| dc.description.abstract | This report is submitted pursuant to Article 130 of the Financial Regulation which requires the Commission to report to the European Parliament and to the Council twice a year on budgetary guarantees and the corresponding risks1. It is completed by a Commission Staff Working Document (the "SWD")2 with a set of detailed tables and explanatory notes. The risks covered by the budget of the European Union (the "Budget") derive from a variety of lending and guarantee operations which can be divided into two categories: –loans granted by the European Communities with macroeconomic objectives, i.e. macro-financial assistance3 ("MFA") loans to third countries and in conjunction with the Bretton Woods institutions, balance-of-payments ("BOP") loans granting support to non-EMU Member States grappling with transitional difficulties; and –loans with microeconomic objectives (Euratom loans and most importantly European Investment Bank ("EIB") external financing4). These operations have been covered since 1994 by the Guarantee Fund for external actions ("the Fund")5 which was set up, among other things, to limit the budgetary impact stemming from calls on guarantees given by the Budget for lending operations in third countries (if a third country has become a Member State the risk is directly born by the Budget). If there are insufficient resources in the Fund, recourse will be made to the Budget. The Council Regulation establishing the Fund (the "Fund Regulation"6), which was adopted in 1994, was first amended in 1999. Following a second amendment of the Council Regulation in 2004, the Fund's coverage is withdrawn if third countries become Member States. In 2007, an amendment7 of the Council Regulation set up a new provisioning mechanism. The Budget directly covers loans to Member States granted or guaranteed by the Community. |
