NextGenerationEU: European Commission endorses Romania’s €29.2 billion recovery and resilience plan

This article is brought to you in association with the European Commission.

The European Commission has today adopted a positive assessment of Romania’s recovery and resilience plan, an important step towards the EU disbursing €14.2 billion in grants and €14.9 billion in loans to Romania under the Recovery and Resilience Facility (RRF). This financing will support the implementation of the crucial investment and reform measures outlined in Romania’s recovery and resilience plan. It will play a crucial role in enabling Romania to emerge stronger from the COVID-19 pandemic.

The RRF is the key instrument at the heart of NextGenerationEU. It will provide up to €800 billion (in current prices) to support investments and reforms across the EU. The Romanian plan forms part of an unprecedented coordinated EU response to the COVID-19 crisis, to address common European challenges by embracing the green and digital transitions, to strengthen economic and social resilience and the cohesion of the Single Market.

The Commission assessed Romania’s plan based on the criteria set out in the RRF Regulation. The Commission’s analysis considered, in particular, whether the investments and reforms contained in Romania’s plan support the green and digital transitions; contribute to effectively addressing challenges identified in the European Semester; and strengthen its growth potential, job creation and economic and social resilience.

Securing Romania’s green and digital transitions  

The Commission’s assessment finds that Romania’s plan devotes 41% of the plan’s total allocation on measures that support the green transition. The plan includes measures to  phase out coal and lignite power production by 2032. Reforms promoting sustainable transport include the decarbonisation of road transport, green taxation, incentives for zero-emission vehicles, and a modal shift to railways and water transport. The plan also has a strong focus on improving the energy efficiency of private and public buildings.

The Commission’s assessment of Romania’s plan finds that it devotes 21% of its total allocation on measures that support the digital transition. This includes measures to digitalise the public administration and businesses, improve connectivity, cybersecurity and digital skills and develop an integrated e-Health and telemedicine system. Measures to support the digitalisation of education are expected to contribute to skills development for both students and teachers, and will be reinforced by measures to modernise school laboratories and creating smart labs. Participation in a multi-country project is planned to be implemented as an Important Project of Common European Interest (IPCEI) on microelectronics.

Reinforcing Romania’s economic and social resilience

The Commission considers that Romania’s plan includes an extensive set of mutually reinforcing reforms and investments that contribute to effectively addressing all or a significant subset of the economic and social challenges outlined in the country-specific recommendations addressed to Romania.

The implementation of social and educational reforms and investments is expected to tackle long-standing vulnerabilities and structural deficiencies. The plan provides for measures to strengthen the public administration, including through reinforcing the effectiveness of the judicial system and fighting corruption. It will also include measures to support private investment, particularly for SMEs, and improve the business environment through reducing the administrative burden for firms. The plan’s reforms in the areas of education and jobs are expected to support a stronger labour market, favouring growth. The flagship reforms on the coal phase-out and the decarbonisation of transport, and investments promoting the green and digital transition are expected to boost competitiveness and make the economy overall more sustainable. Social resilience should to improve as a result of the educational reforms and investments included in the plan. Having a well-skilled labour force and reducing early school leaving should make the economy more resilient against future shocks and the population more adaptable to changing economic patterns.

Supporting flagship investment and reform projects

Romania’s plan proposes projects in each of the seven EU flagship areas. These are specific investment projects which address issues that are common to all Member States in areas that create jobs and growth and are needed for the green and digital transition. For instance, the Romanian plan includes a project to build a secure government cloud computing infrastructure to allow for the interoperability of public administration platforms and data services, fostering the adoption of digital public services for citizens and companies, 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 laid out in the RRF Regulation.

The control systems put in place by Romania are considered adequate to protect the financial interests of the Union. The plan provides sufficient details on how national authorities will prevent, detect and correct instances of conflict of interest, corruption and fraud relating to the use of funds.

Members of the College said:

President Ursula von der Leyen said: “I am delighted to present the European Commission’s endorsement of Romania’s €29.2 billion recovery and resilience plan. By focusing on measures to secure the 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 stand with you in the years to come to ensure that the ambitious investments and reforms set out in the plan are fully implemented.”

Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, said: “Today, we have endorsed Romania’s recovery plan to emerge stronger after the crisis and boost economic growth. The plan will help Romania to decarbonise, with measures to phase out coal and lignite power production that 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 its focus on improving connectivity and cybersecurity as well as digitalising public administration, healthcare and education, thereby improving digital skills development. By carrying out social and educational reforms, backed by investments, Romania should stimulate growth by tackling some long-standing structural issues – with a stronger business environment and less red tape.”

Paolo Gentiloni, Commissioner for Economy, said: “With today’s green light from the Commission for Romania’s recovery and resilience plan, the country takes an important step towards a more prosperous, competitive and sustainable future. This is a big plan, both in terms of the amount of funding Romania is set to 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 tremendous benefits to Romania’s citizens and businesses.”

Next steps

The Commission has today adopted a proposal for a decision to provide €14.2 billion in grants and €14.9 billion in loans to Romania under the RRF. The Council will now have, as a rule, four weeks to adopt the Commission’s proposal.

The Council’s approval of the plan would allow for the disbursement of €3.6 billion to Romania in pre-financing. This represents 13% of the total allocated amount for Romania.

The Commission will authorise further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in the recovery and resilience plan, reflecting progress on the implementation of the investments and reforms.