29.9.2000 Official Journal of the European Communities L 244/27 COUNCIL REGULATION (EC) No 2040/2000 of 26 September 2000 on budgetary discipline THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Articles 37, 279 and 308 thereof, Having regard to the proposal of the Commission (!), Having regard to the opinion of the European Parliament (%), Having regard to the opinion of the Court of Auditors (%), Whereas: 1) The European Council meeting in Berlin on 24 and 25 March 1999 agreed that the Union's expenditure must respect both the imperative of budgetary discipline and efficient expenditure. On 6 May 1999 the European Parliament, the Council and the Commission concluded an Interinstitutional Agreement on budgetary discipline and improvement of the budgetary procedure (). This Interinstitutional Agreement, all the provisions of which apply in full, stresses that budgetary discipline covers all expenditure and is binding on all the institutions involved in its implementation. It establishes a financial perspective intended to assure that, in the medium term, European Union expenditure, broken down by broad category, develops in an orderly manner and within the limits of Own resources: The institutions agreed that calculation of the agricul- tural guideline would remain unchanged. However, with a view to simplification, a recent reference basis should be adopted and the statistical concepts should be consis- tent with those which it is envisaged to adopt in the future Council Decision, concerning the system of the European Communities' own resources. The European Council concluded that the agricultural guideline would from now on cover expenditure under the reformed common agricultural policy, the new rural development measures, veterinary and plant-health measures, expenditure in connection with the agricul- tural pre-accession instrument and the amounts available for accession. The mechanisms for the depreciation of stocks formed during the budget year should be retained. The European Council, meeting in Berlin on 24 and 25 March 1999, taking account of the actual levels of spending and aiming to stabilise agricultural expenditure in real terms over the period 2000 to 2006, considered 21 E, 25.1.2000, p. 37. 189, 7.7.2000, p. 80. (o] c () o] C () O] C 334, 23.11.1999, p. 1. (") o c 172, 18.6.1999, p. 1. (10) (11) that the reform of the common agricultural policy could be implemented within a financial framework which it had determined. It requested the Commission and the Council to pursue additional savings to ensure that total expenditure, excluding rural development and veterinary measures, in the period 2000 to 2006 would not over- shoot an annual average amount it had fixed. In the light of its decisions, it considered that the amounts to be entered in heading 1 of the financial perspective should not exceed certain annual levels, to which the European Parliament, the Council and the Commission subscribed by way of the Interinstitutional Agreement of 6 May 1999. The ceilings for the ‘Common agricultural policy’ and the Rural development and accompanying measures’ subheadings are set in the financial perspective forming an integral part of the Interinstitutional Agreement of 6 May 1999. They can be revised only by a joint decision of both arms of the budgetary authority, acting on a proposal from the Commission, in accordance with the relevant provisions of the Interinstitutional Agreement. When the Council amends agricultural legislation and whenever it deems it to be necessary, the Commission should therefore point out to the Council, if appropriate, that there is a considerable risk that the expenditure arising, in its opinion, from the application of agricul- tural legislation, may exceed the ceiling for subheading 1 of the financial perspective. Without prejudice to point 19 of the Interinstitutional Agreement of 6 May 1999, as such overexpenditure cannot be taken into account in any proposal for a review of the ceiling for subheading 1a of the financial perspective, it is necessary for the Council to be given the opportunity to adjust agricultural legislation in good time to ensure that the ceiling is observed. Budgetary discipline requires that all legislative measures proposed and, if appropriate, adopted, and, throughout the budgetary procedure and when implementing the budget, appropriations requested, authorised or imple- mented comply with the amounts laid down in the financial perspective for expenditure on the common agricultural policy excluding rural development, which constitutes compulsory expenditure, and for expenditure on rural development and accompanying measures. It is possible that savings may have to be made in the short term to ensure compliance with the ceilings laid down for heading 1. In order to comply with the prin- ciple of the protection of legitimate confidence, it is necessary to warn the parties concerned to enable them