Loans and guarantees in the European Union budget

Abstract

Borrowing and debt by the EU as such have been approached with uncertainty, reflecting policy choices of the Member States,—who hold the key to Union’s resources—as to the desired degree of financial autonomy of the Union. Initially recognised as a resource, and integrated in ECSC operations as investment, loans are met with silence in the EEC treaty, while successive financial regulations established the principle that ‘the Community/Union does not raise loans’. Yet, by exception to such principle, a number of acts of secondary legislation enabled the European Commission to borrow, in the name of the Union, in order to subsequently serve various ad hoc policy objectives—save for allowing the Union to run an operating deficit. The handling of loans as a Union resource mirrors such uncertainty, and their full budgeting was never reached; however, other mechanisms have ensured a measure of transparency, and enabled a successful follow-up of EU debt.