Summary of the assessment of the Romanian recovery and resilience plan

The information contained in this summary is based on the documents COM(2021) 608 final and SWD(2021) 276 final, which are the authentic documents representing the Commission’s assessment of the plan. Summary of the Commission’s assessment of the Romanian recovery and resilience plan Grants: EUR 14 239 689 750; Loans: EUR 14 942 153 00 171 measures: 64 reforms and 107 investments divided into 15 components Number of milestones and targets: 507 Climate target: 41 % Digital target: 20.5 % 1. Summary of the Commission’s assessment of the recovery and resilience plan Rating Criterion Commission assessment A-C 2.1 The plan follows a holistic approach to achieve recovery and increase potential growth, while enhancing socio-economic and institutional resilience. The plan contains mutually reinforcing and coherent reforms and investments that refer to policy areas of European relevance, structured around the six pillars. The plan has a strong focus on the green transition pillar with energy and climate related measures, with flagship reforms on the phasing-out of coal and the decarbonisation of road transport. The reforms and investments are expected to significantly decarbonise the energy sector and unlock the potential for renewables deployment. The strong focus on energy efficiency of private and public buildings, digitalisation of road and rail transport and deployment of electric charging infrastructures, climate change adaptation and circular economy, will also facilitate the green transition in all sectors of the economy. The plan also contributes to the digital transition. Measures contributing to the digital objectives are present throughout the plan, across the different components and focus on the digitalisation of the public administration (including health, justice, environment, employment and social protection) and businesses, as well as connectivity, cybersecurity and digital skills. A Several components in the plan have the potential to foster smart, sustainable and inclusive growth. These measures, also through the use of new financial instruments and the creation of a National Development Bank, are expected to support private investments, including for small and medium-sized enterprises (SMEs), thereby increasing the capacity of the country to attract investments and create new businesses and jobs. The plan also aims to reinforce fiscal sustainability through important reforms of the tax administration, tax framework, fiscal management and the pension system. The plan envisages to strengthen social and territorial cohesion through structural measures on the labour market and important reforms and investments targeting both urban and rural development, which are expected to reduce territorial disparities at regional, intra-regional and intra-county level. The proposed reforms and investments are expected to strengthen the overall resilience of the health system, including its digitalisation. Finally, measures in the plan aim to help the next generations mainly by addressing challenges in terms of quality, equity and infrastructure in the educational system. The upgrade of school and university infrastructure in urban and rural areas, the digitalisation of education and a system of grants to reduce the drop-out rate are 1 The information contained in this summary is based on the documents COM(2021) 608 final and SWD(2021) 276 final, which are the authentic documents representing the Commission’s assessment of the plan. the main measures to address these challenges. 2.2 The reforms and investments underpinning the plan can be expected to contribute to addressing all or a significant subset of the 2019 and 2020 country-specific recommendations (CSRs). The plan focuses on reforms and investments facilitating the twin green and digital transitions, but also on reforms and investments to address the challenges identified in sustainability of public finances and pension system, healthcare, public administration, judiciary, business environment, education. Evidence-based decision making, long-term planning and public consultations and measures aimed at improving A the public procurement process, reinforcing the effectiveness and independence of the judicial system and fighting corruption will contribute to improving the quality and effectiveness of the public administration. Furthermore, the plan commits to reforms related to coal phase-out, minimum wage setting, corporate governance of state-owned enterprises, social dialogue, early-childhood education and care system. 2.3 The aims of the plan are in line with the flagship areas identified by the 2021 annual sustainable growth survey for their potential to create jobs and growth and help reap the benefits from the green and digital transitions. Model simulations conducted by the Commission services using the QUEST model show that the plan, together with the rest of the measures of the European A Union Recovery Instrument, has the potential to increase the GDP of Romania by 1.8 % to 2.9 % by 2026. This scenario does not include the possible positive impact of structural reforms, which can be substantial. 2.4 All measures in the plan have passed the ex-ante assessment of the ‘do no significant harm’ principle. In addition, for some measures, the ‘do no significant harm’ principle has been reflected in the milestones and targets A specified in the Annex to the Commission Proposal for a Council Implementing Decision. 2.5 The measures in the plan have the potential to accelerate the green transition and protect the environment. They are expected to support Romania’s decarbonisation and energy transition objectives, as set out in its 2030 national energy and climate plan, and are a step forward in achieving climate neutrality by 2050. The plan includes reforms on the phase out of coal and lignite power production, which is crucial for the decarbonisation of the energy sector and to unlock the potential for renewables deployment. The plan also commits to promote sustainable transport by decarbonisation of road transport, green taxation, incentives for zero-emission vehicles, modal shift to railways and water transport, and measures to promote road safety. The plan also has a strong focus on energy efficiency of private and public buildings. The A introduction of green budgetary planning, digitalisation of road and rail transport and the deployment of electric charging infrastructures, climate change adaptation and circular economy, is expected to also facilitate the green transition in all sectors of the economy. With several reforms and investments in the forestry sector, such as the adoption of the National Forest Strategy and the ecological reconstruction of habitats and the conservation of species, the plan is also expected to contribute to biodiversity conservation and restoration. The implementation of reforms and investments on resource efficiency, material reuse and reducing waste, aim to ensure Romania’s transition to a circular economy by 2030. 2 The information contained in this summary is based on the documents COM(2021) 608 final and SWD(2021) 276 final, which are the authentic documents representing the Commission’s assessment of the plan. 2.6 As regards the digital transition, the measures contributing to digital objectives account for 20.5 % of the financial allocation. Component 7 (Digital Transformation) is fully dedicated to the digital transition. All the plan’s components include measures directly contributing to the digital transformation or addressing related challenges. The key components are the digital transformation, followed by education, sustainable transport and business support and R&D&I. The measures contributing to the digital transformation are expected to improve the effectiveness of the public administration, lowering A the administrative burden, increasing the competitiveness of the businesses and equipping parts of the population (notably students, teachers and civil servants) with basic and advanced digital skills. The digital dimension is strengthened by a cross-border dimension, as Romania is expected to participate in a multi- country project on low power processors and semiconductor chips planned as an Important Project of Common European Interest. 2.7 The implementation of the envisaged measures is expected to have a lasting impact. The plan is fully aligned and integrated with the National Reform Programme. This is expected to help ensure that the implementation of the plan is well coordinated and lasting. The plan includes several measures and policies A that are expected to lead to structural changes in pension system, social benefits, public administration, healthcare, education, digitalisation and green policies. 2.8 The milestones and targets are clear and realistic and the proposed indicators for those milestones and targets are relevant, acceptable and robust. The milestones and targets constitute an appropriate system for monitoring the plan’s implementation. The verification mechanisms, data collection and A responsibilities described by Romania appear sufficiently robust to justify in an adequate manner the disbursement requests once the milestones and targets are assessed as completed. 2.9 Romania has provided individual cost estimates for the measures in the plan. The estimates and supporting documents show that the costs are justified, reasonable, plausible and commensurate, in line with the principle of cost- efficiency. The amounts proposed for financing were in general deemed B appropriate and seen as establishing the plausibility of the cost estimates to a medium extent. The avoidance and prevention of double funding is expected to be ensured through robust procedures structured within the plan. 2.10 Romania’s control and audit system is adequate to prevent, detect and correct potential fraud, corruption and conflicts of interest, and avoid double funding. The system presents a robust process and structure, where the roles and responsibilities are clearly defined and the relevant control functions are appropriately segregated. The proposed measures give assurance that there is A an adequate level of control to prevent, detect and correct irregularities identified when using funds provided by the Recovery and Resilience Facility. Romania committed in specific milestones to having in place an efficient repository system and to having allocated sufficient administrative capacity to perform such audits by the time of the first disbursement request. 3 The information contained in this summary is based on the documents COM(2021) 608 final and SWD(2021) 276 final, which are the authentic documents representing the Commission’s assessment of the plan. 2.11 The plan is structured around six pillars. Each pillar is built around components including measures mutually reinforcing, as investments are accompanied by reforms that aim to address underlying structural challenges. There is an A adequate balance between investments and reforms in view of the main challenges to be addressed, and between investments in different territories. 2. Horizontal principles and additionality Horizontal principle Commission assessment Complementarity with EU The Plan acknowledges significant complementarities with cohesion programmes 2021-2027 policy funds 2021-2027. In particular, the plan specifies that its structure will complement the projects supported by the Cohesion policy to optimise the use of EU funds allocated to Romania for the 2021-2027 period. Complementarities are particularly relevant for areas where reforms or investments will be kick-started with the Recovery and Resilience Facility support, such as the circular economy, energy, sustainable transport, digitalisation, health, education, social inclusion and protection and employment policies, and health sector. Principle of additionality The measures in the plan respect the principle of additionality. Recurring costs The plan will finance a limited amount of costs that are recurring but temporary in nature, thus respecting the conditions set out in Article 5(1) of the RRF Regulation. These costs are strictly necessary for the implementation of the measures. 3. Reply to the European Parliament’s questions Contribution to equality and gender equality: the plan describes existing challenges and briefly explains which reforms and investments contribute to overcoming the challenges identified. Several measures are expected to contribute to addressing challenges related to gender equality and equal opportunities for all. The plan refers notably to addressing the needs of people with disabilities, including in relation to accessibility to transport, buildings and digital public services; to equalising the retirement age over time; to the introduction of a mandatory minimum threshold of 50% for women’s participation in training, education or digital literacy programmes; to promoting equal treatment and opportunities between men and women, and to improving the representation of women in decision-making positions of state-owned enterprises; and providing social housing for disadvantaged or vulnerable people including for persons with disabilities, older persons, as well as Roma or other ethnic minorities. With regard to monitoring and reporting, data on participants benefiting from interventions or institutional or policy implementation developments will be disaggregated by variables such as sex, age, disability and, where possible, membership of a minority group. Contribution to high-quality employment creation: the plan contains investments and reforms expected to boost the economic growth and jobs potential. Benefits for growth and jobs are expected from the investments and reforms related to strengthen the business environment and support of private investments, particularly for SMEs, energy efficiency, energy and transport decarbonisation and an improved health system. Investments and policies to accelerate digitalisation are expected to 4 The information contained in this summary is based on the documents COM(2021) 608 final and SWD(2021) 276 final, which are the authentic documents representing the Commission’s assessment of the plan. improve productivity, as well as create jobs. Improving skills and bridging the gap between education provision and labour market needs is expected to address bottlenecks to growth. Contribution to the implementation of the European Pillar of Social Rights: the plan addresses a number of employment and social policy challenges relevant for the implementation of the European Pillar of Social Rights. To foste