The European Commission approved on Monday Romania’s €29.2 billion National Recovery and Resilience Plan, including €14.2 billion in grants and €14.9 billion in loans. This funding will support the implementation of the crucial investments and reform measures outlined in Romania’s Recovery and Resilience Plan and will play a crucial role in enabling Romania to emerge stronger from the COVID-19 pandemic, says a statement from the European executive.
Funding is provided under the Recovery and Resilience Facility (RRF). The Romanian plan is part of an unprecedented coordinated EU response to the COVID-19 crisis to address common European challenges by embracing green and digital transitions, to strengthen economic and social resilience and the cohesion of the Single Market.
The Commission assessed Romania’s plan against the criteria set out in the RRF Regulation. In particular, the Commission analysed whether the investments and reforms contained in Romania’s plan support the green and digital transitions, contribute to effectively addressing the challenges identified in the European Semester and strengthen growth potential, job creation and economic and social resilience.
The Commission’s assessment finds that Romania’s plan allocates 41% of the total to measures supporting the green transition. The plan includes measures to phase out coal and lignite production by 2032. Reforms promoting sustainable transportation include decarbonisation of road transportation, green taxation, incentives for zero-emission vehicles and a modal shift to rail and water transportation. The plan also has a strong focus on improving the energy efficiency of private and public buildings.
41% of the plan’s total allocation for reform and investment supports climate objectives, as follows:
Modernisation of railways: modernisation of rail infrastructure, including electrified or zero-emission railways and rolling stock – €3.9 billion
Urban mobility: infrastructure for greener and safer urban transportation – €1.8 billion
Clean energy production: the phasing out of coal and lignite production, the development of renewables its related production processes and hydrogen: -€855 million
Energy efficiency of buildings: energy efficient renovation and seismic retrofitting of buildings to reduce CO2 emissions by at least 0.15 million tonnes in private buildings and 0.075 million tonnes in public buildings – €2.7 billion
Biodiversity and environmental protection: afforestation and reforestation and forest nurseries and other biodiversity measures for ecological reconstruction and species protection – €1.1 billion
The Commission’s evaluation shows that Romania allocates 21% of its money to measures supporting the digital transition. This includes measures to digitise public administration and businesses, improve connectivity, cyber security and digital skills, and develop an integrated e-health and Telemedicine system. Measures to support the digitisation of education are expected to contribute to the development of skills for both pupils and teachers and will be reinforced by measures to modernise school laboratories and create smart labs. Romania will also participate in a multi-state project of common European interest (IPCEI) on microelectronics.
21% of the plan’s total allocation for reform and investment supports digital objectives, as follows:
Digitisation of public administration: digitisation of public administration in key areas such as justice, employment and social protection, environment, public service management and skills development, public procurement, cyber security, tax and customs, alongside building a secure government cloud infrastructure and supporting eID deployment – €1.5 billion
Digitising health: developing an integrated e-health system, connecting more than 25,000 healthcare providers and telemedicine systems – €470 million
Digitising education: improving digital teaching skills, educational content and equipment and resources, including in universities – €881 million
Strengthening Romania’s economic and social resilience
The Commission considers that Romania’s plan includes a broad set of mutually reinforcing reforms and investments that contribute to effectively tackling all or a significant subset of the economic and social challenges set out in the specific recommendations addressed to Romania.
The implementation of Social and Educational reforms and investments is expected to address long-standing vulnerabilities and structural weaknesses. The plan foresees measures to strengthen public administration, including by reinforcing the effectiveness of the Judiciary and fighting corruption. It will also include measures to support private investment, in particular for SMEs, and to improve the business Environment by reducing the administrative burden for firms. The plan’s reforms in the areas of Education and employment are expected to support a stronger labour market, fostering growth. Flagship reforms on phasing out coal and decarbonising transport, as well as investments promoting the green and digital transition, are expected to enhance competitiveness and make the economy more sustainable overall. Social resilience should improve as a result of the education reforms and investments included in the plan. Having a well-skilled workforce and reducing early school leaving should make the economy more resilient to future shocks and the population more adaptable to changing economic patterns.
Key measures to strengthen Romania’s economic and social resilience:
Strengthening public administration: measures to strengthen the efficiency of the Judiciary and fight corruption will contribute to improving the quality and efficiency of public administration.
Social and territorial cohesion: modernise Romania’s social benefit system through the implementation of the minimum inclusion income reform, a reform of the pension system, measures to improve employment and the digitisation of social protection systems.
Fiscal sustainability: strengthened budgetary framework, better control of expenditure and review of taxation, pension reform.
Strengthened health system resilience: investment in modern hospital infrastructure to ensure patient safety and reduce the risk of healthcare associated infections in hospitals – €2 billion.
Supporting flagship investments and reform projects
Romania’s plan proposes projects in each of the EU’s seven flagship areas. These are specific investment projects that address issues common to all Member States in areas that create jobs and growth and are necessary for the green and digital transition. For example, the Romanian plan includes a project to build a secure government cloud computing infrastructure to enable interoperability of public administration platforms and data services, encouraging the uptake of digital public services for citizens and businesses and the deployment of electronic identity cards for 8.5 million citizens.
The assessment also finds that none of the measures included in the plan significantly harm the environment, in line with the requirements set out in the RRF Regulation.
The control systems put in place by Romania are considered adequate to protect the financial interests of the EU. The plan provides sufficient details on how national authorities will prevent, detect and correct cases of conflict of interest, corruption and fraud related to the use of funds.
European Commission President Ursula von der Leyen said: “I am pleased to present the European Commission’s opinion on Romania’s €29.1 billion recovery and resilience plan. By focusing on measures to ensure green and digital transitions, from improving the energy efficiency of buildings to improving connectivity and digital skills, the measures set out in the plan have the potential to be truly transformative. We will be with you in the coming years to ensure that the ambitious investments and reforms set out in the plan are fully implemented.”
Valdis Dombrovskis, Executive Vice-President of the Commission, said: “Today we have supported Romania’s recovery plan to emerge stronger from the crisis and boost growth. The plan will help Romania decarbonise, with measures to phase out coal and lignite production, which should boost competitiveness and make the economy more sustainable. It will also promote sustainable transport and improve the energy efficiency of public and private buildings. We welcome the focus on improving connectivity and cybersecurity, as well as on digitising public administration, healthcare and education, thus improving digital skills development. By delivering social and education reforms, backed by investment, Romania should boost growth by tackling long-standing structural problems – with a stronger business environment and less red tape.”
Paolo Gentiloni, Commissioner for Economic Affairs, said: “With today’s green light from the Commission for Romania’s recovery and resilience plan, the country is taking an important step towards a more prosperous, competitive and sustainable future. This is an important plan, both in terms of the amount of funding Romania will receive and the ambitious nature of its reforms and investments. The European Commission will support the Romanian authorities in their efforts to deliver on these commitments, which, if successfully implemented, will bring enormous benefits to Romanian citizens and businesses”.
Next steps:
The Commission adopted today a proposal for a decision to provide Romania with €14.2 billion in grants and €14.9 billion in loans under the RRF. The Council will now normally have four weeks to adopt the Commission proposal.
The Council’s approval of the plan would allow a pre-financing of €3.6 billion to be allocated to Romania. This represents 13% of the total amount allocated to Romania.
The Commission will authorise further payments based on satisfactory achievement of the milestones and targets set out in the recovery and resilience plan, reflecting progress in implementing investments and reforms.
Edited for English