12. 11. 94 Official Journal of the European Communities No L 293/1 (Acts whose publication is obligatory) COUNCIL REGULATION (EC, EURATOM) No 2728/94 of 31 October 1994 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 235 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 (1), Having regard to the opinion of the European Parliament (2), Having regard to the opinion of the Court of Auditors (3), Whereas the general budget of the European Communities is exposed to increased financial risk as a result of the guarantees covering loans to third countries; Whereas 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; whereas it is possible to meet this need by the establishment of a Guarantee Fund which may be drawn on to pay the Community’s creditors direct; Whereas the institutions have agreed, pursuant to the Interinstitutional Agreement of 29 October 1993, to enter into the budget a reserve relating to lending and guarantee operations for the benefit of and in third countries; (1) OJ No C 68, 11. 3. 1993, p. 10. (2} O] No C 315, 22. 11. 1993, p. 235. (3) OJ No C 170, 21. 6. 1993, p. 25. Whereas mechanisms currently 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 1552/89 of 29 May 1989 implementing Decision 88/376/EEC, Euratom on the system of the Communities’ own resources (4); Whereas the Guarantee Fund should be constituted by the gradual payment of resources; whereas 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; Whereas, by reference to the practice of international financial institutions, a ratio of 10 % between the Guarantee Fund’s resources and guaranteed liabilities in principal, increased by unpaid interest due, would seem adequate; Whereas payments to the Guarantee Fund equal to 14 % of the amount of each operation would seem appropriate to attain this target amount; whereas the arrangements for making such payments must be defined; Whereas, once the target amount is attained, the provisioning rate will be reviewed, whereas if the Guarantee Fund exceeds the target amount the surplus will be paid back to the general budget of the European Communities; ' Whereas the financial management of the Guarantee Fund should be entrusted to the European Investment Bank (EIB); whereas the financial management of the Fund should be subject to audit by the Court of Auditors in accordance with procedures to be agreed upon by the (%) O] No L 155, 7. 6. 1989, p. 1. Regulation as last amended by Regulation (EC, Euratom) No 2729/94 (see page S of this Official Journal).