Council Regulation (EC, Euratom) No 89/2007Show full title

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:

‘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 a 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.’;

2.

in Article 2, the first indent shall be replaced by the following:

• ‘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 target amount and the value of the Fund's net assets, calculated at the beginning of the year “n”, any surplus 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”.’;

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 year “n”, 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.’;

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 the Fund in annual tranches starting in year “n+1” and 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.

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 “n–1” or 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 the European Union under the smoothing mechanism until such time as the full amount has been paid back into the Fund.

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. Nevertheless, 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.

4. If, as a result of the activation of guarantees following 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.