21.6.93 OfficialJournaloftheEuropeanCommunities NoC170/25
OPINIONNo3/93OFTHECOURTOFAUDITORS OFTHEEUROPEAN COMMUNITIES
ontheproposalforaCouncilRegulationestablishingaGuaranteeFund
(93/C170/03)
THECOURTOFAUDITORS OFTHEEUROPEAN COM­
MUNITIES ,ancewithArticle26.5oftheFinancialRegulationand,on
theotherhand,eachoftheaboveoperationswouldalso
requireaspecificcalltotheMemberStatesforown
resources ;
HavingregardtotheTreatyestablishingtheEuropean
AtomicEnergyCommunityand,inparticular,Article183
thereof,Whereas,moreover,theproposalforaRegulation,inthe
forminwhichithasbeenpresented,requiressome
technicaladjustments ;HavingregardtotheTreatyestablishingtheEuropean
EconomicCommunityand,inparticular,Article209
thereof,
HASADOPTEDTHEFOLLOWING OPINION
HavingregardtotheproposalforaCouncilRegulation
establishingaGuaranteeFund,whichwassubmittedbythe
Commissionon17February1993,
HavingregardtotheCouncil'srequest,receivedbythe
CourtofAuditorson12March1993,fortheCourttobe
consultedonthesaidproposal,PARTI
Generalobservations
1.Article3definesthetargetamountintermsofa
percentageoftheoutstandingliabilities,Articles4and
5establishtheratesforpaymentsintotheFundandthe
lastsub-paragraph ofArticle5providesformeasures
forreplenishingtheFundwhereresourcesavailablefall
below50%ofthetargetamount.Onlyexperiencewill
showwhethertheratesinquestionareappropriate .
TheRegulationcouldrequiretheCommissiontotake
caretoproposeamendmentswherenecessary.Whereas,initsAnnualReportfortheFinancialYear
1991(J),theCourtcriticizedthebudgetarytreatmentof
guaranteesandstressedthatitdidnotmakeuseofany
analyticalcreditormarketindicatorsinordertoevaluate
thecreditworthiness andriskofdefaultofeachborrower;
Whereas,inthesamecontext,theCourtinvitedthe
Commissiontolookatthepossibilityofcreatingaspecial
loanguaranteereserve,similartotheEAGGFmonetary
reserve,tobefinancedfromownresources,whichwould
onlybeusedincasesofgenuinenecessity;AfourthindentisthusproposedforArticle5.
Whereas,inactualfact,theonlymechanismneededtoback
upthisreservewouldbeonetoestablishthesizeofthe
Fundinrelationtotheriskofdefault;andwhereasthelevel
ofcomplexityoftheproposalgivesgroundsfordoubting
itseffectiveness intermsoftheobjectivesthatthe
mechanisminquestion(theGuaranteeFund)aimsto
achieve;2.Theproposaldoesnotspecifywhatwouldbethe
operativeeventthatwouldtriggeroffthemobilization
ofthereserve(thecreationofaninstrument,the
signingofaguaranteeagreementorthetotalorpartial
repaymentofaloan).However,thechoiceofone
optionortheotherwillconditionthemanagementof
theFund,inparticularwithregardtothenumberof
callsforfundsandtransferoperationsthatwouldbe
necessarytocompletetheoperationinquestion.
Whereastheoperationofthenewreservesforexternal
operationswouldcallforparticularlycomplexmanage­
ment:ontheonehand,eachloanorloanguarantee
operationandeachemergencyaidoperationdecidedon
wouldrequireatransferofappropriations involvingthe
priorauthorizationofthebudgetaryauthorityinaccord­3.TheCourtnotesthattherequirementtopay,fromthe
annualreservetotheGuaranteeFund,aproportionof
theamountofthecommitmentsresultingfromloans
andloanguaranteesmadebytheCommissioncould
havetheeffectoflimitingthatamountordelayingthe
grantingofguaranteedloansgrantedeachyear,which
effectwouldbereinforcedtotheextentthattheannual (!)OJC330,15.12.1992,paragraph12.9.

NoC170/26 OfficialJournaloftheEuropeanCommunities 21.6.93
reservemayormaynothavebeencalledupon,inthe
eventofadefault,torefundthecreditors.
4.TheCourtalsoconsidersthattheconstituentinstru­
mentandtheoperatingproceduresoftheFundshould
besetoutinaCommissionproposal.
5.SomeofthetermsofArticles1and2shouldbe
clarified.PART2
Examination oftheindividualarticles
Inthetablebelow,theCourtsetsouttheamendmentsto
theCommission'sproposalwhichwereadumbratedinPart
One.

THECOMMISSION 'SPROPOSAL THECOURT'SPROPOSAL COMMENTS
Article1,secondsubparagraph
Theterm'apersonnotresident'isimpreciseinsofarasit
mayrefertoaphysicalperson.Theoperationsreferredtointhefirstsubparagraph
shallbecoveredbytheFundonlyifthebeneficiariesare
non-membercountriesorapersonnotresidentinthe
CommunityTheoperationsreferredtointhefirstsubparagraph
shallbecoveredbytheFundonlyifthebeneficiariesare
non-membercountriesoralegalentitynotresidentin
theCommunity
Article2
Onlyoperationsinvolvingloansgrantedtonon­
membercountriesorlegalpersonsnotresidentinthe
communityareliabletobecoveredbytheGuarantee
Fund.TheFundshallbeendowedby:
—paymentsfromthegeneralbudgetcorresponding to
asetpercentageofeachoperationreferredtoin
ArticleI:TheFundshallbeendowedby:
—paymentsfromthegeneralbudgetcorrespondingto
asetpercentageofeachoperation,decidedonand
committedbytheCommunityandguaranteedby
thebudget;
—interestonFundresourcesinvested; interestonFundresourcesinvested;21.6.93 OfficialJournaloftheEuropeanCommunities NoC170/27Iftheterm'debtors'usedbytheCommissiondoesnot
alsoincludetheguarantors,thisshouldbespecified.—amountsrecoveredfromdefaultingdebtorswhere
theFundhasalreadyhonouredtheguarantee.amountsrecoveredfromdefaultingdebtorsor
guarantorswheretheFundhasalreadyhonoured
theguarantee.
Article3
TheFundshallrisetoanappropriatelevel,knownas
'thetargetamount',determinedbyreferenceto
guaranteedliabilities.
AsforArticle2. Thetargetamountshallbe10%oftheCommunity's
outstandingliabilitiesinprincipalarisingfromloans
andloanguaranteesgrantedbytheCommunity .Thetargetamountshallbe10%oftheCommunity's
outstandingliabilitiesinprincipalarisingfromtheloans
andloanguaranteesreferredtoinArticleI.
If,attheendoftheyear,theFundexceedsthisamount,
thesurplusshallbepaidbacktoaspecialheadinginthe
statementofrevenueinthebudget.

THECOMMISSION 'SPROPOSAL THECOURT'SPROPOSAL COMMENTS
Article4
AsforArticles2and3. shallbeequivalentto14%ofthevalueofthe
operationsreferredtoinArticleIuntiltheFund
reachesitstargetamount.Thepaymentsprovidedforunderthefirstindentof
Article2:
—shallbeequivalentto14%ofthevalueofthe
operationuntiltheFundreachesitstargetamount;
—shallbereducedto10%whenthetargetamountis
reached.
Article5 Addafourthindent
Atleastonceayearand,inanycase,duringthe
preparationofthedraftbudget,theCommissionshall
checkwhetherthetargetamountandthepaymentrates
arestillappropriate,and,ifnecessary,shallpropose
amendmentstothebudgetaryauthority.BoththetargetamountestablishedunderArticle3and
thepaymentratesestablishedunderArticles4and5
couldturnouttobeinappropriate inthelightofthe
experienceofFundoperations.Afourthsub-paragraph
shouldthereforebeaddedtoArticle5requiring
continuoussurveillanceonthepartoftheCommission
andtheobligationtoproposeanychangesthathave
becomenecessary.
ThisOpinionwasadoptedbytheCourtofAuditorsinLuxembourgattheCourtmeetingof
22April1993.NoC170/28 OfficialJournaloftheEuropeanCommunities 21.6.93FortheCourtofAuditors
AndreJ.MIDDELHOEK
President