Commission Staff Working Document: Analysis of the recovery and resilience plan of Romania amending the approval of the assessment of the recovery and resilience plan of 29 October 2021

e modified RRP and the REPowerEU chapter contribute to social cohesion. The revised RRP includes measures to address long-standing social challenges. These cover the responsiveness and accessibility of healthcare and long-term care services, and the access to services for children in vulnerable communities and persons with disabilities. Social vulnerabilities should also be addressed through provision of a wide range of social services to ethnic minorities and through integrated programmes to support disadvantaged communities in deprived metropolitan areas. A new reform aims to improve social assistance and reduce poverty for the most vulnerable, while reducing the administrative burden for all stakeholders involved. It aims at stimulating employment through activation measures and at increasing education attainment. These measures are expected to help deliver on the implementation of the European Pillar of Social Rights Action Plan endorsed at the Porto Summit of 7 May 2021 and are expected to contribute to improving the levels of the indicators of the Social Scoreboard. The revised RRP should also foster improved digital literacy for the new generations. Measures are also supporting the integration of digital technologies in the pre-university education system and the digitalisation of universities and their preparation for the digital professions of the future. *** Taking into consideration all reforms and investments envisaged by Romania, its modified recovery and resilience plan is expected to have a high impact on strengthening the growth potential, job creation, and economic, social and institutional resilience of the Member State, on contributing to the implementation of the European Pillar of Social Rights, including through the promotion of policies for children and youth, and on mitigating the economic and social impact of the COVID-19 crisis, thereby enhancing the economic, social and territorial cohesion and convergence within the Union. This would warrant a rating of A under criterion 2.3 of Annex V to the RRF Regulation. 3.4. The principle of ‘do no significant harm’ The modifications of the measures included in the RRP do not have an impact on the assessment of the principle of ‘do no significant harm’, which remains identical. Romania’s REPowerEU chapter includes a systematic assessment of each measure against the principle of ‘do no significant harm’ (DNSH), for each of the six environmental objectives within the meaning of Article 17 of the Taxonomy Regulation. While Romania’s assessment often stresses the environmental and climate benefits of measures, it also provides information allowing to assess that measures comply with the ‘do no significant harm’ principle – for instance by providing reassurances that the implementation of the existing EU and Romanian legislative framework will prevent any significant harm, or by indicating that any measure that could have had a significant impact has been carved out from funding under the RRP. For some measures where calls for projects or calls for interest are necessary to select specific projects, adherence with the ‘do no significant harm’ principle is ensured by introducing specific safeguards in the milestones associated with each measure, to monitor the implementation of the measures. 18 No measure under the REPowerEU chapter of Romanian RRP falls under Article 21c(3), point (a) of the RRF Regulation. *** Taking into consideration the assessment of all the measures envisaged, no measure for the implementation of reforms and investments projects included in Romania’s modified RRP, including its REPowerEU chapter, is expected to do significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) No 2020/852 (the principle of ‘do no significant harm’). This would warrant a rating of A under criterion 2.4 of Annex V to the RRF Regulation. 3.5. Green transition The modifications to the plan increased its contribution to the green transition, with respect to the initial assessment. The modified RRP continues to significantly contribute to the green transition and to the achievement of the Union 2030 climate targets, while complying with the objective of EU climate neutrality by 2050. The new measures introduced in the REPowerEU chapter significantly increase Romania’s efforts to advance the green transition. The REPowerEU chapter includes nine measures which aim to accelerate the deployment of renewable energy sources, the pace of energy efficiency renovations and the requalification of the workforce towards green skills. The modified Romanian plan, including its REPowerEU chapter, includes measures supporting climate change objectives for an amount which represents 44.1% of the total plan’s allocation. For the REPowerEU chapter alone, the share is 96.5%, according to the methodology for climate tracking set out in Annex VI to the Recovery and Resilience Facility Regulation. The climate ambition of the revised plan without the REPowerEU chapter decreases slightly compared to the initial plan and stands at EUR 10.63 billion or 40.1%, compared to 41% for the original plan. Overall, the climate change contribution of the total plan, as well as of the REPowerEU chapter, exceeds the minimum climate target of 37% as set out in that Regulation. The modified RRP of Romania continues to correctly follow the methodology for climate tagging set out in Annex VI to the RRF regulation, by identifying intervention fields, and corresponding coefficients for the calculation of support to the climate objectives, for each measure (the table in Annex I presents the detailed application of the climate tagging methodology). It should be noted that: a) the tagging and the estimated expenditure of existing measures has not been modified, on this basis the assessment as reflected in the previous SWD (2021) 276 final is maintained for those measures. b) For the new measures of the modified plan: o when they consist of several sub-measures, the plan indicates an intervention field for each sub-measure, and climate tagging is computed at sub-measure level; o the choice of intervention fields for the green transition is well justified and reflects the nature, focus, objective, or expected outcome of the investments included in the component; 19  o the plan does not increase the climate coefficients of the selected intervention fields for any measure. *** Taking into consideration the assessment of all the measures envisaged, the modified recovery and resilience plan, including its REPowerEU chapter, is expected, to a large extent, to make a significant contribution to the green transition or to address the challenges resulting from it and ensures that at least 37% of its total allocation contributes to the climate target. At least 37% of the total estimated costs of the REPowerEU chapter contribute to the climate target. This would warrant a rating of A under criterion 2.5 of Annex V to the RRF Regulation. 3.6. Digital transition Despite the downwards adjustment of the financial contribution, the modification of the plan does not impact its ambition towards the digital transition, as well as the initial assessment. The modified RRP continues to significantly contribute to the digital transition, including by developing necessary infrastructure (building up connectivity, cloud and improving cybersecurity) both for businesses and public administration. The plan also has a sectorial approach for the digital transformation, focusing, inter alia, on deploying an e-Health and a telemedicine system, improving the digitalisation of public employment services and social protection, digitalising road and rail transport, as well as education (modernising computer laboratories in schools, provision of additional IT equipment, trainings), tax and tax administration processes, culture, the judiciary and services related to environment. In the original plan, all components contained measures that contributed to the digital transition. Following the revision, this continues to be the case. The newly added component 16 (REPowerEU) puts forward one reform and two sub-investments related to digitalisation of public authorities and software deployment and cybersecurity: (i) reform C16.R1 supporting the digitalisation of the State Domains Agency; (ii) sub-investment C16.5b, providing new digital solutions and equipment to SMART SA, a subsidiary of Transelectrica, to improve the efficacy and speed of intervention on the network; and sub-investment (iii) C16.5.c, concerning the optimisation of the communication network and creation of a data centre of Teletrans SA, another subsidiary of Transelectrica S.A., to limit the risk of cyber-attacks on Transelectrica’s IT infrastructure. The main impact of the revision concerns measures from components 1 (Water management), 7 (Digital transformation), 9 (Business support, research, development and innovation), 12 (Healthcare), and 15 (Education), with a decrease in the contribution to the digital target of EUR 204 million, which is less than proportional to the reduction of the financial allocation available to Romania. Hence, the contribution to the digital transition of the modified RRP (excluding the REPowerEU chapter) stands at 21.8% (EUR 5.8 billion) of Romania’s revised maximum contribution of EUR 28.5 billion, which is above the contribution of the original RRP and the required target of 20% set out in the RRF Regulation. In compliance with Article 21c(c) of the RRF Regulation, the above-mentioned reform and the two sub-investments included in the 20 REPowerEU chapter contributing to the digital transition have not been taken into account when calculating the plan’s contribution to the digital target. *** Taking into consideration the assessment of all the measures envisaged, the modified recovery and resilience plan is expected, to a large extent, to make a significant contribution to the digital transition or to address the challenges resulting from it and ensures that at least 20% of its total allocation (excluding the measures in the REPowerEU chapter) contributes to supporting digital objectives. This would warrant a rating of A under criterion 2.6 of Annex V to the RRF Regulation. 3.7. Lasting impact of the plan With the revised plan, the implementation of the envisaged reforms and investments is expected to stay on its course and deliver lasting structural changes. The RRP continues to address both the consequences of the COVID-19 pandemic and the main structural socio-economic and environmental challenges affecting Romania, pursuing cohesion objectives, and contributing towards all of the six pillars referred to in Article 3 of the RRF Regulation. The Romanian RRP includes reforms and investments with a lasting impact in all five key areas included in the plan – green economy, education, business environment, health, social inclusion, public administration, and digitalisation. The modifications to Romania’s recovery and resilience plan, based on Articles 18 and 21, include the reduction and deletion of certain milestones and targets. Overall, these changes do not have a material impact on the previous assessment regarding the lasting impact on structural changes in administration, institutions and in policies. Moreover, Romania’s newly-added REPowerEU chapter is expected to have a lasting impact by helping reduce fossil fuel consumption and greenhouse gas emissions and increase decarbonisation and the uptake of renewable energy and therefore shape Romanian energy policy beyond the lifespan of the RRP. *** Taking into consideration all reforms and investments envisaged by Romania in its modified recovery and resilience plan, their implementation is expected, to a large extent to bring about a structural change in to bring about a structural change in the administration, in relevant institutions and in relevant policies and to have a lasting impact. This would warrant a rating of A under criterion 2.7 of Annex V to the RRF Regulation. 3.8. Milestones, targets, monitoring and implementation Adequacy of the recovery and resilience plan’s implementation structure, arrangements for the monitoring of progress and reporting The modified RRP clearly describes the arrangements in place, which ensure its effective coordination and implementation. The Ministry of Investment and European Projects maintains its 21 role as national coordinator in charge with the overall implementation of the plan. Since the adoption of the plan, the ministry has reinforced the administrative capacity of its specialised structure, through an internal reorganisation and increasing the number of staff. The Ministry of Investment and European Projects has also kept its responsibility for the implementation, development and operation of the IT platform, which ensures compliance with the requirements laid down in Article 22(2)(d) of the RRF Regulation. The high-level coordination is ensured by the Inter-ministerial Committee for the Coordination of the Plan, working in close cooperation with the Ministry of Investment and European Projects. The monitoring and reporting mechanism is adequate and reliable. The Ministry of Investment and European Projects continues to be responsible for monitoring the progress achieved for each milestone and target, as well as for reporting on the achievement of milestones and targets based on the information provided by the implementing bodies. In this regard, the ministry has implemented an early warning mechanism, a three-layers IT system which facilitates an automated monitoring and reporting of progress made in achieving milestones and targets, while providing an early warning alert system which signals any risk of delays during implementation. The mechanism allows the transfer of information in real-time and at all levels of decision-makers. The ministry also remains responsible for preparing and submitting the payment requests to the European Commission. In this regard, it is responsible for the verification of the legality and regularity of expenditure and for ensuring the prevention, detection and correction of conflict of interest, fraud, corruption and double funding at the level of the plan together with the reform and investment coordinators. Quality of the new or modified milestones, targets and related indicators The new and revised milestones, targets and indicators set out in the Romanian RRP are sufficiently ambitious and clearly defined to enable their effective monitoring and reporting. All modified measures in the plan and the additional ones in the newly added REPowerEU chapter include an adequate number of milestones and targets, clearly defined to ensure that progress in implementing the plan can be robustly monitored. All measures in the revised RRP include milestones and targets consistent with the reforms or investments’ long-term objectives, cost estimates and implementation schedule, and are reflected in specific qualitative or quantitative indicators. Overall, milestones and targets remain sufficiently detailed, clear and ambitious to ensure that their completion can be reported and verified. Key reforms and investments in the revised plan maintain an adequate response to CSRs. Milestones and targets for reforms present an appropriate level of qualitative information to ensure that the achievement of their objectives can be measured at specific moments of the implementation. For investments, milestones and targets are measured by sound, reliable and verifiable quantitative indicators. Their sequencing is sufficiently regular, reflecting the complexity, progress and completion of implementation. Overall organisational arrangements While the initial implementation arrangements remain in place, the REPowerEU chapter will include several new implementing bodies, alongside others which already have a hands-on 22 experience with the RRP specificities. Considering the ambition of the plan, the implementation remains challenging and will need to be closely monitored. The institutional framework is maintained as already approved by Government Ordinance 155/2020, Government Emergency Ordinance 214/2021 and Government Emergency Ordinance 70/2022, as subsequently amended and supplemented. The professional experience of the staff involved in the implementation of the plan varies and covers areas such as European funds management, public procurement, audit and control. The administrative capacity of the national coordinator and of the implementing bodies has been reinforced with additional staff and through the support of technical assistance. Procedures are in place to ensure the adequate implementation of the plan. For most of the measures in the new chapter, the existing structures with responsibilities in implementing the plan will continue to fulfil the role of reform and/or investment coordinator, while for the new structures it will require support and training. *** The arrangements proposed by Romania in its modified recovery and resilience plan are expected to be adequate to ensure effective monitoring and implementation of the recovery and resilience plan, including the envisaged timetable, milestones and targets, and the related indicators. This would warrant a rating of A under the assessment c