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Guarantee Fund for external actions

This Regulation covers the budgetary risks related to loans and guarantees covering loans granted to third countries or for projects executed in third countries. The aim of the Fund is to protect European budget appropriations and to contribute to compliance with budgetary discipline.

ACT

Council Regulation (EC, Euratom) No 480/2009 of 25 May 2009 establishing a Guarantee Fund for external actions (Codified version).

SUMMARY

As a result of its loans to third countries and guarantees covering loans to finance investment operations in these countries, the European Union (EU) is exposed to considerable financial risks. It was with the aim of protecting against such risks that the EU adopted this Regulation establishing a Guarantee Fund for external actions.

This Regulation describes how the Fund operates and lays down the procedure for endowing the Fund and the rules for its management. The main aim of the Fund is to protect European budget appropriations and to contribute to compliance with budgetary discipline.

Mission

The mission of the Guarantee Fund for external actions is to pay the EU’s creditors in the event of default by the beneficiary in respect of:

  • a loan granted or guaranteed by the EU;
  • a guaranteed loan granted by the European Investment Bank (EIB) for which the EU acts as guarantor.

Moreover, the Guarantee Fund can cover only loans and guarantees carried out for the benefit of a third country or for the purpose of financing projects in a third country.

Management and financial endowment

The Commission entrusts the financial management of the Fund to the EIB under a mandate from the EU. The Guarantee Fund is endowed by:

  • direct payments from the general budget of the EU;
  • interest on Fund resources invested;
  • amounts recovered from defaulting debtors.

Pursuant to the interinstitutional agreement of May 2006, which contains the Community financial framework for 2007-2013, financing of the Fund is guaranteed as compulsory expenditure from the general budget of the EU.

Target amount and annual transfer

The target amount refers to the amount of resources required by the Fund in order to fulfil its mission. The Fund's target amount is set at 9 % of the EU's total outstanding capital liabilities arising from each loan or guarantee operation, increased by unpaid interest due. The annual transfer from the EU budget to the Fund is calculated by applying the target amount to the outstanding amount of loans granted and guaranteed. The difference between the target amount and the actual value of the Fund's assets is paid from the general budget of the EU into the Fund, or to the budget in the event of a resulting surplus in the Fund.

The provisioning amount is calculated during financial year "n" on the basis of loans granted and guaranteed during the previous financial year ("n-1"). There is therefore a delay of approximately one year between the time when the amounts become outstanding and the actual provisioning of the Fund.

REFERENCES

ActEntry into forceDeadline for transposition in the Member StatesOfficial Journal
Regulation (EC, Euratom) No 480/2009

30.6.2009

-

OJ L 145 of 10.6.2009

RELATED ACTS

Report from the Commission of 2 July 2010 – Annual Report from the Commission on the Guarantee Fund and the management thereof in 2009 [COM(2010) 805 final - Not published in the Official Journal].

Council Regulation (EC) No 1934/2006 of 21 December 2006 establishing a financing instrument for cooperation with industrialised and other high-income countries and territories [Official Journal L 405 of 30.12.2006].

Regulation (EC) No 1717/2006 of the European Parliament and of the Council of 15 November 2006 establishing an Instrument for Stability [Official Journal L 327 of 24.11.2006].
This Regulation establishes an instrument for stability which includes development cooperation measures and measures for financial, economic and technical cooperation with third countries.

This summary is for information only. It is not designed to interpret or replace the reference document, which remains the only binding legal text.

Last updated: 17.06.2011

See also

  • More information can be found on the European Commission's DG Budget website
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