Council Regulation (EC, Euratom) No 89/2007 of 30 January 2007 amending Council Regulation (EC, Euratom) No 2728/94 establishing a Guarantee Fund for external actions
Date: 2007-01-30
Institutions: Council of the European Union
Subjects: Community loan, European Investment Bank, administrative formalities, budgetary reserve (EU), credit guarantee, financial management, fund (EU), third country

31.1.2007

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Official Journal of the European Union

L 22/1

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is obligatory)

I

REGULATIONS

COUNCIL REGULATION (EC, EURATOM) No 89/2007

of 30 January 2007

amending Council Regulation (EC, Euratom) No 2728/94 establishing a Guarantee Fund for external
actions

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community, and in particular Article 308 thereof,

establishing the European

Having regard to the Treaty establishing the European Atomic
Energy Community, and in particular Article 203 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament (1),

Having regard to the opinion of the Court of Auditors (2),

Whereas:

(1)

(2)

(3)

The efficiency of
the use made of budgetary means
reserved for the Guarantee Fund established by Council
Regulation (EC, Euratom) No 2728/94 (3) should be
improved and the administrative work related to the
budgetary management of the Guarantee Fund reduced.

The transparency and programming of budgetary trans-
actions in relation to the provisioning of the Guarantee
Fund should be enhanced.

The Interinstitutional Agreement between the European
Parliament,
and the Commission on
budgetary discipline and sound financial management (4)
adopted on 17 May 2006 sets the multiannual financial

the Council

(1) Opinion delivered on 14 March 2006 (not yet published in the

Official Journal).

(2) OJ C 313, 9.12.2005, p. 6.
(3) OJ L 293, 12.11.1994, p. 1. Regulation as last amended by Regu-
lation (EC, Euratom) No 2273/2004 (OJ L 396, 31.12.2004, p. 28).

(4) OJ C 139, 14.6.2006, p. 1.

framework of the European Union for the period 2007
to 2013. Pursuant to the Interinstitutional Agreement,
the funding of the Guarantee Fund is provided for as
an obligatory expenditure from the general budget of
the European Union for that period.

(4)

(5)

(6)

(7)

The main function of the Guarantee Fund, namely to
the European Union
shield the general budget of
against shocks due to defaults on loans or guaranteed
loans covered by the Fund, should be maintained.

The Guarantee Fund covers defaults under loans issued
by the European Investment Bank (hereinafter the EIB)
for which the Community provides a guarantee under
the EIB's external mandate. In addition, in line with the
EIB's external mandate as taking effect from 1 February
2007, the Fund should also cover defaults under loan
guarantees issued by the EIB for which the Community
provides a guarantee.

Council Regulation (EC, Euratom) No 2728/94 should
therefore be amended accordingly.

The Treaties provide for no powers, other than those in
Article 308 of the EC Treaty and Article 203 of the
Euratom Treaty, for the adoption of this Regulation,

HAS ADOPTED THIS REGULATION:

Article 1

Council Regulation (EC, Euratom) No 2728/94 is hereby
amended as follows:

1.

in Article 1, the first subparagraph shall be replaced by the
following:

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Official Journal of the European Union

31.1.2007

‘A Guarantee Fund, hereinafter referred to as the “Fund”, shall
be established, the resources of which shall be used to repay
the Community's creditors in the event of default by the
beneficiary of
loan granted or guaranteed by the
Community or of a loan guarantee issued by the European
Investment Bank for which the Community provides a
guarantee.’;

a

2.

in Article 2,
following:

the first

indent shall be replaced by the

‘— one annual payment from the general budget of the
European Union pursuant to Articles 4 and 5,’;

3.

in Article 3, the third subparagraph shall be replaced by the
following:

‘On the basis of the year-end “n–1” difference between the
the Fund's net assets,
target amount and the value of
the year “n”, any surplus
calculated at
shall be paid in one transaction to a special heading in the
statement of revenue in the general budget of the European
Union of the year “n+1”.’;

the beginning of

4. Article 4 shall be replaced by the following:

‘Article 4

Based on the year-end “n–1” difference between the target
amount and the value of the Fund's net assets, calculated at
the beginning of
the required provisioning
amount shall be paid into the Fund in one transaction in
the year “n+1” from the general budget of the European
Union.’;

the year “n”,

5. Article 5 shall be replaced by the following:

‘Article 5

1.
If, as a result of one or more defaults, the activation of
guarantees during year “n–1” exceeds EUR 100 million, the
amount exceeding EUR 100 million shall be paid back into
tranches starting in year “n+1” and
the Fund in annual
continuing over the following years until
full repayment
(smoothing mechanism). The size of the annual tranche is
the lesser of the following:

— EUR 100 million, or

— the remaining amount due in accordance with the

smoothing mechanism.

“n–1” or

Any amount resulting from the activation of guarantees in
years preceding year “n–1”, that has not yet been repaid in
full due to the smoothing mechanism, shall be paid back
before the smoothing mechanism for defaults occurring in
year
subsequent years can take effect. Such
remaining amounts shall continue to be deducted from the
maximum annual amount to be recovered from the general
budget of
smoothing
mechanism until such time as the full amount has been
paid back into the Fund.

the European Union under

the

2.
The calculations based on the smoothing mechanism
shall be made separately from the calculations referred to in
the third subparagraph of Article 3 and in Article 4. Never-
theless, they shall together result in one annual transfer. The
amounts to be paid from the general budget of the European
Union under the smoothing mechanism shall be treated as
net assets of the Fund for the calculation pursuant to Articles
3 and 4.

3.
If, as a result of the activation of guarantees following
one or more major defaults, resources in the Fund fall below
80 % of the target amount, the Commission shall inform the
budgetary authority thereof.

If, as a result of the activation of guarantees following
4.
one or more major defaults, resources in the Fund fall below
70 % of the target amount, the Commission shall submit a
report on exceptional measures that may be required to
replenish the Fund.’;

6. the Annex shall be deleted.

Article 2

This Regulation shall enter into force on the third day following
its publication in the Official Journal of the European Union.

It shall apply from 1 January 2007.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 30 January 2007.

For the Council
The President

P. STEINBRÜCK