Rules for the Guarantee Fund for external actions.
This fund protects the EU budget against the budgetary risks related to loans, and guarantees covering loans, granted to non-EU countries or for projects executed in those countries. Its aim is to protect European budget appropriations and to contribute to compliance with budgetary discipline.
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.
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:
- an annual payment from the budget of the EU (if needed);
- interest on Fund resources invested;
- amounts recovered from defaulting debtors.
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 at the beginning of financial year 'n' on the basis of loans granted and guaranteed during the previous financial year ('n-1'). The amount thus calculated is entered in the budget of year n +1. There is therefore a delay of approximately 2 years between the time when the amounts become outstanding and the actual provisioning of the Fund.
Council Regulation (EC, Euratom) No 480/2009 establishing a Guarantee Fund for external actions (Codified version).