Recovery and resilience plan for Romania

Following an unprecedented crisis due to the pandemic, Romania’s recovery and resilience plan responds to the urgent need of fostering a strong recovery and making Romania future ready. The reforms and investments in the plan will help Romania become more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions. To this end, the plan consists of 107 investment measures and 64 reforms. They will be supported by an estimated €14.24 billion in grants and €14.94 billion in loans. 41% of the plan will support the green transition and 20.5 % of the plan will support the digital transition.

The transformative impact of Romania’s plan is the result of a strong combination of reforms and investments which address the specific challenges of Romania. The reforms address bottlenecks to lasting and sustainable growth, while numerous investments are targeted towards the green transition, notably through sustainable transport, building renovation, biodiversity protection, industry decarbonisation and deployment of renewables. Romania’s plan also includes measures on digitalization of public administration and public services and improvement of healthcare and education sectors, in an approach that takes into account regional disparities. Important reforms and investments aim at improving the quality and sustainability of public finances and the pension system, the effectiveness of public administration, including state owned enterprises, public procurement, the judiciary and the fight against corruption, as well as support for the business environment and research & innovation. All reforms and investments have to be implemented within a tight timeframe, as the Regulation on the Recovery and Resilience Facility foresees they have to be completed by August 2026.

The plan will foster economic growth and create jobs. It is expected to lift Romania’s gross domestic product by 1.8% to 2.9% by 2026. This boost to the economy is expected to bring up to 90,000 citizens into jobs. Romania will also benefit from the Recovery and Resilience Plans of other Member States, for instance through exports. These spillover effects account for 0.2 percentage points of gross domestic product in 2026, showing the value added of synchronised expenditure across Member States.

+ 1.8-2.9%

Impact of NextGenerationEU on Romania's gross domestic product by 2026

+ 90,000

Jobs by 2026

0.2%

Gross domestic product benefits thanks to other Member States’ recovery and resilience plans in 2026

When designing the plan, the Romanian authorities consulted national and regional social partners and stakeholders ahead of the formal submission of the plan on 31 May 2021. On 27 September, the Commission gave its green light to the plan. On this occasion, President Von der Leyen symbolically transmitted the Commission’s assessment to President Klaus Iohannis and Prime Minister Florin Cîțu during a visit in Bucharest. The Plan was in turn adopted by the Council on 28 October opening the door to its implementation and financing.

Green transition

In the area of climate and environmental policies, Romania faces challenges related to the greenhouse-gas emissions that are set to increase and could jeopardise the achievement of 2030 and 2050 energy and climate targets. In addition, while Romania’s circular economy has potential, there is a particular need to improve infrastructure and increase investments in water, waste, wastewater and air pollution infrastructure.

Key measures for the green transition

The plan supports the green transition through investments in modernising railway infrastructure, including electrified or zero-emission railways and rolling stock (€3.9 billion). Furthermore, €1.8 billion will be invested to support urban mobility through infrastructure for a green and safer urban transport. Reforms and investments amounting to €855 million will support clean energy production by phasing-out of coal and lignite power production, deployment of renewables, and hydrogen. In addition, €2.7 billion will be invested for energy-efficient renovation and seismic renovation of buildings. Biodiversity and environmental protection measures include afforestation and reforestation and forest nurseries, as well as other biodiversity measures for ecological reconstruction and species protection, with investments amounting to €1.1 billion.

Example project: Renovation wave fund

The fund worth €2.7 billion aims to increase the energy renovation rate of multi-family buildings and public buildings in Romania. Given that energy consumption in the household sector and the tertiary sector represents 45% of the total final energy consumption in Romania, the renovation wave will enhance energy efficiency of buildings, benefiting the environment and lightening households’ energy bills. In addition, Romania is one of the European countries most exposed to seismic risk. Renovation works will increase the resilience of buildings to earthquakes and their accessibility to persons with disabilities and ageing population.

Digital transition

Digital challenges for Romania include connectivity especially in rural areas, lack of digital skills, below EU average digitalisation of schools, households, companies and public services. Existing capacities are not sufficient to ensure a high level of network security and adequate cyber risk management.

Key measures for the digital transition

Romania’s recovery and resilience plan supports the digital transition with investments and reforms for the digitalisation of public administration in key areas such as justice, employment and social protection, environment, civil service management and skills development, public procurement, cybersecurity, tax and customs, while building a secure government cloud infrastructure and supporting eID deployment. Public administration digitalization investments amount to €1.5 billion. In addition, digitalization of health includes €470 million investments for developing an integrated e-Health system, connecting over 25,000 healthcare providers and developing telemedicine systems. Moreover, investments for digitalisation of education (€881 million) aim at improving digital pedagogical skills, educational content and equipment and resources, including in universities.

Example project: Qualified electronic identity cards and digital signature

The plan will help deliver electronic identity cards to 8.5 million Romanians. The e-ID card will facilitate the interaction between citizens and public and private entities. The introduction of the e-ID is part of a wider array of investments and structural reform that aims at broadening virtual access to services such as health and education, and at facilitating storage and sharing of citizens’ details for a more tailored and efficient interaction with public institutions.

Key macro-economic challenges for the Romania’s economy include growing fiscal and current account deficits stemming from a consumption-led growth model based on strong domestic demand, which was stimulated in recent years by expansionary fiscal policy. In addition, adverse demographic developments and shortages in the education system have led to labour and skill shortages and inequalities and regional disparities have been further accentuated by Covid-19 crisis. An unpredictable business environment is also a challenge of the Romanian economy.

Key measures in reinforcing economic and social resilience

The plan reinforces economic and social resilience by supporting the public administration with a large array of measures including improving the effectiveness of the judicial system, strengthening policy coordination and planning capacity of the government and improving human resources management in the civil service. Territorial and social cohesion will be fostered by development of road infrastructure and modernization of railways, as well as by reforming the Romanian social benefits system through the implementation of the minimum inclusion income reform and measures to improve the employment and social protection digital systems. Fiscal sustainability will be supported by reinforced budgetary framework, better expenditure control and review of taxation, and pension system reform. Investments of €2 billion in modern hospital infrastructure will strengthen the resilience of the health system.

Example project: Minimum Inclusion Income Reform

The reform simplifies the Romanian social policy toolkit, by integrating three means-tested benefits that used to be independent from each other, thus bringing clarity, increasing accessibility and reducing red tape. The minimum inclusion income reform will improve social assistance and reduce poverty for the most vulnerable, while creating incentives to stimulate employment and increase education attainment.

The plan is consistent with relevant country-specific challenges and priorities identified in the European Semester, an annual cycle of coordination and surveillance of the EU’s economic policies. For a detailed explanation of the European Semester see the following link: The European Semester explained | European Commission (europa.eu)