The Guarantee Fund for external Actions was set up in 1994 to cover defaults on loans and loan guarantees granted to non-Member States or for projects in non-Member States.
Set up at a time when the guarantees on loans granted to non-Member countries were growing rapidly, the Fund was established:
The lending operations covered by the Fund relate to three different instruments, each of which benefits from a guarantee from the EU budget. These instruments are: European Investment Bank (EIB) lending, Euratom loans and Macro-Financial Assistance.
The Fund is provisioned from the general EU budget and has to be maintained at a certain percentage of the outstanding amount of the loans and loan guarantees covered by the Fund. This percentage, known as the target rate, is currently 9%.
At the end of 2012, the amount covered by the Fund was about EUR 23 billion and the assets of the Fund stood at about EUR 2 billion. The Commission has entrusted the financial management of the Fund to the EIB. The Commission supervises this mandate, monitors and reviews the Guarantee Fund mechanism, and is responsible for regular reporting on the situation of the Fund and its management to the European Parliament, the Council and the Court of Auditors.