CELEX: 51994EC2728
Language: en
Date: 2006-12-11
Title: Proposal for a Council Regulation (EC, Euratom) No …/.. of […] establishing a Guarantee Fund for external actions (Codified version)

EN

|[pic]                     |COMMISSION OF THE EUROPEAN COMMUNITIES                                                                           |

                                        Brussels,
                                        COM (2005)

                                        NOT FOR PUBLICATION

                                                                  Proposal for a

                                                     COUNCIL REGULATION (EC, Euratom) No …/..

                                                                      of […]

                                                establishing a Guarantee Fund for external actions

                                                                (Codified version)

                                                              EXPLANATORY MEMORANDUM

1.    In the context of a people’s Europe, the Commission attaches great importance to simplifying and clarifying Community law so as to make  it
       clearer and more accessible to the ordinary citizen, thus giving him new opportunities and the chance to make use of the  specific  rights
       it gives him.

       This aim cannot be achieved so long as numerous provisions that have  been  amended  several  times,  often  quite  substantially,  remain
       scattered, so that they must be sought partly in the original instrument and partly in later amending ones.  Considerable  research  work,
       comparing many different instruments, is thus needed to identify the current rules.

       For this reason a codification of rules that have frequently been amended  is  also  essential  if  Community  law  is  to  be  clear  and
       transparent.

2.    On 1 April 1987 the Commission therefore decided[1] to instruct its staff that all legislative acts should be codified after no  more  than
       ten amendments, stressing that this is a minimum requirement and that departments should endeavour to codify at even shorter intervals the
       texts for which they are responsible, to ensure that the Community rules are clear and readily understandable.

3.    The Conclusions of the Presidency of the Edinburgh  European  Council  (December 1992)  confirmed  this[2],  stressing  the  importance  of
       codification as it offers certainty as to the law applicable to a given matter at a given time.

       Codification must be undertaken in full compliance with the normal Community legislative procedure.

       Given that no changes of substance may be made to the instruments affected by codification, the European Parliament, the Council  and  the
       Commission have agreed, by an interinstitutional agreement dated 20 December 1994, that an accelerated procedure may be used for the fast-
       track adoption of codification instruments.

4.    The purpose of this proposal is to undertake a codification of Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994  establishing
       a Guarantee Fund for external actions[3]. The new Regulation will supersede the various acts incorporated in it[4];  this  proposal  fully
       preserves the content of the acts being codified and hence does no more than bringing them together with only such  formal  amendments  as
       are required by the codification exercise itself.

5.    The codification proposal was drawn up on the basis of a preliminary consolidation, in all official languages, of Regulation (EC,  Euratom)
       No 2728/94 and the instrument amending it, carried out by the Office for Official Publications of the European Communities, by means of  a
       data-processing system. Where the Articles have been given new numbers, the correlation between the old and the new numbers is shown in  a
       table contained in Annex III to the codified Regulation.

                                            ê 2728/94

                                                                  Proposal for a

                                                     COUNCIL REGULATION (EC, Euratom) No …/..

                                                                      of […]

                                                establishing a Guarantee Fund for external actions

THE COUNCIL OF THE EUROPEAN UNION,

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

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[5],

Having regard to the opinion of the Court of Auditors[6],

Whereas:

                                            ê 

   1) Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994 establishing a Guarantee Fund for external actions[7] has been substantially
      amended several times[8]. In the interests of clarity and rationality the said Regulation should be codified.

                                            ê 2728/94 Recital 1 (adapted)

   2) The general budget of the European Ö Union Õ is exposed to Ö a Õ financial risk as a result of  the  guarantees  covering  loans  to  third
      countries.

                                            ê 2728/94 Recital 2 (adapted)

   3) The European Council on 11 and 12 December 1992 concluded that considerations of prudent  budgetary  management  and  financial  discipline
      called for the establishment of a new financial mechanism, and that accordingly a Guarantee Fund should be set up in  order  to  cover  the
      risks related to loans and guarantees covering loans granted to third countries or for projects executed in third countries. Ö This Õ  need
      Ö can be met Õ by the establishment of a Guarantee Fund which may be drawn on to pay the Ö Communities Õ creditors direct.

                                            ê 2728/94 Recital 3 (adapted)

   4) The institutions have agreed, pursuant to the Interinstitutional Agreement of Ö 6 May 1999 Õ, to enter into the budget a  reserve  relating
      to lending and guarantee operations for the benefit of and in third countries.

                                            ê 2728/94 Recital 4 (adapted)

   5) Mechanisms exist for honouring guarantees when they are activated, in particular by drawing provisionally on cash  resources,  as  provided
      for in Article 12 of Council Regulation (EEC, Euratom) No Ö 1150/2000 of 22 May 2000 implementing Decision 94/728/EC, Euratom on the system
      of the Communities' own resources[9] Õ .

                                            ê 2728/94 Recital 5

   6) The Guarantee Fund should be constituted by the gradual payment of resources. The Fund will  subsequently  also  receive  interest  on  its
      invested resources and amounts recovered from defaulting debtors where the Fund has already honoured the guarantee.

                                            ê 2728/94 Recital 6 (adapted)

   7) Ö Experience of the functioning of the Guarantee Fund indicates that  a  ratio  of  9 % Õ  between  the  Fund's  resources  and  guaranteed
      liabilities in principal, increased by unpaid interest due, would Ö be Õ adequate.

                                            ê 2728/94 Recital 7 (adapted)

   8) Payments to the Guarantee Fund equal to Ö 9% Õ of the amount of each operation would seem Ö sufficient Õ to attain the target  amount.  The
      arrangements for making such payments Ö should Õ be defined.

                                            ê 2728/94 Recital 8 (adapted)

   9) Once the target amount is attained, the provisioning rate Ö should Õ be reviewed.

  10) If the Guarantee Fund exceeds the target amount the surplus Ö should Õ be paid back to the general budget of the European Ö Union Õ .

                                            ê 2728/94 Recital 9 (adapted)

  11) The financial management of the Guarantee Fund should be entrusted to the European Investment Bank (EIB). The financial management  of  the
      Fund should be subject to audit by the Court of Auditors in accordance with procedures agreed upon by the Court of Auditors, the Commission
      and the European Investment Bank.

                                            ê 2273/2004 Recital 3 (adapted)

  12) Ö The Communities have granted loans and guaranteed loans to accession countries or for projects executed in those countries.  Those  loans
      and guarantees are covered by the Guarantee Fund and will remain outstanding or in force after the date of accession. From that date,  they
      will cease to be external actions of the Communities and should therefore be covered directly by the general budget of the  European  Union
      and no longer by the Guarantee Fund. Õ

                                            ê 2728/94 Recital 10

  13) The Treaties do not provide any powers other than those pursuant to Article 308 of the EC Treaty and Article 203 of the Euratom Treaty  for
      the adoption of this Regulation,

                                            ê 2728/94 (adapted)

HAS ADOPTED THIS REGULATION:

                                                                    Article 1

A Guarantee Fund, hereinafter referred to as «Fund», shall be established, whose resources shall be used to repay the Ö Communities’ Õ  creditors
in the event of default by the beneficiary of a loan granted or guaranteed by the Community.

The lending and guarantee operations referred to in the first paragraph, hereinafter referred to as «operations», shall be those carried out  for
the benefit of a third country or for the purpose of financing projects in third countries.

                                            ê 2273/2004 Art. 1 pt. 1

All operations carried out for the benefit of a third country or for the purpose of financing projects in a third country shall fall outside  the
scope of this Regulation with effect from the date on which that country accedes to the European Union.

                                            ê 2728/94

                                                                    Article 2

The Fund shall be endowed by:

     – payments from the general budget of the European Communities pursuant to Article 5,

     – interest on Fund resources invested,

     – amounts recovered from defaulting debtors where the Fund has already honoured the guarantee.

                                                                    Article 3

The Fund shall rise to an appropriate level, hereinafter referred to as «the target amount».

                                            ê 1149/1999 Art. 1 pt. 1 (adapted)

The target amount shall be 9 % of the Ö Communities’ Õ total outstanding capital liabilities arising from each  operation,  increased  by  unpaid
interest due.

                                            ê 2728/94 (adapted)

If, at the end of a year, the target amount is exceeded, the surplus shall be paid back to a special heading in the statement of revenue  in  the
general budget of the European Ö Union Õ .

                                            ê 2273/2004 Art. 1 pt. 2 (adapted)

                                                                    Article 4

Following the accession of a new Member State to the European Union, the target amount shall be reduced by an amount calculated on the  basis  of
the operations referred to in the third paragraph of Article 1.

In order to calculate the amount of the reduction, the percentage rate referred to in the second paragraph of Article 3 applicable  on  the  date
of accession shall be applied to the amount of those operations outstanding on that date.

The surplus shall be paid back to a special heading in the statement of revenue in the general budget of the European Union.

                                            ê 2728/94
                                            è1 1149/1999 Art. 1 pt. 2

                                                                    Article 5

1. è1 The payments provided for under the first indent of Article 2 shall be equivalent to 9 % of the capital value of the operations. ç

2. Payments into the Fund shall be made in accordance with the arrangements indicated in Annex I.

                                                                    Article 6

                                            ê 1149/1999 Art. 1 pt. 3

If, as a result of the activation of guarantees following default, resources in the Fund stand below 75 % of  the  target  amount,  the  rate  of
provisioning on new operations shall be raised to 10 % until the target amount has once more been reached.

                                            ê 2728/94

If, as a result of the activation of guarantees on one or more major defaults, resources in the Fund fall below 50 % of the  target  amount,  the
Commission shall submit a report on exceptional measures that might be required to replenish the Fund.

                                                                    Article 7

                                            ê 2728/94 (adapted)

The Commission shall entrust  the  financial  management  of  the  Fund  to  the  European  Investment  Bank  EIB  under  a  Ö mandate Õ  on  the
Ö Communities’ Õ behalf.

                                            ê 2728/94
                                            è1 2273/2004 Art. 1 pt. 3

                                                                    Article 8

The Commission shall, by no later than è1 31 May ç of the following financial year, send to the European Parliament, the Council  and  the  Court
of Auditors an annual report on the situation of the Fund and the management thereof in the previous year.

                                                                    Article 9

The revenue and expenditure account and the balance sheet relating to the Fund shall be attached to  the  Communities'  revenue  and  expenditure
account and balance sheet.

                                                                    Article 10

                                            ê 1149/1999 Art. 1 pt. 4 (adapted)

The Commission shall submit to the European Parliament and the Council Ö a Õ comprehensive report on  the  functioning  of  the  Fund  before  31
December 2006. The Commission shall, if necessary, submit to the Council appropriate proposals for modification of the parameters of the Fund.

                                            ê 

                                                                    Article 11

Regulation (EC, Euratom) No 2728/94 is repealed.

References to the repealed Regulation shall be construed as references to this Regulation and shall be read in accordance  with  the  correlation
table set out in Annex III.

                                            ê 2728/94 (adapted)

                                                                    Article 12

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

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

Done at Brussels, […]

      For the Council
      The President
      […]

                                            ê 2728/94

                                                                     ANNEX I

                                    Arrangements for the payments stipulated in the first indent of Article 2

1. Payments into the Fund will be made in accordance with the arrangements set out in paragraphs 2 and 3, depending  on  whether  the  operations
concerned are:

(a)   Community borrowing/lending operations or guarantees to financial bodies, whether made in one  or  more  than  one  tranche,  except  those
       covered by (b)[10];

(b)   Community borrowing/lending operations or guarantees to financial bodies under a framework facility spread over a number of years and  with
       a micro-economic and structural purpose[11].

2. For the operations referred to under point 1(a) the Commission will start the procedure for making the payments into the Fund as soon  as  the
Council has formally adopted the basic decision. The amount to be paid into the Fund will be calculated on the basis of the total amount for  the
operation decided on by the Council.

3. For the operations referred to under point 1(b), payments into the Fund will be made in annual tranches calculated on the basis of the  annual
amounts indicated in the financial statement attached to the Commission  proposal,  adapted  where  appropriate  in  the  light  of  the  Council
decision.

The Commission will start the procedure for making payments into the Fund as soon as the Council has formally adopted the basic decision,  or  at
the beginning of the following financial year if no operation is programmed for the current financial year. For subsequent  financial  years  the
Commission will start the payment procedure at the beginning of the financial year.

As from the second year, the amounts to be paid into the Fund will be corrected by the difference recorded on 31 December of  the  previous  year
between the estimates that were taken as a basis for the previous payment and the actual figure for  the  loans  signed  during  that  year.  Any
difference relating to the previous year will give rise to a payment in the following year.

4. When it starts a payment procedure the Commission will check the situation with regard to the performance of the  operations  which  were  the
subject of previous payments and, where the commitment deadlines originally laid down have not been met, will propose that  this  be  taken  into
account in calculating the first payment to be made at the start of the following financial year for operations already under way.

                                            ê 2728/94 (adapted)

                                            é 

                                                                     ANNEX II

                                                      Repealed Regulation with its amendment

|Council Regulation (EC, Euratom) No 2728/94                             |OJ L 293, 12.11.1994, p. 1                                      |
|Council Regulation (EC, Euratom) No 1149/1999                              |(OJ L 139, 2.6.1999, p. 1)                                    |
|Council Regulation (EC, Euratom) No 2273/2004                              |(OJ L 396, 31.12.2004, p. 28)                                 |

                                                                  _____________

                                                                    ANNEX III

                                                                Correlation table

|Regulation (EC) No 2728/94                                          |This Regulation                                                     |
|Articles 1, 2 and 3                                                 |Articles 1, 2 and 3                                                 |
|Article 3a                                                          |Article 4                                                           |
|Article 4                                                           |Article 5                                                           |
|Article 5                                                           |Article 6                                                           |
|Article 6                                                           |Article 7                                                           |
|Article 7                                                           |Article 8                                                           |
|Article 8                                                           |Article 9                                                           |
|Article 9                                                           |Article 10                                                          |
|-                                                                   |Article 11                                                          |
|Article 10, first paragraph                                         |Article 12                                                          |
|Article 10, second paragraph                                        |-                                                                   |
|Annex                                                               |Annex I                                                             |
|Annex, points 1 to 4                                                |Annex I, points 1 to 4                                              |
|Annex, point 5                                                      |-                                                                   |
|–                                                                   |Annex II                                                            |
|–                                                                   |Annex III                                                           |

                                                                  _____________

                                                             -----------------------
[1]   COM(87) 868 PV.
[2]   See Annex 3 to Part A of the Conclusions.
[3]   Carried out pursuant to the Communication from the Commission to the European Parliament and the  Council  -  Codification  of  the  acquis
      communautaire, COM (2001) 645 final.
[4]   Annex II of this proposal.
[5]   OJ
[6]   OJ
[7]   OJ L 293, 12.11.1994, p. 1. Regulation as last amended by Regulation (EC, Euratom) No 2273/2004 (OJ L 396, 31.12.2004, p. 28).
[8]   See Annex I.
[9]   OJ No L 130, 31.5.2000, p. 1.
[10]  Examples of this type of operation: loans for the balance of payments of third countries or  the  guarantee  granted  to  a  consortium  of
      commercial banks to finance the purchase of food products in third countries.
[11]  Examples of this type of operation: Euratom loans to third countries and the guarantees granted to the EIB for its loans in the  Developing
      countries in Latin America and Asia (DCLAA) and the Central and Eastern European countries (CEEC).