COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Romania Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Romania and delivering a Council opinion on the 2022 Convergence Programme of Romania
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Romania, economic policy, economic recovery, economic reform, energy policy, fiscal policy, improvement of housing, renewable energy, stability pact, stability programme

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.5.2022  SWD(2022) 624 final  COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Romania Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Romania and delivering a Council opinion on the 2022 Convergence Programme of Romania {COM(2022) 624 final} - {SWD(2022) 640 final}  
 
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Romania is catching up despite 
some vulnerabilities  

Romania’s economy was catching up fast 
before  the  pandemic,  but  not  in  a  fully 
sustainable  way.  In  2019,  GDP  per  capita 
was  70%  of  the  EU  average  (see  Annex  15), 
up from 56.5% in 2015. Over the same period, 
the  real  growth  rate  was  more  than  double 
that  of the  EU  average. However,  growth  was 
demand-driven  and  boosted  by  expansionary 
fiscal policy, which resulted in growing current 
account 
and  macroeconomic 
imbalances.  

deficits 

Regional  disparities  remain  high,  driven 
by  labour  productivity,  investment  and 
employment  gaps  between  the  capital 
In  2018, 
and  the  rest  of  regions. 
productivity  was  below  the  EU  average  (at 
69%)  and 
it  varied  extensively  between 
regions,  from  133%  of the  EU  average in the 
Bucharest-Ilfov capital region to 39% in Nord-
Est, the least developed region of the country. 
The  less  developed  regions  lack  key  assets 
such  as  transport  infrastructure,  highly  skilled 
workers and have low levels of employment in 
high-technology sectors and R&D expenditure.  

In  2021,  economic  activity  recovered  the 
losses  of  the  COVID-19  crisis.  Real  GDP 
grew  at  5.9%  due 
to  strong  private 
consumption  (i.e.  household  spending)  and 
international 
investment.  Despite  weak 
demand for Romanian goods and services and 
supply  chain  disruptions,  exports  continued 
growing, though not as fast as imports and the 
further. 
current  account  deficit  widened 
Lockdown  measures  and 
inflation, 
rising 
especially rising energy prices, affected private 
consumption in the second half of 2021. 

Economic prospects are subdued. Due to a 
slowdown  in  late  2021  and  aggravated  by 

Russia’s invasion of Ukraine in 2022, real GDP 
is  projected  to  just  grow  above  2%  in  2022 
and  2023  (see  Graph  1.1),  mainly  supported 
by 
investments  from  several  EU  funds, 
including  the  Recovery  and  Resilience  Facility 
(RRF). Exports and imports are set to grow at a 
lower pace due to supply-side bottlenecks and 
shortages,  with  the  current  account  deficit  to 
remain broadly unchanged. 

Graph 1.1: GDP growth and demand-side 
components 

Source: European Commission  

to 

Prices  are  expected 
rise,  more 
markedly than before. After a mild increase 
in  2020,  the  inflation  rate  reached  4.1%  in 
2021  and  is  set  to  climb  higher  in  2022,  as 
high energy prices will affect other goods and 
services,  in  line  with  global  trends.  Stronger 
expected wage dynamics could feed-back into 
inflation.  The  government  has  adopted 
emergency  measures  to  cut  energy  bills  by 
capping  prices  and  reimbursing  suppliers  for 
the  difference  with  real  market  prices.  As 
reimbursements  take  long,  smaller  suppliers 
may face liquidity constraints. 

The  fiscal  deficit declined  somewhat,  but 
remains a concern. Past ad hoc pension and 
low  public 
wage 

increases  coupled  with 

2 

-8-6-4-2024681014151617181920212223Net exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
  
 
to 

fight 

increased 

recovery  and 

revenues (1)  (see  Annex  18),  led  to  large 
deficits  already  before  the  crisis.  In  2021  the 
deficit  was  7.1%  of  GDP,  down  from  9.3%  in 
2020.  Additional  spending 
the 
pandemic  and  offset  increases  in  energy 
prices  prevented  a  lower  deficit,  which  is 
projected to decline somewhat by 2023 due to 
growth 
revenue 
collection,  supported  by  the  recovery  and 
resilience plan (RRP). However, to go below 3% 
by  2024,  in  line  with  the  June  2021  Council 
recommendation,  will  remain  a  challenge 
large 
without 
structural  primary  deficit  set  for  2023,  the 
increasing  government  debt,  its  sensitivity  to 
macro-fiscal  shocks,  and 
the  uncertainty 
around  baseline  debt  projections  point  to 
substantial  and  moderate  fiscal  challenges 
over 
term 
respectively (2).  Fiscal  deficits  also  contributed 
to  a  negative  current  account  balance  and 
higher  public  debt,  with  costlier  financing. 
Romania  currently  has  the  highest  bond  yield 
spread  in  the  EU  and  its  debt  is  just  at 
investment-grade level.  

corrective  measures.  The 

the  medium 

long 

and 

The 
labour  market  performed  well 
despite  the  COVID-19  pandemic,  but  key 
challenges  remain.  The  employment  rate 
continued  to  grow,  from  65.2%  in  2020  to 
67.1%  in  2021  (see  Graph  1.2).  SURE (3) 
supporting  measures  are  also  a  contributing 
factor.  Still,  employment  rates  of  the  young 
and  older  people,  Roma, women  and  the  low-
skilled  remain  far  below  the  EU  averages, 
while the disability employment gap increased 
to  30.4pps.  The  gender  employment  gap  is 
high  and  has  been  widening  (see  Annex  12). 
The  unemployment 
to  5.6% in 
2021 (4),  down  from  6.1%  in  2020  but  is  still 
above  pre-crisis 
levels.  The  Commission’s 
2022  Spring  Forecast  estimates  that  it  will 
decrease  to  5.5%  in  2022  and  to  5.3%  in 
2023, on the back of a subdued growth.  

rate  fell 

(1)  Government revenues in Romania are less than 30% of 
GDP, compared with  and EU average of 40%. Property 
and capital are taxed at a low rate compared to labour. 

(2)  Fiscal Sustainability Report 2021. 

(3)  Council 

Implementing  Decision 

(EU)  2020/1355: 

http://data.europa.eu/eli/dec_impl/2020/1355/oj 

(4)  Eurostat  Labour  Force  Survey  main  indicators  adjusted 

series 

Graph 1.2: Activity, employment and 
unemployment rates 

Source: European Commission  

respectively. 

In  early  2021, 

Wage  growth  is  set  to  rebound  but 
poverty  and  in-work  poverty  remain  a 
challenge.  The  pandemic  caused  wage 
growth to level  out. Yet in 2021, nominal  and 
real  wage (5)  growth  rebounded  to  5.7%  and 
0.3% 
the 
government  raised  the  minimum  gross  salary 
to  RON 2 300  (EUR 466)  and  approved  an 
increase  to  RON 2 550  (EUR 515)  as  from 
January  2022.  On  the  other  hand,  public 
wages  were  frozen  in  2021,  after  increasing 
37.5% over the past 4 years. Stronger growth 
is forecast for 2022 in overall nominal wages 
of up to 8.3%, but due to high inflation is set 
to  be  negative  in  real  terms  -1.1%  (2022 
Spring Forecast). In-work poverty remains high, 
driven  by  occasional  or  part-time  work,  self-
employment  and  informality  (i.e.  undeclared 
work).  The  share  of  people  at  risk  of  poverty 
remains high (see Annex 12). 

Challenges persist in several areas 

long-
Romania’s  business  sector  has 
weaknesses. 
standing 
Insufficiently 
outdated 
transport  infrastructure  makes  it  difficult  to 
transport  merchandise  within  and  outside  the 

structural 
developed 

and 

(5)  Proxied  by  nominal  and 
compensation per employee. 

real 

(GDP  deflator) 

3 

012345678910455055606570752009Q12009Q42010Q32011Q22012Q12012Q42013Q32014Q22015Q12015Q42016Q32017Q22018Q12018Q42019Q32020Q22021Q12021Q4% of labour force% of populationUnemployment rate 15-74 (rhs)Activity rate 20-64Employment rate 20-64 
                                                 
  
 
                                                 
The  phasing  out  of  coal-fired  power 
production  requires  a  major  increase  in 
renewable  energy  production  capacity. 
The  Decarbonisation  Law  and  investments  to 
increase  the  renewable  energy  production  are 
essential.  Ensuring  a  just  transition  to  green 
energy sources should remain a priority for the 
affected  regions  and  communities.  Also,  any 
energy 
obstacles 
investments should be removed. 

solar  and  wind 

to 

Closing  illegal  and  substandard  landfills 
along  with  rehabilitation  measures  can 
protect  health  and  the  environment. 
Irregular  and  substandard  landfills  and  fly 
in  Romania  and  present 
tipping  operate 
serious  risks  for  human  health  and  the 
environment.  Landfills  also  lack  infrastructure 
capacities,  as  do  the  counties  where  they  are 
located. 

systems  are  not 

Significant  investments  and  reforms  in 
digital policy could close existing gaps. In 
the digital public administration various public 
IT 
interoperable;  e-
government  services  are  scarce  and  where 
they  exist  uptake 
low.  While  overall 
is 
broadband  connectivity  has  been  significantly 
improving  (see  Annex  8),  parts  of  the  country 
are  still  not  connected  to  fixed  very  high 
capacity  networks  broadband.  Basic  digital 
skills  are  lacking  and  the  number  of  ICT 
specialists  is  insufficient.  Finally,  Romanian 
enterprises  do  not  take  full  advantage  of 
digital 
such  as  electronic 
information sharing, social media, big data and 
cloud. 

technologies 

Romania  is  making  progress  on  most  of 
the  UN’s  Sustainable  Development  Goals 
(SDGs), but challenges remain. Poverty and 
deprivation  are  decreasing  and  basic  health 
outcomes  improving  (see  Annex  1).  Still,  poor 
quality  and 
in  research, 
low  expenditure 
development  and  innovation  (R&D&I)  affect 
industrial  capabilities.  Some  concerns  remain 
on the rule of law: the effectiveness of justice 
system 
for 
administrative cases – see Annex 11) and the 
perception  of 
remains  high. 
corruption 
Significant  progress  is  needed  on  3  SDGs: 
gender  equality,  quality  of  education  and 

is  deteriorating 

(especially 

public 

legislative 

administration 
framework 

country,  and  deepen  territorial  disparities. 
Excessive  red  tape  coupled  with  an  at  times 
and 
inefficient 
unpredictable 
(see 
Annex  11)  are  detrimental  to  the  business 
investment 
and 
environment 
opportunities, 
domestic 
especially 
companies.  There  is  significant  scope  for  the 
correct use of corporate governance principles 
in state-owned enterprises in key sectors such 
as  energy,  transport  and  local  public  utilities, 
as discretionary board appointments limit their 
efficiency and effectiveness.   

limit 

for 

Adverse  demographics  put  pressure  on 
the  labour  market  and  the  training  and 
education system. Current trends point to an 
8.8%  reduction  in  the  workforce  in  2030 
compared to  today (6).  This  will  require  higher 
productivity  levels  and  an  increase  in  the 
employment  rate,  notably  of  women,  Roma, 
young  and  older  people,  persons  with 
disabilities  and  those  with  a  low  educational 
attainment.  Still,  the  skills  of  the  workforce 
remain insufficiently aligned with the needs of 
the 
labour  market  Skills  shortages  and 
mismatches,  and  a  weak  education  and 
training  system  negatively  affect  prospects. 
The  capacity  of 
the  Public  Employment 
Services  to  provide  integrated  and  targeted 
support,  including  upskilling  and  reskilling, 
remains limited.  

Social  and  health  services 
remain 
insufficient, including access to long-term 
resources  and 
care.  Lack  of  human 
administrative  capacity  at 
level  are 
local 
among the factors affecting the availability of 
integrated  services  and  progress 
the 
deinstitutionalisation of adults with disabilities. 
The  deinstitutionalisation  process  for  children 
continues, as established, with the objective of 
being finalized as soon as possible. Disparities 
in access to healthcare are lingering, with 11% 
of  the  population  uninsured  and  an  uneven 
distribution  of  the  workforce  across  the 
country.  Home  care  coverage  is  among  the 
lowest in the EU (see Annex 12). 

in 

(6)  In 2021, population aged 15-64 numbered 12.5 million, 
and  it  is  set  to  decrease  to  10  million  by  2040 
(Assuming  as  baseline 
Eurostat’s  demographic 
projections). 

4 

 
                                                 
responsible  consumption  and  production,  as 
action has been limited in recent years. 

Russia’s invasion of Ukraine has 
clouded the economic outlook 

Russia’s  invasion  of  Ukraine  is  expected 
to negatively impact Romania’s economy. 
The direct negative effects of the invasion are 
likely  to  be  limited  due  to  Romania’s  small 
overall  trade  linkages  to  Russia  and  Ukraine. 
Nonetheless, 
could 
sizeable.  

indirect  effects 

the 

The  impact  on  energy  and  commodity 
prices  has  wider 
implications.  Given 
Russia’s and Ukraine’s importance as suppliers 
of  oil,  gas  and  commodities  (food  and  non-
food) in global markets, prices have increased 
significantly.  Romania  produces  the  majority 
of  its  gas  domestically  but  imports  almost 
20%  of  total  gas  consumption,  which  is 
heavily  dependent  on  a  Russian  pipeline  via 
Ukraine.  At  the  same  time,  Russian  crude  oil 
imports  are  the  primary  input  for  the  large 
refining 
re-exports 
finished  oil  products.  As  a  consequence, 
inflation is set to increase further, dampening 
private consumption in spite of the exceptional 
measures  to  cushion  households  and  SMEs 
from  the  impact  of  electricity  and  gas  bills 
that were introduced.  

industry,  which 

then 

Specific sectors are particularly exposed. 
Some important Romanian industries (such as 
automotive  and  machineries)  and 
the 
construction  sector  are  particularly  vulnerable 
to  energy  imports,  energy  price  movements 
and  raw  material  needs,  including  rubber, 
steel,  iron,  lumber  and  phosphate  rock,  a 
in  fertilizer  and  chemical 
primary 
industry.  

input 

is  hosting  a 

Romania  is  a  frontline  country  in  this 
humanitarian  and  geopolitical  crisis. 
Romania 
large  number  of 
displaced  persons  from  Ukraine,  although  the 
to  other  EU 
majority  eventually 
countries.  Addressing  their  needs  will  require 
the mobilisation of additional resources in the 
healthcare  and  social  systems,  which  came 

leave 

flexibilities  provided 

under  great  strain  during  the  pandemic,  but 
also  in  education.  In  the  medium  to  long  run, 
integration in the labour market of individuals 
deciding to stay in Romania could bring about 
an  increase  in  active  population  and  boost 
potential output. Romania will benefit from the 
exceptional 
the 
framework  of 
the  Cohesion’s  Action  for 
Refugees in Europe  (CARE)  initiative and from 
additional  pre-financing  under  the  Recovery 
Assistance  for  Cohesion  and  the  Territories  of 
Europe  (REACT-EU)  programme  to  urgently 
address  reception  and  integration  needs  for 
those  fleeing  Ukraine  as  a  result  of  the 
Russian invasion. 

in 

5 

 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

transition 

The  Romanian  recovery  and  resilience 
plan  (RRP)  includes  important  measures 
aimed at accelerating the twin green and 
digital 
reinforcing 
economic  and  social  resilience.  It  includes 
EUR 14.2 billion in grants and EUR 14.9 billion 
in  loans  to  support  the  implementation  by 
2026 of crucial reforms and investments (see 
Annex 2).  

and 

Green transition 

Romania’s  plan  will  contribute  to  the 
green transition. Reforms include regulatory 
changes  to  incentivise  zero-emission  road 
transport, improve  road safety  and encourage 
inland 
the  modal  shift  to  railways  and 
are 
Significant 
waterways. 
planned 
in  zero-emissions  and  upgraded 
railway  rolling  stock,  for  the  modernisation 
and  renewal  of  railway  infrastructure  and  for 
the development of the underground transport 
network in Bucharest and Cluj-Napoca. 

investments 

A strong boost to the energy efficiency of 
private  and  public  buildings  is  a  key 
priority  of  the  plan.  The  investments  to 
upgrade the current stock of both private and 
public  buildings  (including  historic  buildings) 
will  have  a  clear  impact  across  the  country. 
Building  renovations  will  be  carried  out  by 
local  authorities  and  aim  not  only  at  energy 
efficiency  improvements  but  also  at  seismic 
consolidation  works  where  needed.  Together 
with  the  setting-up  of  a  National  Digital 
Building  Register,  the  creation  of  certification 
programmes  and  a  pool  of  professionals  in 
energy  efficiency 
in  historic 
buildings will create major spill-over effects.  

renovations 

is 
The  deployment  of 
expected  to  increase  in  view  of  the 
country’s  commitment  to  phasing  out 

renewables 

6 

coal  and  lignite  power  production.  The 
plan  envisages  to  phase  out  coal  and  lignite-
fired  power  production  by  2032,  which  is 
crucial  for  the  decarbonisation  of  the  energy 
sector,  supporting  the  transition  to  green 
sources  of  energy  production  (see  Annex  5). 
The  Decarbonisation  Law  expected  by  June 
2022 will set  out  a concrete timeline for coal 
and  lignite  phase  out  across  the  country 
production  sites  and  commit  to  concrete 
targets 
production. 
Significant investments supported by the plan 
and  the  Just  Transition  Fund  will  help  to 
address the social and employment impact of 
the green transition (see Annex 6).   

energy 

green 

for 

Digitalisation of the public 
administration 

by 

lack 

The  plan  intends  to  modernise  the  public 
by 
addressing 
administration 
and 
of 
fragmentation 
interoperability, 
removing 
and 
unnecessary bureaucratic barriers. On the 
Digital  Economy  and  Society  Index,  Romania 
ranked  last  in  the  digital  public  services 
dimension  in  past  years  (see  Annex  8).  The 
plan puts forward an ambitious set of reforms 
and  investments  and  allocate  of  over  EUR  3 
billion to that end. It focuses on introducing an 
interoperability  law  and  on  developing  and 
implementing  a  unitary  framework  for  a 
government cloud system connecting up to 30 
public  institutions.  The  digitalisation  of  the 
public  administration  also  follows  a  sectorial 
approach  through  measures  related  to  e-
health,  digitalisation  of  the  justice  system, 
environment, 
social 
employment 
protection and the implementation of e-forms 
for  public  procurement.  The  rollout  of  the  e-
identification  scheme  for  a  large  part  of  the 
population will facilitate the public’s access to 
a range of electronic services.  

and 

 
 
 
and 

improving 

educational 
training, 
infrastructure.  Measures  will  also  support 
digital  skills  development  for  students  and 
teachers. 

The  plan  also  tackles  poverty  and 
inequality in Romania, which is among the 
highest in the EU, thereby contributing to 
implement  the  European  Pillar  of  Social 
Rights.  The  social  reforms  aim  to  support 
children,  persons  with  disabilities  and  older 
people  as  well  as  the  formalisation  of 
domestic work. The minimum inclusion income 
reform  intends  to  improve  the  efficiency  of 
social  assistance  benefits  by  extending 
coverage,  increasing  adequacy  and  improving 
the  incentives  to  take  up  employment.  The 
national  long-term-care  strategy  should  help 
address  the  needs  of  an  ageing  society.  The 
with 
deinstitutionalisation 
disabilities  should  accelerate  their  integration 
into  the  community.  The  plan  also  envisages 
establishing  a  new  mechanism  for  minimum-
wage  setting,  based  on  objective  criteria,  and 
the consultation of social partners. 

persons 

of 

Health resilience 

in 

The pandemic exposed the fragility of the 
healthcare  system.  The  plan  will  use  EUR 
2.85  billion  to  increase  health  coverage  and 
the  quality  of  health  services.  A  new  Agency 
for  the  Development  of  Health  Infrastructure 
(ANDIS)  should  oversee  the  construction  of 
and  manage  some  of  the  25  hospitals 
envisaged 
plan.  Marginalised 
communities  will  be  prioritised  and  many  of 
the  newly  built  or  renovated  family-doctor 
practices,  integrated  community  centres  and 
outpatient care units will be located in regions 
with  the  greatest  needs.  Through  the  plan, 
Romania will advance on the overdue upgrade 
of  the  national  health  infrastructure  to  help 
ensure  social  cohesion  and  an 
increased 
access to healthcare (see Annex 14). 

the 

Fiscal and pension reform 

The plan includes a comprehensive set of 
reforms  and  investments  to  address  key 
tax  challenges.  These  cover,  among  others, 
reforms  of  the  tax  administration,  the  tax 
system, the government budgetary framework, 
and an expenditure review to support Romania 
in  exiting  the  excessive  deficit  procedure  by 
2024.  

To  ensure 
fiscal  sustainability  and 
correct  inequities,  the  pension  system 
reform  is  a  central  element  of  the  plan. 
New  legislation,  entering  into  force  in  Q1 
2023, will adapt the current pension system to 
an  ageing  population  and  strengthen  the 
contributory  principle.  The  reform  will  reduce 
retirement,  provide 
possibilities  for  early 
incentives  for  postponing  retirement,  revise 
special pensions, and increase the adequacy of 
minimum  and  lower  pensions.  It  will  also 
introduce  a  new  calculation  formula  and 
indexation  rule  and  ensure  the  financial 
viability  of  Pillar  II  (i.e.  the  mandatory  private 
pension  scheme)  of  the  pension  system.  The 
new  legislation  will  help  maintain  total  gross 
public  pension  expenditure 
(including  all 
existing  public  pension  schemes)  stable  at 
9.4%  of  GDP  in  the  long  term  (2022-2070), 
incorporating  a  brake  mechanism 
if  the 
expenditure  cap  is  exceeded.  The  reform  will 
also  contribute  to  the  modernisation  of  the 
introducing  digital 
pension 
applications and services. 

system,  by 

Education and social policies 

The RRP will support education and skills 
development,  allocating  12.4%  of  the 
such  measures. 
to 
overall  budget 
Measures 
implementation  of 
the 
include 
various  reforms  outlined  in  the  Educated 
Romania  project,  which envisages  an  in-depth 
restructuring  of  the  education  and  training 
system  by  2030.  Other 
reforms  and 
investments  cover  early  childhood  education, 
reduction  of  early  school  leaving,  increasing 
the  quality  of  vocational  education  and 

7 

 
 
Public administration  

Research, development and 
innovation (R&D&I) 

to 

and 

plan 

aims 

increase 

The 
the 
independence,  quality  and  efficiency  of 
the 
justice  system,  as  well  as  the 
capacity,  transparency  and  effectiveness 
the  public  administration.  Better 
of 
coordination  and  monitoring  of  policy  and 
legislative  initiatives  at  the  central  level  will 
provide companies and individuals with a more 
regulatory 
coherent 
framework.  The  plan  aims  to  increase  the 
independence,  quality  and  efficiency  of  the 
justice  system  and  improve  its  ability  to 
investigate and prosecute corruption offences, 
which  is  crucial  to  safeguard  the  financial 
interests  of  the  EU.  The  public  procurement 
system  will  be  modernised.  Reforms  of  the 
state-owned 
corporate 
enterprises  will  increase  their profitability  and 
level the playing field.  

transparent 

governance 

of 

The  plan  envisages  several  measures  to 
improve the R&D&I system. It supports the 
integration  of  research  organisations  into  the 
European Research Area, and their capacity to 
access  European  funds  for  R&D&I,  as  well  as 
grant  schemes  aiming  at  attracting  and 
rewarding talent. It also provides a framework 
to  streamline  R&D&I  governance,  reform  the 
research  career,  and  enhance  cooperation 
between business and research. To that end, it 
asks  for  support  from  the2021-2022  Horizon 
Europe  Policy  Support  Facility  to  implement 
the 
forthcoming 
recommendations  by  the  2021-2022  Horizon 
Europe Policy Support Facility. 

implementation  of 

the 

Box 2.1:  Key deliverables under the recovery and resilience plan 2022-23 

  Decarbonisation law 

  Decommissioning of coal-fired power-production capacity  

  Adoption of the National Road Safety Strategy  

  Adoption of the 2021-2026 National Cybersecurity Strategy 

  Adoption of a new social dialogue law 

  Start of implementation of the national programme to reduce early school leaving 

  750  educational  establishments  with  high  risk  of  drop-out  will  receive  grants  to  support 

students transitioning from lower to upper secondary education 

  Establishment of the National Agency for Infrastructure Development in Health (ANDIS) 

8 

 
 
 
 
 
 
 
 
 
 
FURTHER PRIORITIES AHEAD 
FURTHER PRIORITIES AHEAD 

the 

fiscal 

innovativeness 

capacity.  Addressing 

Beyond  the  challenges  addressed  by  the 
RRP,  as  outlined  above,  Romania  faces 
additional  challenges  not  sufficiently 
covered in the plan. More effort is needed to 
enhance 
and 
competitiveness  of  the  private  sector  across 
regions,  tackle 
inequalities  and 
increasing 
extend  activation  measures,  and  strengthen 
these 
local 
challenges  will  also  help  to  make  further 
progress  in  achieving  the  SDG  related  to 
quality  education  (SDG 4),  gender  equality 
(SDG 5),  decent  work  and  economic  growth 
(SDG 8),  sustainable  development 
(SDG 9), 
reduced  inequalities  (SDG 10),  and  domestic 
capacity  for  tax  collection  (SDG 17)  (see 
Annex 1). EU funds can contribute significantly 
to  addressing  these  challenges,  but  strong 
administrative  capacity  will  be  needed  to 
ensure they are used effectively. 

Romania  needs  a  competitive  business 
environment.  The  main  ingredients  for  a 
successful  productive  system  are  there,  but 
they need to be integrate better. This requires 
fostering  interaction  between  foreign-owned 
enterprises  and  inward-oriented  companies, 
forging  partnerships  between  science  and 
industry, making markets for professions more 
competitive, and facilitating access to finance. 

Romania  struggles  with  innovation  and 
firms’  capacity  to  absorb  technology 
remains limited. Gross expenditure in R&D is 
the  lowest  in  the  EU  (see  Annex  9).  At 
company level, business expenditure in R&D is 
significantly lower than the average in the rest 
of the EU. Foreign-owned firms display higher 
capacity 
technologies, 
compared to their domestic peers. The relative 
number  of  tech  start-ups  and  high-growth 
tech enterprises (often drivers of innovation) is 
lower than in other Member States.  

to  adapt 

to  new 

Enhancing innovation capacity and 
competitiveness 

Productivity in Romania has been growing 
significantly, but there is ample scope for 
catching  up  with  the  rest of the  EU.  Over 
the  past  20  years,  labour  productivity  has 
been  increasing  more  than  in  the  rest  of  the 
EU  (7.6%  per  year,  on  average),  but  Romania 
is  still  lagging  behind  (see  Graph  3.1  and 
Annex 10). In particular SMEs, the backbone of 
the  economy,  have  an  average  productivity 
three times  lower  than the  EU  average.  While 
SMEs  benefiting  from  large  foreign  direct 
investments  are  more  sophisticated  and 
innovative  and  have  been  contributing  to  the 
country’s  productivity  growth,  those  without 
foreign support often remain undercapitalised, 
not well integrated in global  value chains and 
struggle  to  absorb  technology.  They  need  a 
different ecosystem to be able to thrive.  

Momentum for innovation is growing, but 
is  concentrated  in  a  few  regions.  The 
information  and  communications  technology 
sector is booming, but mostly in the Bucuresti-
Illfov,  West  and  the  North-West  regions. 
Innovation  hubs  are  emerging.  For  example, 
private  and  public  actors  in  the  North-East 
region, together with the regional development 
agency,  created  a  successful  community  of 
entrepreneurs  to  mentor  start-uppers  and 
nurture  entrepreneurship.  However, 
such 
initiatives  remain  sporadic  and  there  is  a lack 
of strategic vision for the start-up ecosystem. 
Finally,  outside  of  the  large  centres,  research 
institutes  are  gradually  losing  the  capacity 
(already  scarce) 
to  generate  policy-  or 
business-relevant research. 

9 

 
 
 
Graph 3.1: Productivity growth and gap in 
Romania 

Source: European Commission 

critical 

improve 

can  address 

though 
Science-industry  partnerships, 
can  help  narrow 
still  uncommon, 
innovation gaps. Through these partnerships, 
companies 
issues 
affecting  central  business  areas  and  core 
to 
technologies, 
advanced machinery and skilled scientists, and 
update 
their  management  practices  and 
capabilities.  However,  Romania  struggles  to 
forge such partnerships. There is little support 
for  entrepreneurial  activities  for  academics 
(funding 
limited)  and 
irregular  and 
companies often do not have innovation goals 
or strategies on how to achieve them.  

access 

their 

is 

Romania  already  uses  elements 
to 
facilitate  knowledge  transfer,  but  has  to 
complement  them.  Technology 
transfer 
entities  were  created  to  connect  researchers 
and  companies  interested  in  applying  the 
results  of  research  projects,  and  to  develop 
intellectual  properties  for  academic  staff. 
Despite a slight increase in funding for public-
private  partnerships  and  technology  transfer 
activities,  these  entities  remain  underfunded 
and seem to operate without a clear strategic 
direction.  Technology  transfer  offices  within 
universities  are  still  small,  their  personnel  is 
largely  not  trained  and  there  is  no  common 
structure 
their 
activities (7).  

to  coordinate  and  steer 

(7)  EC (2017) 

10 

targeted 

in  part  because  of 

transfer  and 
knowledge 
Successful 
research  output 
requires 
absorption 
closer 
industry  needs. 
to 
Research institutes cannot always provide that 
the  highly 
output, 
fragmented  research  landscape.  In  2018,  a 
majority  of  state  universities  had  less  than 
10 000  students  and  one-third  had  less  than 
5 000  students (8).  Universities  and  research 
centres  could  serve  business  communities 
more effectively if they explored synergies and 
pooled  resources,  without  breaking  their  ties 
with local industry.  

Competitive  firms  need  well-functioning 
markets  for  professional  services.  Some 
of  these  services  like  lawyers,  notaries  and 
accountants  are  essential 
to  day-to-day 
business  operations.  They  enable  companies 
(especially small ones) to outsource supporting 
tasks and focus on their core business, thereby 
increasing  productivity.  Open  and  competitive 
services markets with low barriers to entry are 
Romania’s 
therefore 
competitiveness. 

essential 

to 

and 

(one 

stringent 

Some  markets  for  professional  services 
remain highly restricted. Lawyers need two 
licences  to  operate 
issued  by  the 
professional  body  and  another  by  the  state 
authority) 
entry 
face 
requirements.  Their  conduct  (price  setting, 
advertising  and  interprofessional  cooperation) 
is also regulated more strictly than in most EU 
countries.  In  some  circumstances,  notaries 
have been colluding on their tariffs because of 
price controls (9). Accountants and tax advisors 
must  be  member  of  the  respective  chambers 
and  are  subject 
to  numerous  minimum 
education and training requirements, on top of 
the  mandatory  professional  exams.  The 
Romanian  Competition  Council 
is  actively 
encouraging the removal of excessive red tape 
to  markets  for  services  - 
and  barriers 
especially  notaries  and,  more 
recently, 
accountants.  

(8)  OECD-EC (2019) 

(9)  WB 

(2022)  and 

(2020),  OECD 

the  European 
Commission  Staff Working Document (SWD(2021)185) 
accompanying  the  Communication  on  taking  stock  of 
and  updating 
for 
reform 
regulation in professional services of 2017. 

recommendations 

the 

0%10%20%30%40%50%60%0100200300400500600Labour productivity in Romania as a share of labour productivity in EU top 20% performersLabour productivity normalised (2000=100)Romania relative labour productivity (RHS)Romania (LHS)EU27 (LHS) 
       
                                                 
                                                 
Reassessing  barriers  to  entry  could  be 
beneficial.  Identifying  requirements  that  can 
effectively  guarantee  a  minimum  quality 
standard,  while  scrapping  those  that  are 
support 
excessively  discriminatory, 
competition  and  benefit  consumers  –  and 
companies alike.  

could 

Poor  access  to  finance  is  another  crucial 
factor  undermining  the  competitiveness 
of Romanian companies. On the supply side, 
large banks dominate the financial sector and 
require  high  credit  standards.  On  the  demand 
side,  a  large  share  of  companies  is  either 
undercapitalised  or  has  an  equity  below  the 
regulatory  minimum.  Start-ups  often  face 
unstable revenue and collateral. Poor financial 
education  among  enterprises  (and  citizens)  is 
another  key  obstacle  to  the  development  of 
financial markets. As a consequence, financial 
low,  especially  for 
intermediation  remains 
domestic  companies 
in  non-metropolitan 
areas (10).  

Financial  intermediation  needs  to  adapt 
to  market  characteristics.  Incentives  to 
attract business angels, and private equity and 
venture  capital  funds,  which  are  currently  not 
widespread 
(see  Annex  10),  could  help 
diversify  the  financial  sector.  Microcredit, 
though  currently  scattered  and  fragmented, 
can  encourage  entrepreneurship,  especially  in 
remote  areas (11).  Finally, 
the  National 
Development Bank, to be set up under the RRP, 
is  expected  to  facilitate  access  to  finance  for 
SMEs  and  to  encourage  the  incubation  and 
acceleration of start-ups. 

Improving access to social 
services, including active labour 
market policies, and education for 
disadvantaged groups 

Certain  societal  groups  face  severe 
poverty.  Romania  has  one  of  the  highest 
shares  of  people  at  risk  of  poverty  or  social 

(10)  OECD (2022) 

(11)  OECD (2022) 

11 

the  EU  average.  For 

exclusion in the EU. The ratio between the top 
and  bottom  20%  of  the  income  distribution 
(S80/S20)  remains  among  the  highest  in  the 
EU  in  2020.  Disadvantaged  groups  such  as 
in 
undeclared  workers,  the  self-employed 
agriculture,  Roma,  persons  with  disabilities, 
older people and the homeless are among the 
worst  affected  and  are  facing  a  level  of  risk 
the  Roma 
above 
population in particular, initiatives for effective 
integration  into  the  labour  market  and  for 
effective  coverage  by  public  services  are 
limited.  Child  poverty  increased  from  40%  in 
2019  to  41.5%  in  2020  and  remains  among 
the  highest  in  the  EU.  Energy  poverty  of 
vulnerable  households  is  high  with  limited 
support  to  help  them  tackle  the  impact  of 
increased  energy  prices.  The  Romanian 
authorities adopted a legal framework for the 
protection  of  vulnerable  consumers  (Law  No 
226/2021) which brings additional support for 
those at risk due to the energy price increases. 
Tackling  these  challenges  is  key  for  Romania 
to  contribute  to  achieving  the  2030  EU 
headline target on poverty reduction. 

Access  to  essential  and  social  services 
insufficient,  with  significant 
remains 
rural-urban  and 
regional  disparities. 
Social  transfers  have  a  very  low  impact  on 
poverty reduction (15.8% in 2020 compared to 
the  EU  average  of  32.4%).  The  “minimum 
inclusion  income”  reform  under  the  RRP  to 
improve  the  efficiency  of  the  current  social 
assistance  benefits 
to  be 
is  expected 
progressively rolled out from 2022.  

services 

employment 

The  activation  measures  provided  by  the 
public 
(PES), 
re-skilling, 
upskilling  and 
including 
remain limited. The proportion of PES clients 
benefiting  from  training  is  declining,  as  are 
activity  rates.  The  overall  participation  in 
activation  measures 
the 
lowest in the EU. In 2019, only around 8% of 
the 
unemployed 
benefitted from activation measures and even 
less  benefited  from  trainings.  Support  for  the 
unemployed consists primarily of employment 
subsidies.  The  share  of  adults  participating  in 
learning activities, at 4.9% in 2021, is among 
the  lowest  in  the  EU,  and  only  28%  have  at 
least  basic  digital  skills  (compared  to  the  EU 

remains  among 

registered 

people 

as 

 
                                                 
in  2021).  Consequently, 
average  of  54% 
labour  shortages  and  skills  mismatches 
persist (12).  Targeted  measures  (e.g.,  upskilling 
and  reskilling)  are  clearly  needed,  including 
substantially increasing the capacity of PES to 
provide 
and 
integrated approaches. Cooperation with social 
partners  and  other  relevant  actors  is  crucial 
for delivering results. The quality and scope of 
social  dialogue  remains  limited  and  social 
partners  are 
in  defining 
involved 
reforms or policy developments. 

individualised 

pathways 

rarely 

and 

points 

among 

backgrounds, 

Educational outcomes are low overall, but 
particularly 
disadvantaged 
groups. Lack of basic skills, measured by the 
PISA  test,  is  high  across  the  board,  even 
among  students  from  advantaged  socio-
economic 
to 
structural challenges hampering the quality of 
education.  Still,  the  gap  in  low  achievement 
between  students  from  the  upper  and  the 
lower  socio-economic  quartile  is  one  of  the 
widest in the EU (see Graph 3.2), suggesting a 
strong  connection  between  socio-economic 
status 
outcomes. 
Furthermore,  disadvantaged  students  tend  to 
concentrate  in  certain  schools,  leading  to 
segregation. More than 50% of Roma children 
aged  6-15  attend  schools  where  the  majority 
of  students  are  Roma (13).  Socio-economic 
status  also  affects  students’  expectations  of 
their  future achievements (14).  Measures  to 
improve  equity 
in  education  and  provide 
support  services  to  disadvantaged  students 
remain weak.   

educational 

and 

Rural-urban  disparities 
in  education 
persist. More than 40% of Romania’s primary 
and  lower  secondary-aged  children  attend 
schools  in  rural  areas,  which  have  lower 
educational  outcomes. 
In  2021,  37%  of 
eighth-graders  from  schools  in  rural  areas 
who sat the national evaluation did not obtain 

(12)  Approximately 36% of workers do not work in the field 
of  their  studies,  leading  the  EU  mismatch  (EU  average 
28.6%).  

(13)  Roma  Survey 2021, EU Agency for Fundamental rights 

(Forthcoming) 

(14)  Among 15 year-olds sitting the PISA test in 2018, only 
33%  in  the  poorest  quartile  expect  to  pursue  higher 
education, 
to  87.3%  among  more 
compared 
advantaged students.  

12 

The 

the  minimum  pass  mark  (11%  in  urban 
schools). 
educational 
state 
infrastructure  in  rural  areas  is  worse  than  in 
urban 
buildings, 
laboratories, and internet connections.  

including 

settings, 

of 

Graph 3.2: Low achievement in reading by 
socioeconomic status 

Source: European Commission 

Disparities  in  access  to  good  quality 
education  have  widened  during  the 
pandemic. Romania is experiencing one of the 
highest rates of early school leaving in the EU 
(15.3%  in  2021,  compared  to  an  EU  average 
of  9.7%).  Between  2020  and  2021,  the  rate 
has  remained  relatively  stable.  However,  the 
effects  of  the  COVID-19  crisis  could  worsen 
the  risk  of  early  school  leaving,  which  is 
already  particularly  affecting 
those  from 
disadvantaged  groups,  including  Roma  and 
those  in  rural  areas.  The  crisis  therefore 
creates  further  risks  to  educational  outcomes 
and  inequalities,  due  to  the  extended  school 
closures and the difficulties for many students 
to  access  and  effectively  engage  in  remote 
learning, particularly disadvantaged groups.  

Teachers  continue  to  face  considerable 
challenges. While some important steps have 
already been taken to strengthen the teaching 
profession, 
initial  and  continuous  teacher 
education  is  not  sufficiently  aligned  with 
classroom 
supporting 
improvements  on  practical-experience  is  still 
largely  needed.  Attracting  highly  qualified 
to 
support 
teachers 
disadvantaged 
remains  a 
challenge. 

schools  also 

specialists 

needs, 

and 

and 

0%10%20%30%40%50%60%70%EU27ROStudents in the top socioeconomic quartileAll studentsStudents in the bottom socioeconomic quartile 
                                                 
   
Improving quality and equity in education 
remains  as  a  challenge.  Romania  is  still 
among  the  worst  performers  in  the  EU  in 
meeting  the  targets  set  out  in  the  European 
(see 
Education  Area  strategic  framework 
Annex  13).  Further  measures  are  therefore 
needed  to  address  some  of  the  serious  and 
longstanding  challenges 
the  country’s 
education sector. 

in 

Strengthening local capacity 

Local authorities in Romania have limited 
own  resources.  Since  1990,  the  central 
government  has  decentralised  responsibilities 
to  local  governments  providing  them  with 
sources  of  revenues,  which  remain  very  low 
States. 
compared 
Subnational  expenditure  needs  are  covered 
disproportionally 
earmarked 
transfers  from  the  central  government  (See 
Graph 3.3). The scope of their use is therefore 
limited  and  outside 
local  administrations’ 
control (15).  

other  Member 

usually 

by 

to 

Graph 3.3: Subnational revenues by source 

Source: European Commission 

This fiscal set-up does not empower local 
authorities.  In  fact,  it  makes  them  act  like 
spending  agents  on  behalf  of  the  central 
government, 
independent 
administrative  units.  Local  direct  investments 
as  a  share  of  subnational  expenditure  is  one 

rather 

than 

(15)  SNG-WOFI (2018) 

13 

results 

of the highest in the EU, but is mostly financed 
through the transferred state budget. Absence 
of  ownership,  coupled  with  management 
deficiencies,  eventually 
into  poor 
quality local services and infrastructure. At the 
same  time,  the  unpredictable  distribution  of 
equalisation 
local 
authorities’  capacity  to  plan  ahead.  Providing 
tax 
local  authorities  with 
instruments  and  tax  base  could  enhance 
accountability  and  ownership  at  local  level, 
improving public services. 

undermines 

grants 

their 

own 

The  completion  of  the  cadastre  would 
broaden  the  property  tax  base  and 
increase  local  authorities’  own  revenues. 
Around  42%  of  real  estate  properties  in 
Romania  are  registered  in  the  integrated  IT 
system for the cadastre and land book. Taxes 
on buildings and on land  are the main source 
of  own  resources  for  local  authorities,  which 
enjoy  some  discretion  in  setting  rates  within 
an  allowable  range  set  out  in  the  tax  code. 
Revenues from property tax remain small (see 
Annex  18).  This  is  partly  due  to the  weak  link 
between 
immovable 
taxes  on 
recurrent 
property and housing values (16). 

Energy-related challenges due to 
the geopolitical situation should 
encourage European security of 
supply 

Given  the  current  geopolitical  situation, 
Romania faces energy-related challenges. 
Fossil fuels still make up a large share of the 
energy  mix  (70%  of  the  energy  mix,  and  oil 
and  natural  gas  accounts  for  nearly  60%), 
while  the  share  of  renewable  power  remains 
limited  (20%).  Romania  is  the  second  largest 
gas  producer  in  the  EU,  serving  mostly  the 
domestic  market,  but  still  imports  gas  from 
Russia during winter times. According to 2020 
data, Russian imports of natural gas was 45% 
of  total  gas imports  for  Romania. (17)  In  order 

(16)  OECD (2022) 

(17)  Eurostat  (2020),  share  of  Russian  imports  over  total 
imports  of  natural  gas.  Total  imports  include  intra-EU 
trade. 

0102030405060708090Grants &subsidiesTax revenueTariffs & feesPropertyincomeShare of subnational revneues, by main sourceRomaniaEU27 
       
                                                 
                                                 
country’s building stock. A better management 
of  energy  consumption  of  fossil  fuel  units  in 
industry and heating system can foster further 
energy  consumption  savings,  benefitting  both 
citizens and companies alike. 

Research and innovation will be essential 
for  the  energy  transition.  Beyond  the 
uptake  of  existing  technologies,  research  and 
innovation  is  critical  for  delivering  novel  and 
disruptive  renewable  energy  technologies  and 
energy  storage  solutions  to  underpin  the 
financial  allocations, 
transition.  Suitable 
coupled  with  clearly  articulated  research  and 
innovation  objectives  and  funding  targets  are 
instrumental. 

to  reduce  dependency  on  fossil  fuels  and  to 
ensure a stable gas supply, Romania needs to 
further  diversify  its  energy  mix,  improve  its 
energy efficiency and increase interconnection 
capacity.  Moreover,  off-shore  gas  discoveries 
in  the  Black  Sea  could  reduce  Romania’s 
dependency on Russian natural  gas and allow 
the  country  to  challenge  Russia’s  dominance 
of the regional energy market with exports. In 
addition, Romania is planning to further invest 
in nuclear power. 

Romania  has  committed  to  phase  out 
most of its coal-fired generation capacity 
(85%)  by  2025  and  to  fully  phasing  out 
coal  by  2032.  To  achieve  this  ambitious 
target,  the  RRF  and  other  EU  funds,  such  as 
the  Modernisation  Fund,  include  significant 
decarbonisation investments in the installation 
of  new  renewable  energy  capacity.  However, 
the  green  transition  and  the  steep  forecasted 
increase  in  energy  consumption  will  require 
significant  upgrades  in  energy  transmission 
networks  and  speeding  up  the  deployment  of 
green infrastructure investment. Infrastructure 
to  ensure  security  of  supply  is  of  utmost 
importance. To further support the climate and 
energy  transition,  other  sources  of  funding 
could be used such as the EU ETS revenues. 

an 

has 

Romania 
electricity 
interconnection capacity lower than 10%, 
which  could  be  increased  via  projects 
with neighbouring countries. To increase its 
renewable  energy  share,  the  country’s  RRP 
includes  significant  investments  and  major 
reform projects that will take some years to be 
fully  implemented  as  well  as  new  projects  to 
support the production of hydrogen. Regarding 
imports  come  via  Ukraine. 
gas,  Russian 
Romania  is  connected  to  other  countries,  for 
example  Hungary  and  Bulgaria,  but  no 
alternative routes or LNG exists for now. 

The  old  building  stock  requires  energy 
increase  energy 
renovation  works  to 
focus  on 
should 
efficiency.  Measures 
substantially  increasing  energy  performance 
so  as  to  rapidly  lower  energy  demand.  While 
the Romanian RRP envisages the renovation of 
2.4 million m2 and 4.4 million m2 for public and 
residential  buildings,  respectively,  this  surface 
area  only  accounts  for  a  fraction  of  the 

14 

 
KEY FINDINGS 
KEY FINDINGS 

Romania’s  recovery  and  resilience  plan 
includes measures to address a series of 
structural challenges through: 

  Reforms  aimed  at  boosting  tax  collection, 
improving  public  expenditure  management 
and  increasing  fiscal  sustainability  of  the 
public  pension  system,  while  increasing  its 
fairness. 

  Promotion  of  zero-emission  road  transport 
and  modal  shift  to  more  sustainable 
transport  modes,  such  as  railways  and 
inland  waterways;  modernisation  and 
renewal  of  railways 
infrastructure  and 
support  to  public  transport,  to  improve 
sustainability and air quality. 

  Commitment to phase out coal and lignite-
fired  power  production  by  2032  and  to 
concrete  targets  for  renewable  energy 
production. 

  Digitalisation  of  public  administration  and 
public  services,  including  the  creation  of  a 
government cloud. 

  Reform  of  the  pension  system  and  of  the 

minimum wage. 

Beyond  the  reforms  and  investments  in 
the RRP, Romania would benefit from: 

  Making 

services 

the  market  of 

to 
businesses  more  open  and  competitive. 
Remove unnecessary regulatory barriers to 
access 
notably 
notaries, architects and accountants. 

professions, 

certain 

  Improving 

the 

relationship 

between 
scientific  research  and  the  industry  by 
creating 
and 
development partnerships. 

appropriate 

research 

  Addressing 

the 

in 
access  to  social  services,  in  particular  in 
rural areas. 

regional  disparities 

  Improving 

effective 

the  situation  of  vulnerable 
groups  by  enhancing  skills  and  providing 
more 
activation  measures, 
including  by  significantly  strengthening  the 
capacity of the Public Employment Services 
to provide targeted and integrated support. 
Increase attractiveness of professional and 
adult training. Fostering equal opportunities 
in  the  education  system  by  enhancing  the 
quality  and  inclusiveness,  in  particular  for 
Roma  of  both  early  childhood  education 
and 
the 
the  school  system.  Reduce 
imbalance  of  schooling  quality  between 
urban and rural areas.  

  Putting  an  end  to  the  excessive  deficit 
situation  by  2024  at  the  latest,  by  means 
of  a  budgetary  consolidation  with  the 
objective  to  secure  a  lasting  correction  on 
the  excessive  deficit,  while  being  geared 
towards enhancing the quality of the public 
finances  and 
the  growth 
reinforcing 
potential of the economy. 

  Reduce  overall  reliance  on  fossil  fuels  and 
diversify  imports  of  fossil  fuels,  speed  up 
the  deployment  of  green  infrastructure 
investment,  upgrade  energy  transmission 
in 
grids, 
interconnection with neighbouring countries 
to increase security of supply and increase 
pace  and  ambition  of  renovations  to 
advance energy efficiency of building stock 
and decarbonisation of industry. 

investment 

frontload 

15 

 
 
 
ANNEXES 

 
 
 
LIST OF ANNEXES 

Cross-cutting progress indicators 

Annex 1: Sustainable Development Goals 

Annex 2: Recovery and Resilience Plan - implementation 

Annex 3: Other EU instruments for recovery and growth 

Annex 4: Progress in the implementation of country-specific recommendations 

Environmental sustainability 

Annex 5: Green Deal 

Annex 6: Employment and social impact of the green transition 

Productivity 

Annex 7: Resource efficiency and productivity 

Annex 8: Digital transition 

Annex 9: Innovation 

Annex 10: Industry and single market 

Annex 11: Public administration 

Fairness 

Annex 12: Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

Annex 13: Education and skills 

Annex 14: Health and health systems 

Annex 15: Economic and social performance at regional level 

Macroeconomic stability 

Annex 16: Key financial sector developments 

Annex 17: Macroeconomic Imbalance Procedure assessment matrix 

Annex 18: Taxation 

Annex 19: Key economic and financial indicators 

Annex 20: Debt sustainability analysis 

References 

LIST OF TABLES 

Table A2.1: 
Table A4.1: 
Table A5.1: 
Table A7.1: 

Key elements of the Romanian RRP 
Summary table on 2019, 2020 and 2021 CSRs 
Indicators underpinning progress on the European Green Deal from a macroeconomic perspective 
Selected resource efficiency indicators 

19 

21 

21 

23 

24 

26 

29 

29 

33 

36 

36 

38 

40 

42 

44 

46 

46 

48 

50 

52 

54 

54 

56 

58 

60 

61 

63 

23 
27 
32 
37 

 
 
 
Table A8.1: 
Table A9.1: 
Table A10.1: 
Table A11.1: 
Table A13.1: 
Table A14.1: 
Table A15.1: 
Table A16.1: 
Table A17.1: 
Table A18.1: 
Table A19.1: 
Table A20.1: 
Table A20.2: 

Key Digital Economy and Society Index Indicators 
Key research, development and innovation indicators 
Key Single Market and Industry Indicators 
Public administration indicators – Romania 
EU-level targets and other contextual indicators under the European Education Area strategic framework 
Key health indicators 
Selected indicators at regional level – Romania 
Financial soundness indicators 
Assessment of Macroeconomic Imbalances matrix 
Taxation indicators 
Key economic and financial indicators 
Debt sustainability analysis for Romania 
Heat map of fiscal sustainability risks for Romania 

LIST OF GRAPHS 

Graph A1.1: 

Progress towards SDGs in Romania in the last five years 

Graph A2.1: 

Share of RRF funds contributing to each policy pillar 

Graph A3.1: 

ESIF 2014-2020 Total budget by fund (EUR billion, % of total) 

Graph A3.2: 

Cohesion policy contribution to the SDGs (EUR billion) 

Graph A4.1: 

Romania’s progress on the 2019-2020 CSRs (2022 European Semester cycle) 

Graph A5.1: 

Fiscal aspects of the green transition Taxation and government expenditure on environmental protection 

Graph A5.2: 

Share in energy mix (solids, oil, gas, nuclear, renewables) 

Graph A5.3: 

Terrestrial protected areas and organic farming 

Graph A5.4: 

Mobility Share of zero emission vehicles 

Graph A6.1: 

Fair green transition challenges 

Graph A6.2: 

Energy poverty by income decile 

Graph A7.1: 

Circular economy: economic importance and expansion 

Graph A11.1: 

E-government benchmark scores (lhs) and e-government users (rhs) 

Graph A11.2: 

Performance on the single market public procurement indicator 

Graph A14.1: 

Life expectancy at birth, years 

Graph A14.2: 

Projected increase in public expenditure on health care over 2019-2070 (AWG reference scenario) 

Graph A15.1: 

Real GVA per worker 

Graph A15.2: 

Territories most affected by climate transition – Romania 

Graph A18.1: 

Tax wedge indicators (2021) 

39 
41 
43 
45 
49 
51 
53 
54 
57 
59 
60 
61 
62 

22 

23 

24 

25 

26 

29 

30 

30 

31 

33 

34 

36 

44 

44 

50 

50 

52 

53 

58 

20 

 
 
 
 
CROSS-CUTTING PROGRESS INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

concerning as women’s participation in the labour 
market  remains  low:  the  gender  employment  gap 
increased  from  17.7  pps  to  19.3  pps  between 
2015 and 2020 while it remained stable at around 
11 pps during the same period in the EU. Romania 
also needs to catch up on the quality of education 
as  participation 
in  early  childhood  education 
decreased  by  6.6%  between  2014  and  2019 
(against a stable EU trend). Measures in the RRP to 
digitalise  education  and  a  system  of  grants  to 
reduce the drop-out rate will help to address these 
challenges. 

its 

Romania  is  improving  on  some  indicators 
related  to  productivity  (SDGs  8  and  9)  but 
needs to catch up on others (SDG 4). Romania 
has  performed  well,  halving 
long-term 
unemployment  rate  between  2015  and  2020 
bringing it to below the EU average in 2020 (1.5% 
vs  2.4%).  However,  it  also  shows  low  and  stable 
public  expenditure  on  R&D  (0.47%  in  2020  vs  an 
EU  average  of  2.32%)  which  affects  industrial 
capabilities  and  its  patent  production.  Tertiary 
educational  achievement  (at  24.9%  in  2020)  is 
also declining in contrast with the general  growth 
in  the  EU  over  the  past  5  years.  To  address 
challenges linked to productivity, the RRP plans to 
upgrade  and  digitalise  university  infrastructure, 
giving  grants  for  IT  laboratories  and  smart  hubs 
and developing open educational resources. 

Romania  is  improving  on  SDG  indicators 
related  to  growth  and  employment  (SDG  8) 
but weaknesses on rule of law and corruption 
perception persist (SDG 16). GDP per capita has 
progressed somewhat faster than the EU average 
(by  21%  vs  1.7%),  as  has  the  employment  rate. 
The  situation  is  mixed  regarding  institutions  and 
there are continued concerns about respect for the 
rule  of  law.  The  percentage  of  the  population 
reporting crime or violence fell by a third between 
2015 and 2020 and at 8.8% and is lower than the 
EU average (11% in 2021). The RRP is expected to 
increase  the  effectiveness  of  the  judicial  system 
and the fight against corruption and to contribute 
to improving trust in public administration. 

This  annex  assesses  Romania’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  four  dimensions  of  competitive 
sustainability.  The  17  SDGs  and  their  related 
indicators  provide  a  policy  framework  under  the 
UN’s  2030  Agenda  for  Sustainable  Development. 
The  aim  is  to  end  all  forms  of  poverty,  fight 
inequalities  and  tackle  climate  change,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
The  graph below (18)  is  based  on  the  EU  SDG 
indicator  set,  developed  to  monitor  progress  on 
SDGs in an EU context. 

While  Romania  performs  very  well  or  is 
improving  on  several  SDG  indicators  related 
to  environmental  sustainability    (SDGs  2,  9, 
6,  11,  12,  13  and  15),  it  still  needs  to  catch 
up (SDG 12) or to maintain its progress (SDG 
7)  on  others.  On  responsible  consumption  and 
production,  Romania  has  been  performing  poorly. 
Its circular material use rate is declining while the 
EU as a whole has progressed substantially (1.3% 
vs12.8% in in 2020). The material footprint of the 
Romanian 
significantly 
economy  has  also 
increased  (almost  by  a  third)  since  2015  while  it 
remained  stable  in  the  EU.  Performance  on  other 
indicators linked to climate action, life on land and 
the  sustainability  of  cities  and  communities  has 
been  more  positive.  The  RRP  will  further  help 
Romania to address its current challenges notably 
with  strong  reforms  to  support  the  circular 
economy  and  improve  waste  management  but 
also  with  flagship  reforms  on  the  phasing  out  of 
coal and the decarbonisation of road transport. 

While  Romania  is  improving  on  most  SDG 
indicators related to fairness (SDGs 1, 2, 3, 8 
and  10),  it  still  needs  to  catch  up  on  others 
(SDGs  4  and  5).  Poverty  and  deprivation 
decreased and basic health outcomes improved in 
general  between  2015  and  2020.  However, 
Romania’s  track  record  on  gender  equality  is 

(18)  For  detailed  datasets  on  the  various  SDGs  see  the  annual 
ESTAT  report  ‘Sustainable  development  in  the  European 
Union’, https://ec.europa.eu/eurostat/web/products-statistical-
books/-/KS-03-21-096;  Extensive  country  specific  data  on 
the  short-term  progress  of  Member  States  can  be  found 
here:  https://ec.europa.eu/eurostat/product?code=KS-09-22-
019. 

21 

 
 
                                                 
 
 
 
 
Graph A1.1: Progress towards SDGs in Romania in the last five years 

For detailed datasets on the various SDGs see the annual ESTAT report ‘Sustainable development in the European Union’, 
https://ec.europa.eu/eurostat/web/products-statistical-books/-/KS-03-21-096; Extensive country specific data on the short-term 
progress of Member States can be found here: Key findings - Sustainable development indicators - Eurostat (europa.eu) 
Source:   Eurostat, latest update of 28 April 2022. Data mainly refer to 2015-2020 and 2016-2021. 

22 

-120.00-100.00-80.00-60.00-40.00-20.000.0020.001234567891011121314151617Chart Title 
 
 
   
ANNEX 2: RECOVERY AND RESILIENCE PLAN - IMPLEMENTATION 
ANNEX 2: RECOVERY AND RESILIENCE PLAN - IMPLEMENTATION 

positive 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the  centrepiece  of  the  EU’s  efforts  to 
support  its  recovery  from  the  COVID-19 
pandemic,  fast  forward  the  twin  transition 
and  strengthen  resilience  against  future 
shocks.  Romania  submitted  its  recovery  and 
resilience  plan  (RRP)  on  31  May  2021.  The 
Commission’s 
on  28 
September 2021 and the Council’s approval on 29 
October  2021  paved  the  way  for  disbursing  EUR 
14.2 billion in grants and EUR 14.9 billion in loans 
under  the  RRF  in  2021-2026.  The  financing  and 
the loan agreements were signed on 25 November 
2021  and  15  December  2021  respectively.  The 
key elements of the Romanian RRP are set  out  in 
Table  A2.1.  The  share  of  funds  contributing  to 
each  of  the  RRF’s  six  policy  pillars  is  outlined  in 
graph A2.1. 

assessment 

Table A2.1: Key elements of the Romanian RRP 

(1) See Pfeiffer P., Varga J. and in ’t Veld J. (2021), 
“Quantifying Spillovers of NGEU investment”, European 
Economy Discussion Papers, No. 144 and Afman et al. (2021), 
“An overview of the economics of the Recovery and Resilience 
Facility”, Quarterly Report on the Euro Area (QREA), Vol. 20, 
No. 3 pp. 7-16. 
Source: European Commission 2022. 

Graph A2.1: Share of RRF funds contributing to each policy pillar 

(1)  Each measure contributes towards two policy areas of the six pillars, therefore the total contribution to all pillars displayed on 
this chart amounts to 200% of the estimated cost of the 22 RRPs approved in 2021. The bottom part represents the amount of 
the primary pillar, the top part the amount of the secondary pillar. 
Source:  RRF Scoreboard 
https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/country_overview.html  

23 

Total allocation EUR14.2billioningrants(6.5%of2019GDP)and EUR 14.9 billion in loansInvestmentsandReforms 122 investments and 64 reforms TotalnumberofMilestones and Targets507Estimatedmacroeconomic impact (1) RaiseGDPby1.8%-2.9%by2026(0.2%inspillover effects)Pre-financing disbursed EUR1.8billioningrants(December2021)andEUR 1.9 billion in loans (January 2022)First instalment Romaniadidnotyetsubmitafirstpaymentrequest0%10%20%30%40%50%60%70%Green transitionDigital transformationSmart, sustainable andinclusive growthSocial and territorialcohesionHealth, and economic,social and institutionalresiliencePolicies for the nextgeneration 
 
 
 
 
 
 
 
 
  
   
 
 
 
   
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The EU’s budget of more than EUR 1.2 trillion 
for  2021-2027  is  the  investment  lever  to 
help  implement  EU  priorities.  Underpinned  by 
an  additional  amount  of  about  EUR  800  billion 
largest 
through  NextGenerationEU  and 
instrument, the Recovery and Resilience Facility, it 
represents  significant  firepower  to  support  the 
recovery and sustainable growth. 

its 

funds 

support 

partnership 

agreements 

In  2021-2027,  EU  cohesion  policy  funds (19) 
will 
development 
long-term 
objectives in Romania by investing EUR 32.45 
billion (20), including EUR 2,139.7 million from the 
Just  Transition  Fund  to  alleviate  the  socio-
economic  impacts  of  the  green  transition  in  the 
most vulnerable regions. The 2021-2027 cohesion 
and 
policy 
programmes  take  into  account  the  2019-2020 
country-specific recommendations and investment 
guidance  provided  as  part  of  the  European 
and 
Semester, 
complementarities  with  other  EU  funding. 
In 
addition,  Romania  will  benefit  from  EUR  15.1 
billion  support  for  the  2023-27  period  from  the 
Common Agricultural Policy, which supports social, 
environmental,  and  economic  sustainability  and 
innovation 
rural  areas, 
contributing  to  the  European  Green  Deal,  and 
ensuring long-term food security. 

in  agriculture  and 

synergies 

ensuring 

In  2014-2020,  the  European  Structural  and 
Investment  Funds  for  Romania  are  set  to 
invest  EUR  34.76  billion (21)  from  the  EU 
budget.  The  total  investment  including  national 
financing  amounts  to  EUR  40.97  billion  (Graph 
A3.1),  representing  around  3.09%  of  GDP  for 
2014-2020  and  58.03%  of  public  investment (22). 
By  31  December  2021,  128%  of  the  total  was 
allocated  to  specific  projects  and  54%  was 
reported as spent, leaving EUR 18.76 billion to be 

(19)  European  Regional  Development  Fund  (ERDF),  European 
Social Fund+ (ESF+), Cohesion Fund (CF), Just Transition Fund 
(JTF), Interreg. 

(20) Current prices, source: Cohesion Open Data  

(21)  ESIF includes cohesion policy funds (ERDF, ESF+, CF, Interreg) 
and  European  Agricultural  Fund  for  Rural  Development 
(EAFRD)  and  European  Maritime  and  Fisheries  Fund  (EMFF). 
According  to  the  ‘N+3  rule’,  the  funds  committed  for  the 
years 2014-2020 must be spent by 2023 at latest (by 2025 
for  EAFRD).  Data  source:  Cohesion  Open  data  ,  cut-off  date 
31.12.2021  for  ERDF,  ESF+,  CF,  Interreg;  cut-off  date 
31.12.2020 for EAFRD and EMFF. 

sustainable 

spent by the end of 2023 (23). Of the 11 objectives 
the most relevant ones for cohesion policy funding 
in Romania are network infrastructure in transport 
and  energy,  environment  protection  and  resource 
efficiency, 
and 
quality employment and  social  inclusion  and  low 
carbon economy (in total EUR 19.05 billion). By the 
end  of  2020,  cohesion  policy  investments  had 
supported  to  more  than  4  500  firms  and  helped 
improve  the  water  supply  of  more  than  300 000 
people  and  the  energy  efficiency  of  more  than 
33 000  households.  European  Social  Fund  (ESF) 
policy  investments  supported  more  than  120 000 
unemployed and inactive people, provided 56 000 
vulnerable  people  with  integrated  services  and 
480 000  people  benefited 
from  preventive 
healthcare services and trained more than 41 000 
teachers,  in  particular  to  address  the  needs  of 
vulnerable  groups.  In  addition,  more  than  17 
million 
food  and  hygiene  packages  were 
distributed to socially vulnerable people. 

Graph A3.1: ESIF 2014-2020 Total budget by fund 
(EUR billion, % of total) 

(1) ESIF includes cohesion policy funds (ERDF, ESF+, CF, 
Interreg), the European Agricultural Fund for Rural 
Development (EAFRD) and the European Maritime and 
Fisheries Fund (EMFF). According to the ‘N+3 rule’, the funds 
committed for 2014-2020 must be spent by 2023 at the 
latest (by 2025 for EAFRD). 
Source: Cohesion Open data, cut-off date 31.12.2021 for 
ERDF, ESF+, CF, Interreg; cut-off date 31.12.2020 for EAFRD 
and EMFF. 

policy 

Cohesion 
already 
substantially contributing to the Sustainable 
In 
Development  Goals  (SDGs)  objectives. 

funds 

are 

(22)  Public  investment  is  gross  fixed  capital  formation  plus 

(23)  Including REACT-EU. ESIF data on 

capital transfers, general government. 

https://cohesiondata.ec.europa.eu/countries/RO 

24 

7.6919%12.7031%0.220%14.5936%5.4413%0.331%CFEAFRDEMFFERDFESFYEI 
 
                                                 
   
                                                 
 
Romania,  cohesion  policy  funds  (Graph  A3.2) 
support 11 of the 17 SDGs with up to 93% of the 
expenditure  contributing  to  the  attainment  of  the 
goals.  

Graph A3.2: Cohesion policy contribution to the 
SDGs (EUR billion) 

enabling  Romania  to  re-allocate  resources  for 
immediate  public  health  needs  (470  million)  and 
to  support  businesses  (550  million).  For  instance, 
Romania  redirected  fund  to  purchase  protective 
equipment  and  healthcare  material,  reinforce 
healthcare staff, provide working capital for SMEs, 
support  digitalisation  of  the  education  system 
through  purchase  of  IT  equipment  and  provide 
subsidies  for  technical  unemployment.  Romania 
also  benefited  from  the  temporary  100%  EU 
financing  of  cohesion  policy  measures,  with 
approximately  EUR  463  million  in  2021  through 
100% co-financing. 

received 

support  under 

Romania 
the 
European  instrument  for  temporary  support 
in  an 
to  mitigate  unemployment  risks 
emergency  (SURE)  to  finance  short-time 
work  schemes,  similar  measures  and  as  an 
ancillary, 
health-related  measures. The 
Council granted financial assistance under SURE to 
Romania  in  September  2020  for  a  maximum  of 
EUR 4.099 billion, 73% of which was disbursed by 
2 May 2022. SURE is estimated to have supported 
approximately  15%  of  workers  and  10%  of  firms 
for at least one month in 2020 and 2% of workers 
and  1%  of 
in 
accommodation  and  food  services,  professional, 
scientific and technical activities, and construction. 
Romania is estimated to have saved a total of EUR 
0.85  billion  on  interest  payments  as  a  result  of 
SURE’s lower interest rates. 

in  2021,  primarily 

firms 

The  Commission  provides  tailored  expertise 
to  Romania  under  the  Technical  Support 
Instrument.  As  of  2022  Romania  receives  help 
with  building  its  capacity  to  implement  specific 
reforms  and  investments  in  the  RRP,  for  instance 
for  enhancing  policy  coherence,  transparency  and 
coordination at the centre of the government. New 
technical  support  projects  will  contribute,  among 
others, to enhance gender mainstreaming in public 
policy  and  the  budgetary  processes.  The  country 
will  benefit  from  additional  RR-related  technical 
support,  to  develop  a  national  hydrogen  strategy 
and action plan and to set up and run a corporate 
governance  mechanism 
state-owned 
enterprises.  

in 

Romania  also  benefits  from  other  EU 
programmes  such  as  the  Connecting  Europe 
Facility,  which  allocated  EUR  985.3  million  to 
specific  projects  on  strategic  transport  networks, 
and  Horizon  2020,  which  allocated  EU  funding  of 
EUR 299.8 million. 

(1) SDG 1 No poverty, SDG 3 Good health and well being, SDG 
4 Quality education, SDG 6 Clean water and sanitation, SDG 7 
Affordable and clean energy, SDG 8 Decent work and 
economic growth, SDG 9 Industry, innovation, infrastructure, 
SDG 11 Sustainable cities and communities, SDG 12 
Responsible consumption and production, SDG 13 Climate 
action, SDG 15 Life on land 
Source: European Commission, DG REGIO. 

REACT-EU 

instrument 

The 
(Recovery 
Assistance  for  Cohesion  and  the  Territories 
of Europe) under NextGenerationEU provided 
EUR  1 540  million  of  additional  funding  to 
2014-2020  cohesion  policy  allocations  for 
Romania to ensure a balanced recovery, boost 
convergence  and  provide  vital  support  to  regions 
following  the  coronavirus  outbreak.  REACT-EU 
provided support in Romania to SMEs in the form 
of  working  capital  and  productive  investments.  It 
contributed  to  the  short-time  work  schemes, 
reinforced  the  health  care  system,  strengthened 
skills  development, 
education, 
promoted  energy  efficiency  and  reduced  material 
deprivation with direct food delivery. 

training  and 

Investment 
The  Coronavirus  Response 
Initiative (24) provided the first EU emergency 
support  to  Romania  for  the  COVID-19 
pandemic.  It  introduced  extraordinary  flexibility 

(24)  Re-allocating  ESIF  resources  according  to  Regulation  (EU) 
2020/460 of the European Parliament and of the Council of 
30  March  2020,  and  Regulation  (EU)  2020/558  of  the 
European Parliament and of the Council of 23 April 2020. 

25 

0.370.400.410.841.141.391.622.172.625.038.500510SDG 12SDG 15SDG 13SDG 11SDG 1SDG 4SDG 7SDG 3SDG 6SDG 8SDG 9 
     
                                                 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 
RECOMMENDATIONS 

Graph A4.1: Romania’s progress on the 2019-2020 
CSRs (2022 European Semester cycle) 

The  Commission  assessed  the  2019-2021 
country-specific  recommendations  (CSRs) (25) 
addressed  to  Romania  in  the  context  of  the 
European  Semester.  The  assessment  takes  into 
account  the  policy  action  taken  by  Romania  to 
date (26),  as  well  as  the  commitments  in  the 
Recovery  and  Resilience  Plan  (RRP) (27).  At  this 
early  stage  of  the  RRP  implementation,  overall 
27%  of  the  CSRs  focusing  on  structural  issues  in 
2019  and  2020  have  recorded  at  least  “some 
progress”,  while  73%  recorded  “limited”  or  “no 
Considerable 
progress” 
additional  progress  in  addressing  structural  CSRs 
is  expected  in  the  years  to  come  with  the  further 
implementation of the RRP.  

(see  Graph  A4.1). 

Source: European Commission 

(25)  2021 CSRs: https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A32021H0729%2823%29&qi
d=1627675454457  
2020 CSRs: EUR-Lex - 32020H0826(23) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(23) - EN - EUR-Lex 
(europa.eu) 

(26)  Incl.  policy  action 

in 

reported 

the  National  Reform 
Programme,  as  well  as  in  the  RRF  reporting  (bi-annual 
reporting on the progress with implementation of milestones 
and  targets  and  resulting  from  the  payment  request 
assessment). 

(27)  Measures  foreseen  in  the  annex  of  the  adopted  Council 
Implementing Decision on the approval of the assessment of 
the  RRP  which  are  not  yet  adopted  nor  implemented  but 
considered  as  credibly  announced,  in  line  with  the  CSR 
assessment  methodology,  warrant  “limited  progress”.  Once 
implemented, these measures can lead to “some/substantial 
progress”  or  “full 
implementation”,  depending  on  their 
relevance. Member States were asked to effectively address 
all  or  a  significant  subset  of  the  relevant  country-specific 
recommendations issued by the Council in 2019 and 2020 in 
their  RRPs.  The  CSR  assessment  presented  here  takes  into 
account  the  degree  of  implementation  of  the  measures 
included in the RRP and of those done outside of the RRP at 
the time of assessment.   

26 

No Progress3%Limited Progress70%Some Progress18%Substantial Progress6%Full Implementation3% 
 
                                                 
  
 
 
 
Table A4.1: Summary table on 2019, 2020 and 2021 CSRs 

(Continued on the next page) 

27 

RomaniaAssessment in May 2022*RRP coverage of CSRs until 20262019 CSR1Limited ProgressEnsure compliance with the Council recommendation of 14 June 2019 with a view to correcting the significant deviation from the adjustment path toward the medium-term budgetary objective. Not relevant anymoreNot applicableEnsure the full application of the fiscal framework. No ProgressStrengthen tax compliance and collection.Limited ProgressRelevant RRP measures planned as of 20222019 CSR 2Some ProgressSafeguard financial stability and the robustness of the banking sector. Substantial ProgressEnsure the sustainability of the public pension system and Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023the long-term viability of the second pillar pension funds.Some Progress2019 CSR 3Limited ProgressImprove the quality and inclusiveness of education, in particular for Roma and other disadvantaged groups.Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022Improve skills, including digital, notably by increasing the labour market relevance of vocational education and training and higher education. Limited ProgressRelevant RRP measures planned as of 2022Increase the coverage and quality of social services and Limited ProgressRelevant RRP measures planned as of 2022complete the minimum inclusion income reform. Limited ProgressRelevant RRP measures planned as of 2022Improve the functioning of social dialogue. Limited ProgressRelevant RRP measures planned as of 2022Ensure minimum wage setting based on objective criteria, consistent with job creation and competitiveness. Limited ProgressRelevant RRP measures planned in 2024Improve access to and cost-efficiency of healthcare, including through the shift to outpatient care.Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 20232019 CSR4Some ProgressFocus investment-related economic policy on transport, notably on its sustainability, low carbon energy and energy efficiency, environmental infrastructure as well as innovation, taking into account regional disparities. Some ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023Improvepreparationandprioritisationoflargeprojectsandaccelerate their implementation. Some ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023Improvetheefficiencyofpublicprocurementandensurefullandsustainableimplementationofthenationalpublicprocurementstrategy.Some ProgressRelevant RRP measures planned as of 20232019 CSR 5Limited ProgressEnsurethatlegilsativeinitiativesdonotunderminelegalcertaintybyimprovingthequalityandpredictabilityofdecision-making,includingbyappropriatestakeholderconsultations,effectiveimpact assessments and streamlined administrative procedures.Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022Strengthenthecorporategovernanceofstate-ownedenterprises.Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 20232020 CSR1Limited ProgressPursuefiscalpoliciesinlinewiththeCouncil’srecommendationof3April2020,whiletakingallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuing recovery. Not relevant anymoreNot applicableAvoidtheimplementationofpermanentmeasuresthatwouldendanger fiscal sustainability. Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022Strengthen the resilience of the health system, including in the areas of health workers and medical products, and improve access to health services. Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 20222020 CSR2Limited ProgressProvide adequate income replacement and Substantial Progressextend social protection measures and Limited ProgressRelevant RRP measures planned as of 2022extend access to essential services for all. Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023Mitigatetheemploymentimpactofthecrisisbydevelopingflexible working arrangements and activation measures. Limited ProgressRelevant RRP measures planned as of 2024Strengthen skills and digital learning and Limited ProgressRelevant RRP measures planned as of 2022ensure equal access to education. Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023 
 
 
 
  
 
Table (continued) 

*  See footnote 27. 
Source:  European Commission 

28 

2020 CSR 3Limited ProgressEnsure liquidity support to the economy benefiting businesses and households, particularly small and medium-sized enterprises and the self-employed. Full ImplementationRelevant RRP measures being implemented as of 2021 and planned as of 2022Front-load mature public investment projects and Limited ProgressRelevant RRP measures planned as of 2022 and 2023promote private investment to foster the economic recovery. Some ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022Focusinvestmentonthegreenanddigitaltransition,inparticularon sustainable transport,Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022digital service infrastructure,Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023cleanandefficientproductionanduseofenergyandenvironmental infrastructure, including in the coal regions.Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 20232020 CSR 4Limited ProgressImprovethequalityandeffectivenessofpublicadministrationand Some ProgressRelevant RRP measures planned as of 2022 and 2023improvethepredictabilityofdecision-making,includingthroughan adequate involvement of social partners.Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 20222021 CSR1Limited ProgressPursuefiscalpoliciesinlinewiththeCouncilRecommendationof18June2021withaviewtobringinganendtothesituationofanexcessive government deficit in Romania.Limited progressNot applicable 
 
  
 
ENVIRONMENTAL SUSTAINABILITY 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 5: GREEN DEAL 
ANNEX 5: GREEN DEAL 

intends 

The  European  Green  Deal 
to 
transform the  EU  into a  fair and prosperous 
society,  with  a  modern,  resource-efficient 
and competitive economy where there are no 
net  emissions  of  greenhouse  gases  in  2050 
and  where  economic  growth  is  decoupled 
from resource use. This annex offers a snapshot 
of  the  most  significant  and  economically  relevant 
developments 
respective 
building  blocks  of  the  European  Green  Deal.  It  is 
complemented by Annex 6 on the employment and 
social impact of the green transition and Annex 7 
for circular economy aspects of the Green Deal.  

in  Romania 

the 

in 

Romania significantly reduced its greenhouse 
gas (GHG) emissions in previous decades but 
more  efforts  will  be  needed  to  achieve  the 
new ambitions set out in the EU climate law. 
The  country’s  total  greenhouse  gas  emissions 
(save land use) have decreased considerably since 
1990. Emissions per capita are lower than the EU 
intensity  of  the 
average  but  the  emissions 
economy  is  still twice  as high  as  the  EU  average. 
In  2020,  emissions  in  sectors  not  covered  by  the 
EU  emissions  trading  system  (ETS)  were  lower 
than  the  2020  target  of  limiting  the  increase  to 
+19%  compared  to  2005.  However,  Romania  is 
not likely to reach its current 2030 target for non-
ETS  emissions  of  -2%  even  with  additional 
measures.  Moreover,  to  reach  the  proposed  ESR 
target under the Fit for 55 package of -12.7% will 
require  considerable  additional  efforts.  Under 
current  land  management  practices,  Romania  is 
projected to see decreasing net removals by 2030. 
In  its  recovery  and  resilience  plan  (RRP),  Romania 
its  allocation  for  climate 
earmarks  41%  of 
objectives  and  outlines  crucial 
reforms  and 
investments to accelerate the transition to a more 
sustainable, 
low-carbon  and  climate-resilient 
economy. 

investment 

in 
increased 
Romania  has 
environmental  protection  and  decreased 
fossil fuel subsidies, but  there is still a long 
way to go given the absorption and capacity 
issues. Progress on environmental tax collection is 
mixed 
policy 
developments in Romania are mainly driven by EU 
directives  and  Regulations,  and  the  relevant  EU 
rules  are  generally 
time.  
Implementation  remains  the  main  challenge,  with 
to  be  difficult. 
practical  application  proving 

transposed  on 

(Graph  A5.1). 

Environmental 

29 

Romania’s tax revenues are above the EU average 
in  terms  of  the  share  of  total  tax  revenues,  but 
below 
the  EU  average  as  share  of  GDP. 
Environmental taxation is largely driven by energy 
taxes,  with  a  smaller  proportion  attributed  to 
transport and pollution taxes. Fossil fuel subsidies 
have  been  steadily  decreasing  since  2016. 
Meanwhile, the climate risk to public finances due 
to  uninsured  assets  is  considered  low-medium, 
with a significant share of uninsured climatological 
losses (see Annex 18).  

Graph A5.1: Fiscal aspects of the green transition 
Taxation and government expenditure on 
environmental protection 

Source: Eurostat 

Romania is still largely reliant on fossil fuels 
in 2020 (Graph A5.2). Gross inland consumption 
is mainly driven by coal, lignite, oil and natural gas, 
which accounts for nearly 71% in the energy mix. 
Nuclear  accounts  for  9%  of  the  energy  mix, 
renewables  for  around  20%.  Both  are  planned  to 
increase, while the share of fossil fuels is expected 
to  decline  over  time.  In its  RRP,  Romania  plans  to 
phase  out  coal  and  lignite  power  by  2032  and 
further  deploy  renewables  and  hydrogen.  The 
setting-up  of  additional 
renewable  energy 
capacities  until  2030  of  approximately  6.9  GW 
compared to 2020 is planned.  For this to happen, 
the  reforms  in  the  energy  market  and  permitting 
included in the RRP are essential. 

0.01.02.03.04.05.06.07.08.0Environmentaltaxes (% of GDP)Environmentaltaxes (% of totaltaxation)Governmentexpenditure onenvironmentalprotection (% oftotal expenditure)RO (2020)EU27 (2020) 
 
 
   
 
 
 
 
targets  on  ozone  concentration  have  not  been  met. 
Persistent  breaches  of  air  quality  requirements,  which 
have  severe  negative  effects  on  health  and 
the 
environment,  are  being  followed  up  by  the  Commission 
through  infringement  procedures.  Romania  has  failed  to 
submit  the  latest  air  pollutant  emission  projections 
required  under 
the  National  Emission  Reduction 
Commitments  Directive.  Furthermore  Romania  it the  only 
Member  State  that  has  not  submitted  its  National  Air 
Pollution Control Programme on the reduction of national 
emissions  of  certain  atmospheric  pollutants.  On  nitrates 
pollution  of  ground  water,  the  situation  seems  to  have 
slightly  improved.  However,  Romania  has  eutrophication 
issues  and  some  polluted  hotspots.  Romania  designated 
all  its  territory  as  sensitive  areas  and  decided  that 
agglomerations over 10 000 p.e. discharging into sensitive 
areas  must  apply  biological  treatment  with  nitrogen  and 
phosphorus removal. 

Graph A5.3: Terrestrial protected areas and 
organic farming 

(1) For terrestrial protected areas data for 2018, and data for 
the EU average (2016, 2017) is lacking. 
Source: EEA (terrestrial protected areas) and Eurostat 
(organic farming). 

On  mobility,  the  share  of  zero-emission  vehicles  in 
new  car  registration  has  increased  substantially 
over  recent  years  but  is  still  half  the  EU  average 
(Graph  A5.4).  The  density  of  public  charging  points  is 
above EU average; its accelerated expansion is vital to the 
further development of electromobility. While only slightly 
more than a third of the overall rail network in Romania is 
electrified, the share reaches 98% for the Romanian part 
of  the  TEN-T  network,  where  most  of  the  traffic  is 
concentrated.  

Graph A5.2: Share in energy mix (solids, oil, gas, 
nuclear, renewables) 

(1) The energy mix is based on gross inland consumption, and 
excludes heat and electricity. The share of renewables 
includes biofuels and non-renewable waste 
Source: Eurostat. 

In  biodiversity  and  ecosystem  health,  Romania 
presents  a  mixed  picture  (Graph  A5.3).  The  country 
performs  above  the  EU  average  on  the  share  of  Natura 
2000 terrestrial protected areas but below the EU average 
on utilised agricultural area under organic farming. Around 
68%  of  the  habitats  and  46%  of  species  were  in  good 
conservation  status.  On  birds,  about  19%  of  breeding 
species showed short-term increasing or stable population 
trends while for the wintering species the share stood at 
in  good 
15%.  The  share  of  habitats  and  species 
conservation status seems to have increased between the 
two  last  reporting  periods,  however  figures  provided  are 
not  necessarily  directly  comparable  because  changes  in 
Romania’s conservation status may be due to changes in 
methods  or  better  data  rather  than  reflecting  genuine 
changes.  Agriculture  put  by  far  the  greatest  pressure  on 
habitats  while  for  species  the  main  sources  pf  pressure 
were 
the  development,  construction  and  use  of 
infrastructure  and  the  extraction  and  cultivation  of  living 
resources.  Progress  has  been  made  on  adopting 
management  plans  for  Natura  2000  sites  but  a  number 
are still missing, and the management of the sites is not 
always  effective.  Forests  cover  32.46%  of  Romania’s 
territory. 

In  terms  of  pollution,  air  quality 
in  Romania 
continues to be a severe concern. Emissions of key air 
pollutants  have  decreased  significantly  in  Romania  in 
recent  years.  In  2020,  exceedances  above  air  quality 
standards were registered for nitrogen dioxide in three air 
quality  zones  and  for  particulate  matter  (PM10)  in  four 
zones.  Furthermore,  for  several  air  quality  zones  the 

30 

0102030405060708090100200520102015201820192020RenewablesNuclearGasOilSolid fossil fuels, peat and oil shale0510152025302016201720192020Terrestrial protected areas (% total area)Area under organic farming (% total utilised agricultural area)EU27 (terrestrial)EU27 (organic) 
   
   
 
Graph A5.4: Mobility Share of zero emission 
vehicles 

(1) Zero emission vehicles (passenger cars) include battery 
and fuel cell electric vehicles (BEV, FCEV). 
Source: European Alternative Fuels Observatory.  

31 

0.02.04.06.08.010.0201620172018201920202021% of new registrationsROEU27 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A5.1: Indicators underpinning progress on the European Green Deal from a macroeconomic 
perspective 

(1) The 2030 non-ETS GHG target is based on the Effort Sharing Regulation. The FF55 targets are based on the COM proposal to 
increase EU's climate ambition by 2030. Renewables and Energy Efficiency targets and national contributions under the 
Governance Regulation (Regulation (EU) 2018/1999). (2) Distance to target is the gap between Member States’ 2030 target under 
the Effort Sharing Regulation and projected emissions, with existing measures (WEM) and with additional measures (WAM) 
respectively, as a percentage of 2005 base year emissions. (3) Percentage of total revenues from taxes and social contributions 
(excluding imputed social contributions). Revenues from the ETS are included in environmental tax revenues (in 2017 they 
amounted to 1.5% of total environmental tax revenues at the EU level). (4) Covers expenditure on gross fixed capital formation to 
be used for the production of environmental protection services (i.e. abatement and prevention of pollution) covering all sectors, 
i.e. government, industry and specialised providers. (5) The climate protection gap indicator is part of the European adaptation 
strategy (February 2021), and is defined as the share of non-insured economic losses caused by climate-related disasters. (6) 
Sulphur oxides (SO2 equivalent), Ammonia, Particulates < 10µm, Nitrogen oxides in total economy (divided by GDP). (7) 
Transportation and storage (NACE Section H). (8) Zero emission vehicles include battery electric vehicles (BEV) and fuel cell 
electric vehicles (FCEV). (9) European Commission Report (2019) 'Benchmarking smart metering deployment in the EU-28'. (10) 
European Commission (2021). Each year the DESI is re-calculated for all countries for previous years to reflect any possible 
change in the choice of indicators and corrections to the underlying data. Country scores and rankings may thus differ compared 
with previous publications. 
Source:  Eurostat, JRC, European Commission, EEA, EAFO 

32 

TargetTarget2005201920202030WEMWAM2030WEMWAMNon-ETS GHG emission reduction target (1)MTCO2 eq; %; pp (2)79.40%0%-2%-11-13%-12-10200520162017201820192020Share of energy from renewable sources in gross final consumption of energy (1)%18%25%24%24%24%24%31%Energy efficiency: primary energy consumption (1)Mtoe36.130.732.532.632.130.932.3Energy efficiency: final energy consumption (1)Mtoe24.622.223.323.623.923.525.7201520162017201820192020201820192020Environmental taxes (% of GDP)% of GDP2.52.41.92.02.11.92.42.42.2Environmental taxes (% of total taxation)% of taxation (3)8.89.37.87.68.17.36.05.95.6Government expenditure on environmental protection% of total exp.2.651.761.492.102.001.611.661.701.61Investment in environmental protection% of GDP (4) 1.030.360.240.340.31-0.420.380.41Fossil fuel subsidiesEUR2020bn0.941.171.101.080.80-56.8755.70-Climate protection gap (5)score 1-4Net GHG emissions1990 = 100474644444341797669GHG emissions intensity of the economykg/EUR'100.820.770.740.710.660.650.320.310.30Energy intensity of the economykgoe/EUR'100.220.210.210.200.190.190.120.110.11Final energy consumption (FEC)2015=100100.0101.8106.8108.0109.3107.7103.5102.994.6FEC in residential building sector2015=100100.0100.5104.8105.4105.1108.6101.9101.3101.3FEC in services building sector2015=100100.0102.5105.5112.2111.4104.1102.4100.194.4Smog-precursor emission intensity (to GDP) (4)tonne/EUR'10 (6)2.872.492.282.212.17-0.990.93-Years of life lost caused due to air pollution by PM2.5per 100.000 inh.13671277151815221261-863762-Years of life lost due to air pollution by NO2per 100.000 inh.71141212211215-12099-Nitrate in ground watermg NO3/litre------21.720.7-Terrestrial protected areas% of total-22.223.4-23.423.4-25.725.7Marine protected areas% of total-21.4--21.5--10.7-Organic farming% of total utilised agricultural area1.81.71.92.42.93.58.08.59.100-0606-1212-18Net land takeper 10,000 km213.011.05.0201520162017201820192020201820192020GHG emissions intensity of transport (to GVA) (7)kg/EUR'100.460.420.420.410.420.450.890.870.83Share of zero emission vehicles (8)% in new registrations0.00.10.20.41.02.31.01.95.43561211158812Share of electrified railways%37.437.437.437.437.4-55.656.0-32.031.831.930.532.4-28.928.8-YearROEUShare of smart meters in total metering points (9) - electricity% of total20184.835.8Share of smart meters in total metering points (9) - gas% of total20180.013.1ICT used for environmental sustainability (10)%202167.965.9DigitalFiscal and financialindicators1.7 out of 4 (slight decrease from historical level of 1.8). This is a low/medium risk category (4 being a high risk).ClimateEnergyPollutionBiodiversity2000-20062006-20122012-20183.74.86.9MobilityNumber of plug-in electric vehicles per charging pointCongestion (average number of hours spent in road congestion per year by a representative commuting driver)Progress to policy targetsNational contribution to 2030 EU targetROMANIAEU'Fit for 55'DistanceDistance 
 
   
 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 

The  green  transition  not  only  encompasses 
environmental 
to 
improvements 
sustainability, but also includes a significant 
social dimension.  While measures in this regard 
include the opportunity for sustainable growth and 
job creation, it must also be ensured that no one is 
left  behind  and  all groups  in  society  benefit  from 
the  transition.  Romania’s  green  transition  takes 
place in a challenging social setting, with a carbon-
intensive economy in need of transformation. But, 
the  green  economy  can  also  provide  jobs  and 
growth  opportunities,  and 
redistribution 
measures  of  energy  taxes  is  likely  to  greatly 
benefit low-income households. 

the 

Graph A6.1: Fair green transition challenges 

(1) Numbers are the normalised indicator performance 
relative to the EU27 average 
Source: Eurostat, World inequality database 

The  Romania’s  recovery  and  resilience  plan 
(RRP) sets out key elements for a fair green 
transition. Investments will be made to integrate 
energy-efficiency  technologies  into  educational 
infrastructure,  including  in  disadvantaged  areas. 
This includes building a network of “green schools” 
(ensuring  a  balance  between  rural  and  urban 
areas) and 10 integrated campuses for vocational 
education  and  training. 
in  social 
infrastructure, including for people with disabilities 
and  day  centres  for  children  at  risk,  will  also  aim 
improving  energy  efficiency  and  reducing 
at 
greenhouse gas emissions.  

Investments 

the  green 

Several  European  Funds  will  contribute  to 
facilitating 
transition  while 
mitigating  its  overall  impact.  The  European 
Social Fund Plus (ESF+) will facilitate the transition 
to  a  greener  economy,  through  investments  in 

education  and  training  to  build  a  workforce  more 
resilient to changes in demand for skills. The Just 
Transition  Fund  (EUR  2.14  billion;  current  prices) 
the  social,  employment, 
will  help  mitigate 
economic  and  environmental 
the 
transition in six Romanian counties.  

impact  of 

The  social  impact  of  energy  poverty  is 
partially  addressed  in  Romania’s  integrated 
national energy and climate plan. Published in 
April  2020,  it  provides  for  the  creation  of  a  new 
institution to monitor energy poverty and draw up 
a  national  strategy  to  fight  it.  The  plan  also 
considers  the  impact  of  the  green  transition  on 
employment,  in  particular  in  the  mining  and  coal 
regions  of  Hunedoara  and  Gorj  (both  within  the 
scope  of  the  Just  Transition  Fund) (28).  These  two 
counties  employ  90%  of  Romania’s  entire  mining 
work  force,  with  18  600,  jobs  depending  directly 
on  coal  extraction  or  coal  fired  energy  production 
represents 18 600, with another 10 000 indirectly 
depending  on  coal.  Hunedoara  and  Gorj  represent 
some  90%  of  greenhouse  gas  (GHG)  emissions 
caused  by  Romania’s  coal  fired  power  plants,  or 
approximately  30%  of  all  Romanian  GHG 
emissions 
and 
manufacturing.  

from  mining 

stemming 

Moving away from fossil fuel extraction and 
use is likely to put jobs at risk. In the counties 
of  Dolj,  Galați,  Prahova  and  Mureş  a  significant 
share of the work force is employed in fossil  fuel 
power  and  heat  generation  or  energy-intensive 
manufacturing  and  heavy  industry  (chemicals, 
metal  processing  cement,  fertilisers,  etc.).  These 
of 
counties 
Romanian’s GHG emissions stemming from mining 
and  manufacturing.  Additional  investments  are 
envisaged  to  soften  the  impact  of  the  green 
transition and coal phase-out in the region, aiming 
providing  workers  with  new  skills  and  work 
prospects. 
just 
forthcoming 
transition plan for Romania will include substantial 
investments in these counties.  

approximately  35% 

territorial 

generate 

The 

reduced 

The  economy  has 
its  carbon 
footprint  and  though  key  energy-intensive 
sectors  remain  sizeable,  the  green  economy 
has  strong  potential  to  grow  and  contribute 
to  job  creation.  The  greenhouse  gas  (GHG) 
emissions  intensity  of  the  Romanian  economy 
decreased  markedly  between  2015  and  2020  (in 

(28)  European  Commission’s  Assesment  of  the  final  national 
energy and climate plan of Romania (SWD(2020)922). 

33 

0.001.002.003.004.00GHG tonnesper Euro ofgross addedvalue (MS/EU)GHG tonnesper worker(MS/EU)Employmentshare inenergy-intensiveindustries…Share ofpopulation inrural areas atrisk of poverty(MS/EU)Energy poverty(MS/EU)Carboninequality(MS/EU)RomaniaEU 2020Romania 2015 
 
   
                                                 
 
terms of gross value added) but is still double the 
EU  average.  The  average  carbon  footprint  per 
worker  of  10.94  tonnes  of  GHG  emissions  is 
decreasing  and  stands  below  the  EU  average 
(13.61;  see  Graph  A6.1).  Romania’s  energy-
intensive  industries,  including  metals,  chemicals 
and  paper (29),  provide  jobs  for  4.7%  of  the  total 
employed  workforce,  for  which  up-  and  reskilling 
could  be  particularly  important  (see  Annex  15).  In 
the  metal,  chemical,  cement,  and 
Romania, 
fertiliser 
transforming,  while 
sectors 
coal/lignite and fossil fuel based energy production 
sectors  are  in  decline (30)  implying  potential  job 
losses  in  affected  industries.  The  environmental 
goods  and  services  sector  provides  jobs  to  a 
comparatively  limited  share  of  the  employed 
population (1.9% vs. 2.2% in the EU) (31) and wind 
(especially  in  the  South-East  coastal  region)  and 
solar energy potential as well as energy efficiency 
improvements offer further opportunities for green 
jobs (32). There is a risk that the transition will give 
rise  to  labour  shortages in  the  greening  sector  of 
energy production (33). 

are 

As  for  the  social  dimension  of  the  green 
transition,  ensuring  access  to  essential 
transport  and  energy  services  remains  a 
challenge  in  Romania.  A  relatively  high  and 
stable  share  of  the  rural  population  is  at  risk  of 
poverty (38.9% vs. 18.7% in the EU) (34). The share 
of  the  population  being  unable  to  keep  their 
homes adequately warm decreased from 13.1% in 
2015  to  10%  in  2020,  which  is  above  the  EU 
average (8.2%). Lower-income groups are affected 
most  and  more  than  the  EU  average  (see  Graph 
A6.2). A large part of the Roma population lives in 
substandard  settlements  and  housing,  and 

(29)  2020 European Semester: Overview of Investment Guidance 
on  the  Just  Transition  Fund  2021-2027  per  Member  State 
(Annex D). 

(30)  European  Commission’s  Staff  Working  Document  on  the 

territorial just transition plans (SWD(2021)275). 

(31)  There  is  currently  no  common  EU-wide  definition  of  green 
jobs.  The  environmental  goods  and  services  sector  (EGSS) 
accounts  only  report  on  an  economic  sector  that  generates 
environmental products, i.e. goods and services produced for 
environmental protection or resource management. 

(32)  Asikainen, et al., 2021 

(33)  Eurofound (2021) 

(34)  Based  on  Annex  1  of  the  European  Commission’s  proposal 
for  a  Regulation  of  the  European  Parliament  and  of  the 
Council establishing a Social Climate Fund (COM(2021) 568) 
as a proxy for potential transport challenges in the context of 
the green transition (e.g. due to vulnerability to fuel prices). 

remains  particularly  vulnerable  to  energy  poverty. 
Consumption  patterns  vary  across  the  population: 
the  average  carbon  footprint  of  the  top  10%  of 
emitters is about 5.8 times higher than that of the 
bottom  50%  of  the  population  (close  to  the  EU 
average of 5.3 times). 

Graph A6.2: Energy poverty by income decile 

(1) HH050: Ability to keep home adequately warm  
(2) HY020: Total disposable housing income 
Source: Eurostat (EU SILC survey 2020) 

Tax  systems  are  key  to  ensuring  a  fair 
transition  towards  climate  neutrality (35). 
Romania’s  revenues  from  total  environmental 
taxes decreased from 2.47% in 2015 to 2.12% in 
2019,  and  declined  further  to  1.92%  in  2020 
(2.24% in  the  EU).  The  labour  tax  wedge  for  low-
income earners (36) declined from 37.3% to 36.6% 
between  2015  and  2019  (with  a  rebound  to 
37.2%  in  2021),  compared  to  31%  in  the  EU  in 
2021  (see  Annex  18).  Redistributive  measures 
accompanying  environmental  taxation  have  the 
potential  to  foster  progressive  measures  and  to 
have  a  positive  impact  on  the  disposable  income 
of  households,  with  Romania  having  (among)  the 
strongest  potential  positive  effects  on  the  first 
income decile (37). 

(35)  European 

Commission’s 

Council 
Recommendation  on  ensuring  a  fair  transition  towards 
climate neutrality (COM(2021)801). 

proposal 

for 

a 

(36)  Tax  wedge  for  a  single  earner  at  50%  of  the  national 
(Tax  and  benefits  database,  European 

average  wage 
Commission/OECD). 

(37)  European  Commission’s  Impact  Assessment  Report  of  the 
proposal  for  a  Council  Directive  restructuring  the  Union 
framework for the taxation of energy products and electricity 
(recast) (SWD(2021)641 PART 3/3). 

34 

0%5%10%15%20%25%30%35%40%12345678910Unable to keep home adequately warm (per income decile)Income decileRomaniaEuropean Union 
                                                 
  
                                                 
35 

 
 
PRODUCTIVITY 
PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 

while 

minimizing 

The  efficient  use  of  resources  is  key  to 
ensuring  competitiveness  and  open  energy 
autonomy, 
the 
environmental  impact.  The  green  transition 
presents  a  major  opportunity  for  European 
industry 
clean 
creating  markets 
technologies  and  products.  It  will  have  an  impact 
across  the  entire  value  chains  in  sectors  such  as 
energy and transport, construction and renovation, 
food  and  electronics,  helping  create  sustainable, 
local and well-paid jobs across Europe. 

for 

by 

Romania  has  not  made  progress  in  circular 
secondary  material  usage  over  the  past 
decade.  The  circular  (secondary)  use  of  material 
decreased between 2015 and 2020 from 1.7% to 
1.3%,  well  below  the  EU  average  of  11.3%  to 
12.8%  over  the  same  period.  Romania’s  recovery 
and resilience plan (RRP) includes investments and 
reforms  to  support  recycling  and  improve  waste 
management. It notably includes the adoption of a 
national  strategy  for  circular  economy  strategy 
and an action plan covering the whole life cycle of 
products, as well as legislation to operationalise a 
unitary waste management system, the treatment 
of waste,  sanitation services in municipalities and 
the  packaging  producer 
an  extension  of 
responsibility scheme. 

Resource  productivity  is  far  below  the  EU 
average.  Resource  productivity  expresses  how 
efficiently the economy uses material resources to 
produce  wealth.  Improving  resource  productivity 
can  help  to  minimise  negative  impacts  on  the 
environment  and  reduce  dependency  on  volatile 
raw  material  markets.  However,  Romania’s 
resource  productivity  is  far  below  the  EU  average 
and was actually the lowest in the EU in 2020. 

Romania’s  economic  growth 
is  not  yet 
decoupled  from  the  generation  of  waste. 
is 
Romania’s  municipal  waste  recycling  rate 
13.7%, well below the EU average of around 48%, 
and  far  below  the  2020  and  2025  EU  targets  of 
50%  and  55%  respectively.  The  Commission  had 
identified Romania among the countries at risk of 
missing  the  2020  targets.  This  comparatively  low 
value 
level  of  waste 
management in Romania, as do the high landfilling 
rates.  Romania  has  the  highest  landfilling  rate  in 
the  EU  (2018  figure).  However,  Romania  had  the 
lowest  rate  of  municipal  waste  generation  in 
2020.  The  fluctuating  GDP  and  the  population 

illustrates 

low 

the 

decrease over the last decade both had an impact 
on waste generation. 

Graph A7.1: Circular economy: economic 
importance and expansion 

Source: Eurostat 

its 

environmental 

Further  measures  could  help  Romania 
improve 
technology 
performance,  notably  measures  on  sustainable 
product  design, 
resource  efficient  production 
processes,  digital  solutions,  industrial  symbiosis, 
remanufacturing  in  key  value  chains,  alternatives 
to  unsustainable  extraction  of  raw  materials,  and 
new circular business models. There is also scope 
to shift reusable and recyclable waste away from 
landfills  and  mechanical  biological  treatments 
(MBTs),  including  by  making  use  of  the  available 
economic instruments to roll out, adding separate 
collection  facilities.  This  would  help  the  country 
achieve 
targets, 
the 
particularly for plastics. 

post-2020 

recycling 

36 

1.54%1.58%1.54%1.53%0.71%0.75%0.79%0.78%1.72%1.73%1.75%1.71%0.94%0.94%0.96%0.97%0.0%0.2%0.4%0.6%0.8%1.0%1.2%1.4%1.6%1.8%2.0%2015201620172018Persons employed in the circular economy, RO (% of totalemployment)Value added at factor cost, RO (% of GDP ) 
 
 
      
 
 
 
 
 
 
Table A7.1: Selected resource efficiency indicators 

Source: Eurostat  

37 

SUB-POLICY AREA201520162017201820192020EU27 Latest year EU 27CircularityResource Productivity (Purchasing power standard (PPS) per kilogram)2.32.32.42.52.72.82.22020Material Intensity (kg/EUR)0.40.40.40.40.40.40.42020Circular Material Use Rate (%)1.71.71.71.51.31.312.82020Material footprint (Tones/capita)22.623.221.823.728.17-14.62019Waste Waste generation (kg/capita, total waste)-9 012-10 425--5 2342018Landfilling (% of total waste treated)-92.3-93.8--38.52018Recycling rate (% of municipal waste)13.213.41411.111.513.747.82020Hazardous waste (% of municipal waste)-0.4-0.4--4.32018CompetitivenessGross value added in environmental goods and services sector (% of GDP)1.81.91.92.02.0-2.32019Private investment in circular economy (% of GDP)0.20.20.20.2--0.12018 
 
   
 
compared  with  an  EU  average  of  65%.  On  the 
indicator  for  pre-filled  forms,  Romania’s  score  of 
19 is significantly below the EU average of 64.   

to 

The large share of digital investments and reforms 
dedicated  to  this  dimension  in  the  Romanian 
Recovery  and  Resilience  plan  (RRP)  presents  an 
opportunity 
results.  The 
measures  contributing  to  the  achievement  of 
digital  objectives  account  for  20.5%  of  the 
financial allocation, and cover all DESI dimensions 
with  a  focus  on  digital  infrastructure  and  the 
transition to a digitalised economy and society. 

improve 

these 

ANNEX 8: DIGITAL TRANSITION 
ANNEX 8: DIGITAL TRANSITION 

The Digital Economy and Society Index (DESI) 
monitors EU Member States’ digital progress. 
The  areas  of  human  capital,  digital  connectivity, 
the 
technologies  by 
businesses  and  digital  public  services  reflect  the 
Digital  Decade’s  four  cardinal  points (38).  This 
Annex describes Romania´s DESI performance. 

integration  of  digital 

The  lack  of  basic  digital  skills  and  ICT 
specialists  are  key  challenges  for  Romania. 
The country scores considerably below EU average 
in  both  indicators,  as  only  28%  of  people  aged 
between  16  and  74  have  at  least  basic  digital 
skills (54% in the EU as a whole), while 41% have 
at least digital content creation skills (EU average: 
66%).  Only  9%  of  individuals  have  above-basic 
digital  skills.  However,  the  level  of  female  ICT 
specialists has improved and scores in the EU’s top 
performing tier.  

Digital connectivity is the dimension in which 
Romania scores best. The country scores above 
the  EU  average  for  very  high  capacity  network 
(VHCN)  (87%  compared  to  70%  EU  average).  5G 
coverage (25%) is however below the EU average 
and in addition, assignment of 5G spectrum is low 
(22%  compared  to  the  EU  average  of  56%) (39). 
increased  to  93%, 
Fast  broadband  coverage 
surpassing  the  EU  average.  Strong  infrastructure-
based  competition  in  Romania,  mainly  in  urban 
areas,  is  reflected  in  the  fixed  VHCN  coverage 
indicator,  while  Romania’s  urban-rural  digital  gap 
decreased.  Fixed  broadband  take-up  has  been 
increasing slowly but steadily and is above the EU 
average. 

scores  very  poorly  on 

Romania 
the 
integration  of  digital  technologies.  The  share 
of SMEs with at least a basic level of digital skills 
as  well  as  the  take-up  of  advanced  technologies 
like  cloud,  artificial  intelligence  and  big  data 
remain  considerably  below  the  EU  average.  In 
particular, only 22% of SMEs have at least a basic 
level  of  digital  intensity  compared  to  an  EU 
average  of  55%.Digital  public  services  are  a 
key challenge for the country. Romania scores 
significantly  below  EU  average  on  the  availability 
of digital public services for citizens as well as for 
businesses.  Only  17%  of  Romanian  online  users 
engage  actively  with  e-government  services, 

(38)  T2030  Digital  Compass:  the  European  Way  for  the  Digital 

Decade Communication, COM (2021) 118 final 

(39)  Source:  Communications  Committee  (COCOM)  based  on 

iDATE. 

38 

 
 
                                                 
 
Table A8.1: Key Digital Economy and Society Index Indicators 

* The 5G coverage indicator does not measure users’ experience, which may be affected by a variety of factors such as the type 
of device used, environmental conditions, number of concurrent users and network capacity. 5G coverage refers to the percentage 
of populated areas as reported by operators and national regulatory authorities.  
Source: Digital Economy and Society Index. 

39 

EUEU-top performanceHuman capitalDESI 2020DESI 2021DESI 2022DESI 2022DESI 2022At least basic digital skillsNANA28%54%79%% individuals202120212021ICT specialists2.3%2.4%2.6%4.5%8.0%% individuals in employment aged 15-7420192020202120212021Female ICT specialists24%26%26%19%28%% ICT specialists20192020202120212021ConnectivityFixed Very High Capacity Network (VHCN) coverage68%76%87%70%100%% households201920202021202120215G coverage *NA12%25%66%100%% populated areas2020202120212021Integration of digital technologySMEs with at least a basic level of digital intensityNANA22%55%86%% SMEs202120212021Big data11%5%5%14%31%% enterprises20182020202020202020CloudNANA11%34%69%% enterprises202120212021Artificial IntelligenceNANA1%8%24%% enterprises202120212021Digital public servicesDigital public services for citizensNANA4475100Score (0 to 100)202120212021Digital public services for businessesNANA4282100Score (0 to 100)202120212021Romania 
 
 
   
 
ANNEX 9: INNOVATION 
ANNEX 9: INNOVATION 

The  present  annex  provides  a  general 
overview on the performance of the Romania 
research and innovation system. 

comprehensive 

out  a 
to 
streamline  the  governance  of  the  national  R&I 
system  and  to  make  the  necessary  first  steps  to 
reform the research career.  

reform  package 

remains 

cooperation 

large  companies. 

the 
Although 

a 
Public-private 
country’s 
challenge  and  hampers 
innovation 
the 
performance. 
percentage  share  of  GDP  available  as  Venture 
Capital in Romania is among the lowest in the EU, 
business  spending  on  R&D  has  doubled  since 
2013,  mostly  driven  by 
In 
parallel,  public  support  for  business  R&D  has 
decreased over the last decade. Universities, public 
research institutions and businesses lack adequate 
incentives  to  seek  collaborations  with  each  other. 
Romania  also  performs  below  the  EU  average  on 
public-private scientific co-publications as a share 
of total publications. Although the RRP will address 
some bottlenecks in science–business cooperation, 
the  measures  focus  on  reforming  the  regulatory 
framework and lack a holistic approach. 

in  2017  total  R&D 

Romania  is  an  emerging  innovation  performer 
according  to  the  2021  edition  of  the  European 
Innovation  Scoreboard (40),  and  has  the  weakest 
innovation performance in the EU. After a peak of 
intensity 
0.5%  of  GDP 
decreased  to  0.47%  of  GDP  in  2020,  remaining 
remarkably below the target of 2% initially set for 
2020.  In  2018,  Romania  filled  70  international 
indicator  of 
patent  applications 
innovation capacity), compared to the EU  average 
of  2 046).  With  a  score  of  71,  Romania  ranked 
24th  on  the  2021  Eco-Innovation  Scoreboard, 
highlighting  the  need  to  boost  its  eco-innovation 
activities.  Romania  performs  well  below  the  EU 
average on all five components of the 2021 Eco-
Innovation 
inputs,  eco-
innovation  activities,  eco-innovation  outputs, 
resource  efficiency  outcomes  and  socio-economic 
outfits).  

(eco-innovation 

(a  common 

Index 

At company level, innovation capacity is also 
limited. Business expenditure on R&D in Romania 
amounts  to  only  0.28%  of  GDP,  compared  to  the 
EU  average  of  1.53%.  The  number  of  tech  start-
ups per million inhabitants is also far below the EU 
average  (3.5  vs.  24) (41).  Similarly,  the  share  of 
high growth tech enterprises in 2019 was still very 
low compared to the EU average (4.9% vs. 18.3%). 

Romania  has  not  been  able  to  improve  the 
performance of its public research system or 
address  its  chronic  underfunding  in  the  last 
decade.  Since  2011,  public  R&D  intensity  has 
been  declining  from  0.32%  of  GDP  to  0.19%  of 
GDP  in  2020,  well  below  the  EU  average.  The 
chronic  underfunding  of  the  public  science  base 
has  resulted 
low  number  of 
researchers,  with  the  lowest  relative  share  in  the 
EU.  In  addition,  the  number  of  new  graduates  in 
science and engineering halved between 2009 and 
2019,  and  poor  working  conditions  and  career 
prospects for researchers have further accelerated 
human  resources  shortages  for  science  and 
innovation. To address these structural challenges, 
Romania’s  recovery  and  resilience  plan  (RRP)  sets 

in  a  critically 

(40)  2021  European 

Innovation  Scoreboard,  Country  profile: 

Romania 
https://ec.europa.eu/docsroom/documents/45932/attachment
s/1/translations/en/renditions/native  

(41)  OECD (2022) 

40 

 
 
                                                 
 
Table A9.1: Key research, development and innovation indicators 

Source: DG Research and Innovation - Common R&I Strategy and Foresight Service - Chief Economist Unit (Data: Eurostat, OECD, 
DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe) 

41 

CompoundEUannual growthaverage2010-20R&D Intensity (GERD as % of GDP)0.460.490.50.480.47-0.62.32Public expenditure on R&D as % of GDP0.280.270.200.200.19-5.50.78Business enterprise expenditure on R&D (BERD) as % of GDP0.180.210.300.280.284.91.53Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 3.03.24.7::5.69.9PCT patent applications per billion GDP (in PPS)0.10.30.2008.6 3.5Public-private scientific co-publications as % of total publications4.44.75.45.75.72.89.05New graduates in science & engineering per thousand pop. aged 25-3418.411.211.211.9:-4.716.3Total public sector support for BERD as % of GDP0.0570.045:0.018:-8.50.196Share of environment-related patents in total patent applications filed under PCT (%)12,9  6,411 : : -2,012.8 Venture Capital (market statistics) as % of GDP0.0130.0020.0020.0050.005-8.30.054Employment in fast-growing enterprises in 50% most innovative sectors2.12.62.82:05.52020Romania2010201520182019Finance for innovation and Economic renewalKey indicators Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation  
 
 
 
      
 
ANNEX 10: INDUSTRY AND SINGLE MARKET 
ANNEX 10: INDUSTRY AND SINGLE MARKET 

prosperity,  well-being 

Productivity  growth  is  a  critical  driver  of 
and 
economic 
convergence over the long run. A major source 
of  productivity  for  the  EU  economy  is  a  well-
functioning single market, where fair and effective 
competition  and  a  business  friendly  environment 
are  ensured, 
in  which  small  and  medium 
enterprises  (SMEs)  can  operate  and  innovate 
without  difficulty.  Businesses  and  industry  rely 
heavily  on  robust  supply  chains  and  are  facing 
bottlenecks that bear a negative impact on firms’ 
productivity 
levels,  employment,  turnover  and 
entry/exit  rates.  This  may  impact  the  Member 
States’ capacity  to deliver on Europe´s green and 
digital transformation.   

labour  productivity  has  been 
Romania’s 
increasing, but is still below the EU average. 
Although output per employee has been increasing 
over the past 20 years, it is still 24.8% below the 
EU27  average  (and  output  per  hour  is  35.8% 
below  the  EU  average).  There  is  ample  room  to 
catch up. The total factor productivity decreased in 
2020-2021  compared  with  2019,  but is  expected 
to pick up in 2022. 

Access  to  finance  is  a  constraint  to  doing 
business (42). On SMEs’ access to finance through 
loans and grants, Romania scored below the EU27 
average in 2020 (0.25 vs 0.56). It performed even 
worse  on  equity  finance  (0.06  vs  0.18).  Business 
angels,  and  private  equity  and  venture  capital 
funds are not yet widespread (43). Furthermore, the 
situation  for  equity  finance  has  deteriorated 
significantly  since  2017.  To  enhance  liquidity  for 
companies  and  SMEs,  Romania’s  recovery  and 
resilience  plan 
includes  a  substantial 
financial  package,  including  equity  (EUR  1.25 
billion).  

(RRP) 

Companies also face regulatory barriers and 
excessive  red  tape.  Procedures  to  set  up  a 
company,  close  it  and  report  on  labour  market 
obligations  will  be  streamlined,  simplified  and 
digitalised.  The  RRP  will  tackle  these  issues, 
thereby  improving  the  business  environment  and 
dynamics  in  Romania.  The  RRP  will  also  increase 

(42)  SMEs, start-ups, scale-ups and entrepreneurship - September 

2020 - - Eurobarometer survey (europa.eu) 

(43)  Romania  has  the  lowest  Venture  Capital  investments  as  a 
share  of  GDP  in  the  EU:  0,005%  in  2020  (Kraemer-Eis, 
Botsari,  Gvetadze,  Lang,  &  Torfs,  2021).  These  investments 
are  mostly  concentrated  on  ICT,  business  and  consumer 
services (Flachenecker, et al., 2020). 

the transparency, competition and the efficiency of 
the public procurement processes  (see  Annex  11). 
Late payments remain a concern.  

face 

entry 

stringent 

Certain  markets  for  services  face  excessive 
red  tape.  Lawyers  need  two  licenses  to  operate 
and 
requirements. 
Accountants and tax advisors must be member of 
the  respective  chambers  and  are  subject  to 
numerous  minimum  education  and 
training 
requirements,  on  top  of  mandatory  professional 
examinations. Architects, civil engineers and tourist 
regulatory 
guides 
restrictions. 

excessive 

similar 

face 

Unfair  competition  may  stem  from  weak 
surveillance of the market including for non-
food  products.  The  number  of  inspections  for 
such  goods  is  very  low  in  Romania  (the  third 
lowest  in  the  EU),  due  to  limited  resources. 
Responsibility for market surveillance of non-food 
products  is  spread  over  more  than  a  dozen 
authorities,  posing  coordination  and  prioritisation 
challenges.  Cooperation  with 
customs 
authorities  can  help  reduce  the  volume  of  non-
compliant products imported from outside the EU. 

the 

Romania  is  well  integrated  in  the  single 
is 
market  overall,  but  further  progress 
needed  especially  on  professional  services. 
22% of Romania’s labour force can be considered 
to  be  working  in  regulated  professions,  slightly 
higher  than  the  EU  average  of  21% (44).  Several 
professions 
tourist 
guides,  architects  and  civil  engineers)  face 
significantly more restriction than the EU average. 

(accountants/tax  advisers, 

The  overall  economy  was  resilient  to 
disruptions  in  the  global  supply  chain,  but 
not all sectors were equal. Sectors such as the 
automotive industry had to reduce production due 
to disruptions in supplies such as semiconductors. 

(44)  EUR-Lex - 52021SC0185 - EN - EUR-Lex (europa.eu) 

42 

 
 
                                                 
 
                                                 
 
Table A10.1: Key Single Market and Industry Indicators 

Source: See the source for each indicator in the table above (column “Description”). 

43 

SUB-POLICY AREAINDICATOR NAMEDESCRIPTION20212020201920182017Growth ratesEU27 average*Value added by source (domestic)VA that depends on domestic intermediate inputs, % [source: OECD (TiVA), 2018]69.2162.6%Value added by source (EU)VA imported from the rest of the EU, % [source: OECD (TiVA), 2018]19.2619.7%Value added by source (extra-EU)% VA imported from the rest of the world, % [source: OECD (TiVA), 2018]11.517.6%Cost competitivenessProducer energy price (industry)Index (2015=100) [source: Eurostat, sts_inppd_a]145.1107.2113.5104.395.951.30%127.3Material Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]5433367%26%Labour Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]981210650%14%Sectoral producer pricesAverage (across sectors), 2021 compared to 2020 and 2019, index [source:Eurostat]10.6%5.4%Concentration in selected raw materialsImport concentration a basket of critical raw materials, index [source: COMEXT]0.190.180.170.160.1619%17%Installed renewables electricity capacity Share of renewable electricity to total capacity, % [source:Eurostat, nrg_inf_epc]57.256.65049.815%Net Private investmentsChange in private capital stock, net of depreciation, % GDP [source: Ameco]7.17.33.14.461.4%2.6%Net Public investmentsChange in public capital stock, net of depreciation, % GDP [source: Ameco]2.61.40.60.6333%0.4%Single Market integrationIntra-EU tradeRatio of Intra-EU trade to Extra-EU trade, index [source: Ameco]3.252.822.702.662.6722%1.59Professional services restrictivenessRegulatory restrictiveness indicatorRestrictiveness of access to and exercise of regulated professions (professions with above median restrictiveness, out of the 7 professions analysed in SWD (2021)185 [source: SWD (2021)185; SWD(2016)436 final])4   40.00%3.37Professional qualifications recognitionRecognition decisions w/o compensationProfessionals qualified in another EU MS applying to host MS, % over total decisions taken by host MS [source: Regulated professions database]42.445%Transposition - overall5 sub-indicators, sum of scores [source: Single Market Scoreboard]On averageOn averageOn averageAbove averageInfringements - overall4 sub-indicators, sum of scores [source: Single Market Scoreboard]Below averageOn averageOn averageOn averageInvestment protectionConfidence in investment protectionCompanies confident that their investment is protected by the law and courts of MS if something goes wrong, % of all firms surveyed [source: Flash Eurobarometer 504]5856%BankruptciesIndex (2015=100) [source: Eurostat, sts_rb_a]66.870.659.844.749.40%70.1 (2020)Business registrationsIndex (2015=100) [source: Eurostat, sts_rb_a]122.4147.7130141.8-13.7%105.6Late paymentsShare of SMEs experiencing late payments in past 6 months, % [source: SAFE]52.65253.1n.a.n.a.-1.0%45%EIF Access to finance index - LoanComposite: SME external financing over last 6 months, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.250.210.270.25-1.1%0.56 (2020)EIF Access to finance index - EquityComposite: VC/GDP, IPO/GDP, SMEs using equity, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.060.090.080.15-56.8%0.18 (2020)% of rejected or refused loansSMEs whose bank loans’ applications were refused or rejected, % [source: SAFE]17.722.316.518.618.4-3.8%12.4%SME contractorsContractors which are SMEs, % of total [source: Single Market Scoreboard]63%SME bidsBids from SMEs, % of total [source: Single Market Scoreboard]70.8%Public procurement SINGLE MARKETCompliance - cooperation EC and MSBUSINESS ENVIRONMENT - SMEsBusiness demographyAccess to financeInvestment dynamicsHEADLINE INDICATORSEconomic structureRESILIENCEShortages/supply chain disruptionsStrategic dependencies 
 
     
 
ANNEX 11: PUBLIC ADMINISTRATION 
ANNEX 11: PUBLIC ADMINISTRATION 

capacity 

administrative 

Good 
enables 
economic  prosperity,  social  progress,  and 
fairness. Public administrations at all government 
levels deliver crisis response, ensure the provision 
of  public  services  and  contribute  to  building 
resilience  for  the  sustainable  development  of  the 
EU economy.  

increase  interoperability  of  the  various  public 
institutions’  IT&C  systems.  These  are  expected  to 
reduce  fragmentation,  boost  interoperability  and 
simplify bureaucratic barriers. 

Graph A11.2: Performance on the single market 
public procurement indicator 

Graph A11.1: E-government benchmark scores (lhs) 
and e-government users (rhs) 

Source: Eurostat (ICT use survey) and E-government 
benchmark report 

(1) The competition and transparency indicators are triple-
weighted, whereas the efficiency and quality indicators have 
unitary weights. All others receive a 1/3 weighting in the SMS 
composite indicator. 
Source: Single market scoreboard 2020 data. 

Evidence-based  policy-making  remains  a 
long-standing  structural  challenge.  Public 
consultations and stakeholder involvement remain 
limited  as  does  the  use  of  ex  ante  and  ex  post 
impact 
unpredictability 
continued  in  2021  with  a  large  share  of  laws 
in  extraordinary  proceedings  by  the 
adopted 
government,  and  a 
fast-changing  body  of 
legislation.  

assessments. 

Policy 

The quality of public procurement in Romania 
remains a major challenge. In the Single Market 
Scoreboard,  Romania  performs  below  the  rest  of 
the 
the  EU.  Transparency,  competition  and 
remain 
efficiency,  of  procurement  processes 
problematic (Graph A11.2).  

reforms 

The  effectiveness  of  Romania’s  public 
administration  is  ranked  substantially  below 
the  EU27  average (45).  The  wide  range  of 
administrative 
is  advancing  slowly. 
Frequent 
reorganisations  and  dismissals  at 
management level hinder institutional stability, the 
the 
accumulation  of  administrative  capacity, 
continuity in reform implementation as well as the 
consolidation  and 
reform 
outcomes.  High  fragmentation  of  competencies 
and  resources  continues  to  affect  the  delivery  of 
public  services,  especially  at  decentralised  level 
and  in  lagging  areas.  Decision-making  has  often 
been based on government emergency ordinances. 

sustainability  of 

Digital public services in Romania have been 
slowly  improving.  The  country  still  scores  far 
below  the  EU  average  (41.8  vs  70.9)  (Graph 
A11.1). Only 17% of internet users actively use e-
government  services  (EU  average:  70.8%).  The 
Romanian  recovery  and  resilience  plan  (RRP) 
investments  for  the 
envisages  reforms  and 
development  of  the  government  cloud  and  to 

(45)  Worldwide Governance Indicators, 2021  

44 

01020304050607080ROEU27averageROEU27averageUser centricityTo obtain informationTransparencyTo download official formsKey EnablersTo submit completed formsCross-border servicesE-governmentbenchnark scoreE-government users0102030405060708090100Chart TitleRomaniaCompetition & TransparencyEfficiency & QualitySingle bidderCooperative procurementNo calls for bidsAward criteriaPublication rateDecision speedSME ParticipationData QualitySME contractorsMissing call for bidsSME bidsMissing seller registration #Procurement by lotsMissing buyer registration # 
 
   
                                                 
   
 
 
Table A11.1: Public administration indicators – Romania 

(1) High values indicate good performance, except indicators 7 and 8. 
(2) Measures the user centricity (including for cross-border services) and transparency of digital public services as well as the 
existence of key enablers for the provision of those services. 
(3) Break in the series in 2021. 
(4) Defined as the absolute value of the difference between the share of men and women in senior civil service positions. 

Source:  ICT use survey, Eurostat (1); E-government benchmark report (2); Open data maturity report (3); Fiscal Governance 
Database (4, 9, 10); Labour Force Survey, Eurostat (5, 6, 8), European Institute for Gender Equality (7), Single Market Scoreboard 
public procurement composite indicator (11); OECD Indicators of Regulatory Policy and Governance (12). 

Administrative  capacity  at  all  government 
levels remains a challenge. Coordination of the 
tasks between the institutions is poor. Programme 
development  is  impeded  by  weak  collaboration 
between  central  and  local  administration  and 
heavy  political 
interference.  As  a  result,  the 
objectives  and  policies  of  programmes  change 
often  and  delays  occur.  Programme  management 
and  strategic  planning  skills  are  limited,  and  the 
participation  of  civil  servants  in  adult  learning  is 
low compared to the EU average. Romania’s 2021 
on  merit-based 
includes  measures 
RRP 
recruitment of civil servants. 

justice  system 

The 
is  facing  efficiency 
challenges,  and  there  are  concerns  about 
judicial  independence.  The  clearance  rate  for 
resolving  civil,  commercial  and  administrative 
cases  at  first  instance  decreased  very  slightly 
(96.7% in 2020 vs 100.2% in 2019 and 103.5% in 

length  of  administrative 
2018).  The  average 
proceedings  increased  considerably  (690  days  in 
2020  vs  138  days  in  2019),  and  the  clearance 
rate decreased to 48.4% in 2020 (from 100.3% in 
2019).  The  justice  systems  is  losing  human 
resources  as  the  number  of  newly  recruited 
magistrates  does  not  compensate  for  the  current 
lack of judicial staff and the increasing number of 
magistrates retiring (46).  

(46)  For more detailed analysis of the performance of the justice 
system  in  Romania,  see  the  2022  EU  Justice  Scoreboard 
(forthcoming)  and  the  country  chapter  for  Romania  of  the 
Commission’s 2022 Rule of Law Report (forthcoming). 

45 

RO20172018201920202021EU27113.012.015.016.017.070.82nananana41.870.93nananana75.581.1469.369.369.369.3na56.8554.255.356.754.953.655.36nana1.6na7.218.673.80.87.08.67.821.8810.410.110.711.712.021.390.800.800.800.80na0.72101.91.92.22.2na1.511-5.3-7.7-8.3-6.3na-0.7121.39nananana1.6Public Financial Management Medium term budgetary framework indexStrength of fiscal rules indexPublic procurement composite indicatorEvidence-based policy makingIndex of regulatory policy and governance practices in the areas of stakeholder engagement, Regulatory Impact Assessment (RIA) and ex post evaluation of legislation Scope Index of Fiscal InstitutionsEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with tertiary education, levels 5-8  (3)Participation rate of public administration employees in adult learning (3)Gender parity in senior civil service positions (4)Share of public sector workers between 55 and 74 years (3)2021 open data maturity indexIndicator (1)E-government Share of individuals who used internet within the last year to interact with public authorities (%)2021 e-government benchmark´s overall score (2) Open government and independent fiscal institutions 
 
 
                                                 
 
   
 
 
FAIRNESS 
FAIRNESS 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The European Pillar of Social Rights provides 
for  upward  convergence 
the  compass 
towards better working and living conditions 
in the EU. The implementation of its 20 principles 
on  equal  opportunities  and  access  to  the  labour 
market,  fair  working  conditions,  social  protection 
and inclusion, supported by the 2030 EU headline 
targets  on  employment,  skills  and  poverty 
reduction, will strengthen the EU’s drive towards a 
digital,  green  and  fair  transition.  This  Annex 
provides  an  overview  of  Romania´s  progress  in 
achieving  the  goals  under  the  European  Pillar  of 
Social Rights. 

Serious  labour  market  challenges  persist. 
While  the  employment  rate  increased  in  recent 
years (67.1% in 2021, up from 60.3% in 2016), it 
is  still  below  the  EU  average  of  73.1%.  The 
unemployment  rate  (5.6%  in  2021)  is  below  the 
EU average (7%) but is still above pre-crisis levels 
(4.9% in 2019).  

The  labour  market  participation  of  some 
population groups remains limited. The gender 

46 

employment  gap  is  among  the  highest  in  the  EU, 
at  20.1  pps,  and  widening,  with  inactivity  among 
women  standing  at  44.3%  mainly  due  to  the 
limited  availability  of  and  access 
to  early 
childhood  education  and  care  Because  of  the 
COVID-19  pandemic,  the  proportion  of  children 
under  3  years  old  in  formal  childcare  dropped  to 
6.8% in 2020 (from 14.1% in 2019) and remains 
significantly  below  the  EU  average  of  18.5%. 
Investment in the construction and running of 110 
crèches outlined in the recovery and resilience plan 
(RRP)  will  help  address  this  challenge.  The 
disability  employment  gap  stood  at  30.4  pps  in 
2020, above the EU average of 24.5 pps. Persons 
with  disabilities  still 
training 
opportunities.  In  2021,  only  41%  of  the  Roma 
were engaged in any form of paid work. The share 
of  young  people  not  in  education,  employment  or 
training  (NEET)  was  steadily  declining  before  the 
pandemic,  but  remains  among  the  highest  in  the 
EU and increased significantly to 20.3% in 2021.  

reduced 

face 

Activation  measures  provided  by  the  public 
employment  services  (PES)  do  not  ensure 
sufficient  coverage  and  targeted  support. 
Investments  outlined  in  the  RRP  will  support  the 
labour market through the digitalisation of the PES 
and  the  introduction  of  a  system  to  formalise 
domestic  work.  EU  cohesion  policy  funds  will 
further  support  the  modernisation  of 
labour 
market  institutions  and  the  transition  to  more 
efficient  and  sustainable  activation.  Although 
social  partners  can  play  an  important  role  in 
improving 
their 
involvement  in  policy  design  and  implementation 
remains  limited,  as  does  social  dialogue.  The  RRP 
plans  for  the  entry  into  force  of  a  new  social 
dialogue  law  and  a  revision  of  the  economic 
sectors,  while  the  European  Social  Fund  Plus 
(ESF+)  will  further  strengthen  social  partners’ 
capacity. 

labour  market  performance, 

quality 

and 
in  early 

The  education  and  training  system  faces 
persistent 
inclusiveness 
childhood 
challenges.  Enrolment 
education  and  care is  well  below  the  EU  average, 
and  the  rate  of  early  leavers  from  education  and 
training  is  high  and  likely  to  worsen  due  to  the 
pandemic  (see  Annex  13),  affecting  in  particular 
students  with  disabilities  or  disadvantaged 
backgrounds,  such  as  Roma  and  people  living  in 
rural  areas.  Under  the  Recovery  Assistance  for 

 
 
 
 
 
 
is 

continues,  as  established,  with  the  objective  of 
being  finalized  as  soon  as  possible.  Self-reported 
unmet  needs  for medical  care  remains  above  the 
EU  average,  with  substantial  differences  between 
income  groups  and  regions.  Access  to  long-term 
insufficient,  especially  at 
care  services 
community  level,  as  is  public  spending  on  long-
term care. For older people, home care coverage is 
one of the lowest in the EU and unmet needs for 
long-term care are significantly higher than the EU 
average (61.6% in 2019 vs 46.5%). Implementing 
the  minimum  inclusion  income,  minimum  wage 
in  child 
and  pension 
protection  and the  deinstitutionalisation  of  people 
with  disabilities,  as  outlined  in  Romania’s  RRP 
could  help  the  country  achieve  the  2030  EU 
headline target on poverty reduction.  

investments 

reforms, 

Cohesion and the Territories of Europe (REACT-EU), 
Romania  financed  additional  classes  to  mitigate 
the impact of COVID-19-related school closures on 
the most vulnerable pupils. However, there is still a 
pressing  need  to  improve  learning  outcomes  and 
reduce inequalities in education.  

training 

Insufficient  alignment  of  skills  with  labour 
market needs remains a challenge. Romania’s 
RRP aims to improve the labour market relevance 
of  vocational  education  and 
(VET) 
graduates and higher education. Certain measures 
will  receive  ESF+  support,  in  particular  those  that 
aim to help vulnerable students gain access to all 
levels  of  education.  Levels  of  digital  skills  and 
participation in adult learning remain critically low, 
with  less  than  one  third  of  people  aged  16-74 
having  at  least  basic  digital  skills  (EU  average 
54% in 2021). Based on the latest available data 
for  2021,  participation  in  adult  learning  over  the 
past  4  weeks  stood  at  4.9%  (compared  to  10.8% 
in 
the  quality  and 
inclusiveness of education and training will be key 
if  Romania  is  to  achieve  the  2030  EU  headline 
targets on skills and employment. 

the  EU).  Strengthening 

Poverty risks and inequality remain elevated. 
Romania has one of the highest shares of people 
at risk of poverty or social exclusion (AROPE) in the 
EU  (35.8%  in  2020  vs  an  EU  average  of  21.6%). 
The same is particularly high among people living 
in  rural  areas,  marginalised  communities  and 
vulnerable groups, including the Roma. This is also 
partly  due  to  the  high  share  of  Roma  living  in 
municipalities  or 
informal  settlements  where 
access to the labour market and public services is 
severely  limited.  The  child  AROPE  rate  is  among 
the highest in the EU (41.5% vs an EU average of 
23.9%)  and  almost  1  in  3  children  experienced 
severe  material  and  social  deprivation  in  2020. 
The  share  over  65  year-olds  and  people  with 
disabilities  at  risk  of  poverty  or  social  exclusion 
also  remains  among  the  highest  in  the  EU.  The 
impact  of  social  transfers  (excluding  pensions)  on 
poverty  reduction  is  among  the  lowest  across  EU 
countries, while gaps in access to social protection 
remain  widespread  and  affect  in  particular  the 
unemployed  and  those  in  non-standard  forms  of 
employment.  

Social,  health,  educational  and  employment 
services are insufficiently integrated and the 
deinstitutionalisation process for adults with 
The 
disabilities 
children 
deinstitutionalisation 

behind. 
for 

lagging 

process 

is 

47 

 
 
ANNEX 13: EDUCATION AND SKILLS 
ANNEX 13: EDUCATION AND SKILLS 

This  Annex  outlines  the  main  challenges  for 
Romania’s  education  and  training  system  in 
light of the EU-level targets of the European 
Education  Area  strategic  framework  and 
other  contextual  indicators,  based  on  the 
analysis  from  the  2021  Education  and 
Training  Monitor.  Romania’s  education  and 
training  system  struggles  with  quality  and  equity 
challenges  that  risk  to  worsen  due  to  the 
pandemic.  Romania  lags  significantly  behind  the 
EU  average  and  the  EU-level  targets  on  early 
childhood  education,  basic  skills,  early  leavers 
tertiary 
from  education  and 
education.  

training,  and 

Participation  in  early  childhood  education 
and  care  is  low  and  decreasing.  Romania  is 
among the EU Member States where participation 
rates  in  early  childhood  education  have  declined 
compared to 2014. The enrolment rate of children 
between  the  age  of  3  and  the  starting  age  of 
compulsory  education  is  one  of  the  lowest  in  the 
EU  and  significantly below  the  European  average, 
in particular for Roma children (27%).  

The  majority  of  pupils  from  disadvantaged 
backgrounds  lack  basic  skills.  The  share  of 
young  people  with  low  basic  skills  in  reading, 
mathematics  and  science  -  as  measured  by  the 
PISA  test  –  is  almost  double  the  EU  average. 
Socio-economically  disadvantaged  students  are 
disproportionately  affected.  The  performance  gap 
between them and their more advantaged peers is 
equivalent  to  2.5  years  of  schooling.  Digital  skills 
among young people are also low. Learning losses 
expected  due  to  the  pandemic  risk  to  further 
aggravate  the  situation.  Public  expenditure  on 
education is one of the lowest in the EU (3.6% of 
GDP in 2019, EU-27: 4.7%).  

Inequalities  are  manifested  in  a  large  rural-
urban  divide  and  for  the  Roma.  Early  school 
leaving  remains  high,  in  particular  in  rural  areas 
(23.2%) and among the Roma, with consequences 
for  their  labour  market  and  social  inclusion. 
Disadvantaged  pupils  are  often  concentrated  in 
schools  in  which  the  quality  of  education  and the 
learning conditions are poor.   

Evidence (47) shows that teacher policies face 
major  challenges.  With  a  relatively  young 

(47)  See  Kitchen,  Fordham,  Henderson,  Looney,  &  Maghnouj 
(Presidential 
Romania 

(2017), 
Administration, 2021) and OECD (2020). 

Educated 

Report 

teacher  education 

teacher  population,  Romania’s  ambitions 
to 
improve  educational  outcomes  rely  largely  on  its 
existing teaching force. However, neither initial nor 
continuous 
is  sufficiently 
aligned  with  classroom  needs.  Long  career 
impact  on  the 
low  salaries 
progression  and 
attractiveness  of  the  teaching  profession.  The 
merit-based  allowance  tends  to  encourage  a 
narrow focus on tests and academic competitions, 
improvements. 
rather 
Attracting 
to 
teachers 
disadvantaged  schools  and  ensuring  sufficient 
support specialists remain challenging.  

than  supporting  equity 

qualified 

highly 

of 

the 

in  a 

Participation  in  higher  education  is  low, 
resulting 
lack  of  highly  skilled 
professionals.  Persistently  high  rates  of  early 
school  leaving,  the  low  passing  rate  at  the 
baccalaureate  exam,  as  well  as 
low 
participation  of  students  from  disadvantaged 
backgrounds  contribute  to  low  higher  education 
attainment.  The  rate  is  particularly  low  in  rural 
areas  (8.2%  vs  an  EU  average  of  29.6%).  The 
percentage 
(science, 
STEM 
is 
technology,  engineering  and  mathematics) 
among the highest in the EU (30%), however due 
to  low  participation  in  higher  education,  the 
number  of  graduates  ready  to  enter  the  labour 
market  is  low.  Furthermore,  the  labour  market 
relevance of vocational education and training and 
of  higher  education  still  needs  improvement. 
Emigration  has  further  reduced  the  number  of 
specialists with a higher education degree. Finally, 
participation  of  adults  in  learning  remains  limited 
(see Annex 12).  

graduates 

reforms  and 

investments  outlined 

The 
in 
Romania’s  recovery  and  resilience  plan  will  help 
address  some  of  these  long-standing  challenges. 
Key  reforms  focus  on  improving  early  childhood 
education and care, reducing early  school  leaving, 
setting  up  a  full  professional  route  for  dual 
education  and  digitalising  education  and  training. 
Such  reforms  will  be  backed  by  corresponding 
investments 
infrastructure,  equipment  and 
digitalisation,  and  training  programmes,  among 
others. 

in 

48 

 
 
                                                 
 
Table A13.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

The 2018 EU average on PISA reading performance does not include ES  
b = break in time series, c = confidential, u = low reliability, : = not available 
Data are not yet available for the remaining EU-level targets under the European Education Area strategic framework, covering 
underachievement in digital skills, exposure of vocational education and training graduates to work-based learning and 
participation of adults in learning.  
Source: Eurostat (UOE, LFS); OECD (PISA). 

49 

96%84.6%91.9%78.6%201992.8%2019Reading< 15%38.7% 20.4%40.8%201822.5%2018Mathematics< 15%39.9% 22.2%46.6%201822.9%2018Science< 15%38.5% 21.1%43.9%201822.3%2018< 9 %19.1%11.0%15.3%9.7%Men19.5%12.5%15.1%11.4%Women18.5%9.4%15.5% 7.9%Cities5.9%9.6%4.5% 8.7%Rural areas27.8%12.2%23.2%10.0%Native19.1%10.0%15.3%8.5%EU-born:u20.7%:u21.4%Non EU-born:u23.4%:u21.6%45% (2025)25.5%36.5%23.3%41.2%Men22.9%31.2%20.6%35.7%Women28.3% 41.8%26.2%46.8%Cities44.7%46.2%44.0%51.4%Rural areas8.6%26.9%8.2%29.6%Native25.5%37.7%23.2%42.1%EU-born:32.7%59.7%40.7%Non EU-born:u27.0%70.0% 34.7%28.6% 38.3%29.4%201938.9%2019Share of school teachers (ISCED 1-3) who are 50 years or overBy country of birthTotalBy genderBy degree of urbanisationBy country of birthEarly leavers from education and training (age 18-24)Tertiary educational attainment (age 25-34)Participation in early childhood education (age 3+)Low achieving 15-year-olds in:TotalBy genderBy degree of urbanisation20152021IndicatorTargetRomaniaEU27RomaniaEU27 
 
   
 
Graph A14.2: Projected increase in public 
expenditure on health care over 2019-2070 (AWG 
reference scenario) 

Source: European Commission/EPC (2021) 

Romania  faces  many  challenges  in  health, 
including  access  to  quality  care,  outdated  health 
infrastructure  and 
shortages  of  healthcare 
personnel.  Primary  care  and  prevention  are 
underdeveloped.  The  numbers  of  physicians  and 
nurses per capita are well below the EU averages. 
Reported  unmet  needs  for  medical  care  are  high 
to  EU  average,  with  substantial 
compared 
differences  between  income  groups  and  regions 
(see Annex 12). High antibiotic consumption raises 
public  health  concerns  related  to  antimicrobial 
resistance.  

Through  its  recovery  and  resilience  plan 
(RRP),  Romania  plans  to  invest  EUR  2.85 
billion  (9.8  %  of  the  total  RRP)  to  modernise  its 
health  infrastructure,  professionalise  healthcare 
management, 
resource 
human 
in  healthcare,  digitalise  health 
management 
institutions  and  develop  digital  infrastructure  for 
health services, including telemedicine.  

improve 

ANNEX 14: HEALTH AND HEALTH SYSTEMS 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Especially  relevant  in  light  of  the  ongoing  COVID-
19 pandemic, resilient healthcare is a prerequisite 
for a sustainable economy and society. This Annex 
provides  a  snapshot  of  the  healthcare  sector  in 
Romania.  

Life  expectancy  in  Romania  is  significantly 
lower than in the EU as a whole (Graph A14.1), 
and  it  fell    by  almost  17  months  in  2020  due  to 
COVID-19. As of 17 April 2022, Romania reported 
3.17  cumulative  COVID-19  deaths  per  1  000 
inhabitants and 146 confirmed cumulative COVID-
inhabitants.  Treatable 
19  cases  per  1  000 
mortality  (rate  per  100,000  inhabitants)  is  more 
than double the EU average, including deaths from 
prostate  and  breast  cancer.  Also,  mortality  linked 
is  high,  mainly 
lifestyle 
more  closely 
cardiovascular  disease,  lung  cancer  and  alcohol-
related deaths. 

to 

Graph A14.1: Life expectancy at birth, years 

Source: Eurostat database 

Health spending in Romania increased in the 
last decade but remains the second lowest in 
the  EU.  About  44  %  of  health  spending  was 
allocated to the hospital sector (including inpatient 
and  day  care  services)  in  2019,  amongst  the 
highest  proportion  among  EU  countries.  Although 
the public share of health spending (80% in 2019) 
is in line with the EU average, direct out-of-pocket 
payments  (18.9%  of  total  health  spending)  are 
above the EU average (15.4%). Public expenditure 
on  health 
increase  by  0.9 
percentage  points  (pps)  of  GDP  by  2070,  raising 
long-term  fiscal  sustainability  concerns  (Graph 
A14.2).  

is  projected 

to 

50 

80.580.980.981.081.380.474.975.275.275.375.674.2201520162017201820192020EURomania6.63.90.90.902468EURomania% of GDP20192070 increase 
 
   
   
 
 
 
 
 
 
 
Table A14.1: Key health indicators 

(1) Doctors' density data refer to practising doctors. Nurses' density data refer to practising nurses. More information: 
https://ec.europa.eu/health/state-health-eu/country-health-profiles_en 
Source:  Eurostat database except: * Eurostat database and OECD, ** ECDC.  

51 

20162017201820192020EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)208.0206.0210.6208.392.1 (2017)Cancer mortality per 100 000 population277.3275.6273.2264.0252.5 (2017)Current expenditure on health, % GDP 5.05.25.65.79.9 (2019)Public share of health expenditure, % of current health expenditure78.378.779.780.579.5 (2018)Spending on prevention, % of current health expenditure 1.71.81.41.52.8 (2018)Acute care beds per 100 000 population516.6525.3528.5533.3387.4 (2019)Doctors per 1 000 population *2.82.93.03.23.8 (2018)Nurses per 1 000 population *6.77.07.27.58.2 (2018)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day **24.424.525.124.023.814.5 (2020) 
 
   
 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

is  an 

The  regional  dimension 
important 
factor  when  assessing  economic  and  social 
developments  in  Member  States.  Taking  into 
account  this  dimension  enables  a  well-calibrated 
and targeted policy response that fosters cohesion 
and  ensures  sustainable  and  resilient  economic 
development across all regions.  

Regional  disparities  remain  very  high  in 
Romania  and  are  driven  by 
labour 
productivity, 
investment  and  employment 
gaps  between  the  Bucharest-Ilfov  capital 
region and the rest of the regions. Addressing 
these  gaps  and  prioritising 
investment  at  a 
regional  level  would  help  increase  the  country’s 
competitiveness  and  support  long-term  growth, 
development and modernisation. 

Romanian  regions  have  been  catching  up 
with  the  rest  of  the  EU  since  Romania’s 
accession  but  regional  disparities  persist.  In 
the capital  region, GDP per person corresponds to 
160% of the EU average, followed by West region 
with  71%.  In  the  other  regions,  GDP  per  person 
ranges from 44% to 66% of the EU average. The 
capital  region  and  four  other  regions  grew  faster 
than  the  EU  average,  while  the  three  poorest 
regions  saw  their  GDP  per  person  shrink  between 
2010 and 2019.  

also 

rates 

least  developed 

the  country’s 
growth 

In  2018,  productivity  in  Romania  was  below 
the EU average (at 69%) with great variation 
across  regions.  Productivity  ranges  from  133% 
of  the  EU  average  in  the  capital  region  of 
Bucharest-Ilfov  to  39%  in  North-East,  which  is 
region. 
also 
Productivity 
differed 
significantly.  Between  2010  and  2019,  real 
productivity  grew  fastest  in  the  capital  region 
(6.36%) and the West region (6.26%). Three other 
regions  saw  lower  productivity  growth,  but  still 
above the EU average, while in three other regions 
productivity  shrunk  between  2010  and  2019 
(Graph  A15.1).  One  factor  impeding  territorial 
development  is  the  lack  of  key  assets,  such  as 
transport infrastructure and skilled workers, in the 
less developed regions. In some regions, over 20% 
of  the  population  aged  18-24  leave  school  early, 
and  employment  in  high-technology  sectors  and 
R&D expenditure is extremely low. 

Graph A15.1: Real GVA per worker 

Unit: real GVA in MM EUR (2015 prices) by employment in 
thousands of persons. The light red circle shows the capital 
city region. The blue circles show the remaining NUTS2 
regions. The green diamond shows the national average. The 
purple line shows the EU27 average. 
Source: European Commission 

the 

The  climate  transition  affects  Romanian 
regions  to  varying  degrees  (Graph  A15.2). 
Although  Romania  has  one  of 
lowest 
greenhouse gas (GHG) emissions per capita in the 
EU,  it  has  some  of  the  highest  rates  of  carbon 
intensity.  Emissions  per  GDP  in  2019  were  430 
tCO2/EUR,  13%  less  than  in  2018  but  still  above 
the  EU  average  of  263  tCO2/EUR.  Three  NUTS3 
territories,  Gorj,  Dolj  and  Hunedoara,  are 
dependent  on  coal  mining  and  coal  energy 
production. Hunedoara and Gorj account for some 
90% of GHG emissions caused by Romania’s coal-
fired  power  plants,  or  approximately  30%  of  all 
Romanian  GHG  emissions  stemming  from  mining 
and  manufacturing.  Three  NUTS3 
territories, 
Mureş,  Prahova,  Galați,  are  dependent  on  energy 
intensive  high  emissions  industries.  In  2020,  30.6 
%  of  total  CO2  emissions  (ETS),  approx.  9.98 
million  tonnes,  were  the  result  of 
industrial 
in  Galați,  Prahova  and  Mureş.  The 
activities 
transition to a low-carbon economy is expected to 
increase  unemployment  and  worsen 
social 
conditions in the affected regions. 

Digital disparities persist between Romanian 
regions. ICT uptake is low and Romania ranks last 
in  the  EU  in  the  2021  edition  of  the  Digital 
Economy and Society Index (DESI). For instance, in 
2020,  only  13%  of  the  population  used  the 
internet 
interact  with  public  authorities 
compared  with  an  EU  average  of  56%.  In  2020, 

to 

52 

 
 
     
 
Table A15.1: Selected indicators at regional level – Romania 

Source:  Eurostat, *EDGAR Database 

the  share  rose  to  almost  30%  in  Bucharest-Ilfov, 
while  it  remained  very  low  in  all  of  the  less 
developed  regions,  ranging  from  10%  in  North-
East  and  South-Muntenia  to  13%  in  South-West 
Oltenia. 

Graph A15.2: Territories most affected by climate 
transition – Romania 

Source: European Commission. 

The  share  of  the  population  at  risk  of 
poverty and social exclusion is the highest in 
the  EU  with  major  disparities  between  the 
less  developed  regions  (with  shares  ranging 
from 19.3% in North-West to 47.1% in North-East) 
and the capital region. Regions with high shares 

53 

in 

The 

of  the  workforce  concentrated  in  low  productivity 
sectors experience relatively low salaries and high 
poverty  rates,  with  a  negative  impact  on  social 
cohesion. 
productivity, 
differences 
investment,  education  and  poverty  are  only 
partially  reflected  in  the  labour  market  figures. 
Unemployment in 2020 was low (5% overall) and 
varied  between  regions  (from  3.0%  in  North-East 
to  7.4%  in  South-East,  the  only  region  above  the 
EU  average).  Despite  the  overall  positive  labour 
low 
market 
population  growth  and  the  outward  migration  of 
skilled 
labour  generate  significant  workforce 
shortages. 

performance, 

persistently 

the 

region.  For 

instance,  while 

All  regions  in  Romania  were  affected  by  the 
COVID-19  pandemic  with  no  clear  territorial 
pattern.  The  socio-economic  consequences  seem 
to have been more severe in some regions, notably 
the  capital 
the 
unemployment rate fell sharply between 2015 and 
2019, it then rose by 2.3 pps in the capital region, 
by 1.8 pps in the Centre region and by around 1.0 
pp  in  the  South-East,  South-Muntenia  and  West 
regions.  The  share  of  the  population  at  risk  of 
material  deprivation  continued  to  decrease  in 
some  regions  such  as  the  capital  region,  South-
Muntenia  and  South-West  Oltenia,  while 
it 
increased  in  other  regions,  ranging  from  a  0.1  pp 
increase  in  North-West  region  to  3.4  pps  in  the 
Centre region.  

NUTS 2 RegionGDP per head (PPS)Productivity (GVA (PPS) per person Real productivity growthGDP GDP per head growthUnemplo-yment ratePopulation with high educational Early school leaversR&D expenditureCO2 emissions from fossil Innovation performanceEU27=100,2019EU27=100, 2018Avg % change on preceding year,2010-2019Avg % chAvg % change on preceding year, 2010-2019% of active population, 2020% of population aged 30-34, 2017-2019% of population aged18-24, 2017-2019% of GDP, 2018tCO2 equivalent, 2018RIS regional performance groupEuropean Union1001001.001.397.139.410.42.197.2România70693.053.125.025.616.60.50Nord-Vest64613.243.703.826.214.90.222.7Emerging innovator -Centru66762.802.657.123.820.00.313.4Emerging innovator -Nord-Est (RO)4439-1.91-1.183.017.020.20.192.3Emerging innovator -Sud-Est58643.293.237.416.521.50.096.3Emerging innovator -Sud - Muntenia5458-0.47-0.895.915.818.00.335.6Emerging innovator -Bucureşti - Ilfov1601336.366.724.752.47.31.153.8Emerging innovator +Sud-Vest Oltenia5453-0.17-0.625.019.613.40.248.6Emerging innovator -Vest71786.265.494.621.710.80.424.9Emerging innovator - 
   
 
 
      
 
MACROECONOMIC STABILITY 
MACROECONOMIC STABILITY 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 

This  Annex  provides  an  overview  of  key 
developments  in  Romania’s  financial  sector. 
The  financial  sector  remains  predominantly  bank-
based,  with  an  overall  low  degree  of  financial 
intermediation.  Total  banking  sector  assets  stood 
at almost 59% of GDP in 2021, of which the five 
largest banks had a share of 62.4% at the end of 
2020, marginally lower than in 2019. The banking 
sector  is  foreign  owned  to  a  large  extent  (around 
70%  of  total  assets),  mostly  by  euro  area  banks. 
The  loan-to-deposit  ratio  has  somewhat  declined 
since  2018,  mainly  due  to  the  strong  increase  in 
deposits. The market-funding ratio was rather low 
at 27.7% in 2020, as bank loans remain the most 
important  form  of  external  financing  for  most 
companies. 

pre-pandemic  levels.  The  results  of  liquidity  and 
solvency stress tests show that the banking sector 
is  able  to  manage  the  main  risks  that  might 
materialise  under  a  severe  macroeconomic 
scenario.  Non-performing  loans  (NPLs)  declined 
steadily  over  the  last  few  years  and  the  system-
wide NPL ratio stood at 3.7% in Q3-2021 (slightly 
above  the  EU  average).  Despite  the  increase  in 
loan-loss provisions in 2020, profitability remained 
resilient  and  further  improved  in  Q3-2021.  The 
cost-to-income-ratio has also steadily declined on 
the  back  of  banks’  efforts    to  increase  efficiency. 
Banks in Romania are increasingly offering digital 
solutions.  As  regards  the  non-banking  sector,  the 
to  be  highly 
insurance  market 
concentrated  on  top  insurance  undertakings  and 
on  types  of  insurance  other  than  life,  ,  notably 
motor vehicles segment.  

continues 

The  banking  sector  in  Romania  is  stable 
overall  and  it  weathered  the  impact  of  the 
pandemic  relatively  well.  Banking  sector 
capitalisation  has  been  stable  for  several  years, 
with  the  capital  adequacy  ratio  at  22%  in  Q3-
2021,  above  the  EU  average  and  also  well  above 

  The  sovereign-bank  nexus 

The banking sector’s exposure to government 
debt  and  to  the  real  estate  market  remains 
high. 
remained 
significant, with local banks’ government exposure 
reaching  around  24%  of  their  assets  at  August 
2021,  one  of  the  highest  shares  in  the  EU.  This 

Table A16.1:Financial soundness indicators 

(1)  Last data: Q3 2021. 
Source:  ECB, Eurostat, Refinitiv. 

54 

2015201620172018201920202021Total assets of the banking sector (% of GDP)57.655.652.651.050.057.158.8Share (total assets) of the five largest bank (%)57.459.159.561.662.662.4-Share (total assets) of domestic credit institutions (%)19.58.622.725.126.429.430.3Financial soundness indicators:1- non-performing loans (% of total loans)13.49.76.65.04.33.93.7- capital adequacy ratio (%)18.919.219.419.721.023.522.0- return on equity (%)11.310.611.713.612.39.013.8NFC credit growth (year-on-year % change)--7.97.74.17.516.6HH credit growth (year-on-year % change)--10.59.65.45.17.6Cost-to-income ratio (%)1-57.9-52.454.953.553.451.450.5Loan-to-deposit ratio (%)167.668.269.271.772.067.669.1Central bank liquidity as % of liabilities---0.00.00.1-Private sector debt (% of GDP)58.153.850.947.546.748.4-Gross external debt (% of GDP)1Gross external debt (% of GDP)   - public119.619.118.017.117.826.625.0Gross external debt (% of GDP)    - private126.928.227.926.827.427.926.6Long-term interest rate spread versus Bund (basis points)297.8322.9364.1429.0479.2440.3399.8Market funding ratio (%)28.829.529.727.527.227.7-Green bond issuance (bn EUR)----0.4 
 
 
 
 
 
 
  
 
results  in  an  increase  of  liquid  assets  and  a 
prudent  approach,  but  also  in  a  non-diversified 
liquidity  reserves  and  less  propensity  for  lending. 
The  latter  however  intensified  in  the  course  of 
2021, mainly in the corporate segment, supported 
by the guarantees offered by the State. Legislative 
proposals  such  as  on  interest  rates  capping  for 
mortgage  loans  may  result  in  tighter  lending 
conditions  and  thus  in  some  borrowers  switching 
to unregulated and unsupervised solutions.  

55 

 
 
ANNEX 17: MACROECONOMIC IMBALANCE PROCEDURE ASSESSMENT MATRIX 
ANNEX 17: MACROECONOMIC IMBALANCE PROCEDURE ASSESSMENT MATRIX 

The  Macroeconomic 
Imbalance  Procedure 
matrix presents the main elements of the in-
depth  review  for  Romania (48).  For  Member 
States  selected  in  the  2022  Alert  Mechanism 
Report  it  presents,  separately  for  each  source  of 
imbalance and adjustment issue, the main findings 
regarding  the  gravity  and  the  evolution  of  the 
identified  challenges,  as  well  as  policy  response 
and gaps. 

to 

to 

its 

its 

risks 

posing 

competitiveness 
external 

Romania’s  economy  is  facing  vulnerabilities 
related 
and 
balance 
particularly 
developments.  Increasing  fiscal  deficits  (and 
non-compliance  with  the  preventive  arm  of  the 
Stability  and  Growth  Pact)  spurring  the  negative 
current  account  balance,  pre-dated  the  COVID-19 
crisis  and  have  continued  to  increase  with  the 
pandemic, 
longer-term 
sustainability via higher entitlements. Government 
increased  significantly,  albeit  from 
debt  has 
moderate 
are 
levels. 
significant  for  government  and  private  sector 
debts.  Cost  competitiveness  losses  accumulated 
markedly mainly over the second half of the past 
decade but have eased somewhat in recent years 
due  to  more  moderate  pay  rises.  Red  tape,  an 
inefficient  public  administration  and  a  volatile 
legislative 
dampen 
competitiveness  and  put  a  burden  on  investment 
activity. 

framework, 

exposures 

Currency 

further 

to 

Going 
forward,  vulnerabilities  are  not 
expected  to  unwind  soon.  The  current  account 
deficit  is  expected  to  remain  elevated  in  the 
is 
medium  term,  as  the  government  deficit 
forecast  to  remain  sizeable,  despite  a  reduction. 
Sovereign  borrowing  costs  have  increased  since 
early  2021.  The  expected  acceleration  in  wages 
amid  higher  inflation  and  a  tightening  labour 
market 
cost 
competitiveness.  Nominal  depreciation  alleviated 
competitiveness  pressures  in  recent  years,  but 
further  depreciation  could  add  to  inflationary 
pressures  and  increase  the  burden  of  serving 
debts  in  foreign  currencies.  The  financing  of  the 
significant external borrowing needs could become 
complicated 
given 
more 

could  weigh 

challenging, 

further 

the 

on 

(48)  European  Commission 

STAFF 
(2022), 
WORKING  DOCUMENT  In-Depth  Review  for  Romania  in 
accordance with Article 5 of Regulation (EU) No 1176/2011 
on 
the  prevention  and  correction  of  macroeconomic 
imbalances, forthcoming.  

COMMISSION 

geopolitical  context  and  the  outlook  of  tighter 
financial conditions. 

including 

Recent  policy 
the 
initiatives, 
successful  implementation  of  the  RRP,  could 
address  some  vulnerabilities.  Some  fiscal 
consolidation  albeit  limited  has  started  in  2021. 
Public sector wages have been frozen since 2021 
while future increases in the minimum wage are to 
be set based on an objective mechanism by 2024, 
which  should  help  cost  competitiveness  and  net 
exports.  The  RRP  includes  measures  that  are 
conducive  to  improving  non-cost  competitiveness, 
such  as  enhancing 
infrastructure, 
improving  access  and  quality  of  education, 
improving 
and 
supporting  innovation.  Measures  to  foster  the 
efficiency  of  the  public  administration,  financial 
management and the judiciary, and to address the 
volatile legislative framework are also part of the 
RRP (49). Additional policy action could complement 
the RRP implementation in certain areas important 
for competitiveness and potential growth, such as 
labour  market 
local 
administrative  capacity,  and  linkages  between 
research institutions and firms. 

activation  measures, 

environment 

transport 

business 

the 

(49)  https://ec.europa.eu/economy_finance/recovery-and-resilience-

scoreboard/index.html#:~:text=What%20is%20it%3F,of%20the%20
Covid%2D19%20pandemic. 

56 

 
 
                                                 
                                                 
 
Table A17.1: Assessment of Macroeconomic Imbalances matrix 

Source: European Commission 

57 

Gravity of the challengeEvolution and prospectsPolicy responseExternal balance Thecurrentaccountdeficitdeterioratedfromanearlybalancedpositionin2014to5%ofGDPin2020and7.0%in2021.Thiswasmainlyduetorisingimports,whileexportmarketsharescontinuedtogrowslowly.ThefundamentalsoftheRomanianeconomysuggestaclosetobalancecurrent account.At–46%ofGDPin2021,theNIIPstoodbelowwhatfundamentalswouldsuggest,butclosetoprudentiallevels.Grossexternaldebtslightlyincreasedin2021to58%ofGDP,pushedbythegovernmentsector,withsignificantforeigncurrencyexposures.Currentaccountdeficitsareforecastat7.5%ofGDPin2022and7.3%in2023.Thus,theNIIPissettobecomemorenegative. Recently,thecurrentaccountdeficithasbeenfinancedagainprimarilybyforeigndirectinvestment,afterrelyingonportfolioinvestments in 2020.Thegovernmentsectorisamajorcontributortotheexternalfinancingneeds.Itsborrowingcostshaverisensinceearly2021.RatingagencieskeptRomania’sgovernmentdebtatthelowestinvestmentgrade.Beforethepandemic,expansionarypro-cyclicalfiscalpoliciesfosteredaprivateconsumptionboomthatledtoawideningof the current account deficit.Despitesomeconsolidationefforts,thegeneralgovernmentdeficitremainsat7.1%ofGDPin2021andisforecasttodecreaseonlymarginallyby2023.Withoutwell-specifiedmeasures,thereisariskthatRomaniawillnotcomplywiththeEDPrecommendationoftheCouncilin2022and2023.TheimplementationoffiscalandpensionreformsandtaxcollectionimprovementsincludedintheRRPwouldhelp improve the public finances.Competitiveness Over2016-2019,unitlabourcosts(ULCs)growthaveraged8.3%,fuelledbyveryhighnominalwageincreases.Thepandemicledtomoremoderatednominalwagegrowthof2.6%.In2021,astheeconomyrebounded, wage growth increased strongly to5.7%.Thedepreciationoftheleuexchangeratehassoftenedtheappreciationoftheunit-labour-cost-basedreal effective exchange rate.Non-costfactorssuchasdeficientinfrastructure,particularlyinpoorerregions,skillmismatchesandlowinnovationandacumbersomebusinessenvironment,fuelledbypoliticalandlegislativeuncertainty,negativelyimpactRomania’s competitiveness.ULCsareexpectedtoaccelerate,from-9%in2021,to6.4%and4.1%in2022and2023respectively,onthebackofwageincreasesof8.3%and7%,andwithproductivitygrowthataround2.3%.Thiscouldleadtostrongerappreciationsoftherealexchangerate,leadingtopotentialcost competitiveness losses.In2021,theminimumwageincreasewasmoderate,buthasincreasedby11%in2022,stillwellbelowtheaverageof22%between2016-2018.TheRRPforeseesanobjectiveminimumwagesettingmechanismasof2024.Since2021,publicwages have been frozen.TheRRPincludesmeasurestoimprovecompetitiveness,suchasimprovingtransportinfrastructure,educationquality,reducingredtapeandofferingbusinesssupport.Reformsalsoaimtoattractmoretalentandtoincreaseinnovationinresearchinstitutes,strengthenscience-industrynexus,increasethetransparencyandeffectivenessofpublicadministrationandjudiciary.Gapsrelatedtoactivationmeasures and local administrative capacity Imbalances (unsustainable trends, vulnerabilities and associated risks) 
 
 
 
 
 
   
 
ANNEX 18: TAXATION 
ANNEX 18: TAXATION 

This  Annex (50)  provides  an  indicator-based 
overview of Romania’s tax system. It includes 
information  on  the  tax  structure,  i.e.  the  types  of 
tax  that  Romania  derives most  revenue  from,  the 
tax  burden  for  workers,  and  the  progressivity  and 
redistributive  effect  of  the  tax  system.  It  also 
provides 
tax  collection  and 
compliance,  and  on  the  risks  of  aggressive  tax 
planning. 

information  on 

Romania’s  tax  revenues  are  very  low  in 
relation  to  GDP  (the  second  lowest  in  EU 
after Ireland, which is in a special situation), 
and  dominated  by  taxes  on  consumer  goods 
and  services  and  labour  taxes.  Romania’s 
government  revenues  are  less  than  30%  of  GDP, 
significantly lower than the EU average of 40%. In 
2021, labour tax revenues as a percentage of GDP 
were  among  the  lowest  in  the  EU,  but  still 
relatively  high 
in  the  national  tax  structure 
because  of  low  property  and  low  capital  taxes. 
Recurrent  taxes  on  immovable  property  are  low 
compared  to  the  EU  average.  A  flat  personal 
income tax (PIT) rate of 10% is generally in place. 
However,  there  are  several  exceptions to this  rule 
(e.g. the tax rate for dividends, IT and construction 
sectors  exemptions,  the  tax  rate  for  income  from 
the  transfer  of  immovable  property,  etc.),  that 
contradict the concept of a flat-rate tax system. 

Romania has low taxes that, in addition, are 
not  collected.  Tax  revenues  on  consumer  goods 
and  services  as  a  percentage  of  GDP  are  in  line 
with  the  EU  average  but  they  are  often  not 
collected (Romania has the highest VAT gap in the 
EU since measurements began). Environmental tax 
revenues  are  slightly  below  the  EU  average,  and 
property  taxes  are  among  the  lowest  in  the  EU. 
Romania  also  has  low  tax  rates  on  inheritances 
and the cadastral values, which serve as their tax 
base, are not updated. Finally, corporate tax rates 
were considerably below the EU average. 

Romania in 2021 was higher than the EU average 
for  low  income  levels,  and  lower  than  the  EU 
average  for  higher  incomes.  The  increase  in  the 
proportion  of  workers  receiving  minimum  wage 
(29%  in  2021  up  from  8%  in  2011)  has  made 
matters worse. The tax-benefit system has helped 
reduce  inequalities  (as  measured  by  the  GINI 
coefficient) by less than the EU average.  

Graph A18.1: Tax wedge indicators (2021) 

(1) The second earner average tax wedge measures how 
much extra personal income tax plus employee and employer 
social security contributions (SSCs) the family will have to pay 
as a result of the second earner entering employment, as a 
proportion of the second earner’s gross earnings plus the 
employer SSCs due on the second earner’s income. For a more 
detailed discussion see OECD (2016), ‘Taxing Wages 2016’, 
OECD Publishing, Paris. 
http://dx.doi.org/10.1787/tax_wages-2016-en  
(*) EU-27 simple average as there is no aggregated EU-27 
value. 
Source: Commission services  

labour 

Romania’s 
uniform  across  wage 
labour 
imbalances.  The 

relatively 
levels,  masking 
tax  wedge (51)  for 

taxes  are 

(50)  For more  data on tax revenues  as well as the methodology 
applied, see EC (2021a) and the ‘Data on Taxation’ webpage 
(data 
https://ec.europa.eu/taxation_customs/taxation-
1/economic-analysis-taxation/data-taxation_en).  For  more 
details on VAT GAP see EC (2021b). 

(51)  The  tax  wedge  is  defined  as  the  sum  of  personal  income 
taxes  and  employee  and  employer  social  security 
contributions  net  of  family  allowances,  expressed  as  a 
percentage of total labour costs (the sum of the gross wage 

58 

and  social security contributions  paid by the employer). It is 
calculated  for  specific  types  of  tax  payers  in  terms  of 
household composition and income level  expressed as % of 
average wage. Data on tax wedges can be consulted in the 
‘Tax 
ECFIN 
https://europa.eu/economy_finance/db_indicators/tab/  

database’ 

benefit 

and 

by 

37.238.238.338.338.2At 50% ofAverageWage (Singleperson)At 67% ofAverageWage (Singleperson)At 100% ofAverageWage (Singleperson)At 167% ofAverageWage (Singleperson)For secondearner at67% ofAverageWage (Twoearner…RO 
 
                                                 
   
 
                                                                              
 
Table A18.1: Taxation indicators 

(1) Forward-looking effective tax rate (OECD), (*) EU-27 simple average, as no aggregated EU-27 value. 
Source:  European Commission  and OECD 

Romania  is  making  some  progress  in  the 
digitalisation  of  the  tax  administration, 
which  is  helping  reduce  tax  arrears  and 
increase  collection.  Although  outstanding  tax 
arrears  have  declined  by  1.4  pps  to  43%  of  total 
net  revenue, they  remain consistently  higher than 
the  EU-27  average.  The  VAT  gap  (an  indicator  of 
the  effectiveness  of  VAT  enforcement  and 
compliance), already the highest in the EU   further 
deteriorated  in  2019.  E-filing  rates (52)  of  tax 
returns  increased  considerably  in  recent  years, 
together  with  the  simplifications  in  VAT  and  the 
relatively low level of administration necessary for 
the  flat  tax;  however,  collection  and  the  fiscal 
predictability should improve.  

investments 

reforms  and 

Romania’s recovery and resilience plan (RRP) 
outlines 
to 
digitalise the tax administration. This includes 
the digitalisation of the National Agency for Fiscal 
(ANAF),  which  already  started. 
Administration 
Ongoing  measures 
taxpayers’ 
facilitate 
to 
compliance  and  tax  administration  processes 
include  the  development  of  digital  services  and 
integrated risk management. 

(52)  EC  (2021c).  See  section  2.1.4  Improving  tax  administration 

for further details. 

59 

2010201820192020202120102018201920202021Total taxes (including compulsory actual social contributions) (% of GDP)26.426.826.827.137.940.141.041.3Labour taxes (as % of GDP)11.012.212.013.020.020.720.721.5Consumption taxes (as % of GDP)11.310.110.210.010.811.111.110.8Capital taxes (as % of GDP)4.13.73.93.37.18.28.17.9Total property taxes (as % of GDP)0.80.60.70.61.92.22.22.3Recurrent taxes on immovable property (as % of GDP)0.70.50.50.51.11.21.21.2Environmental taxes as % of GDP2.12.02.11.92.42.42.42.2Tax wedge at 50% of Average Wage (Single person) (*)42.336.036.637.337.233.932.432.031.531.9Tax wedge at 100% of Average Wage (Single person) (*)44.638.338.338.338.341.040.240.139.939.7Corporate Income Tax - Effective Average Tax rates (1) (*)14.414.414.419.819.519.3Difference in GINI coefficient before and after taxes and cash social transfers (pensions excluded from social transfers)6.05.06.86.98.47.97.48.3Outstanding tax arrears: Total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)44.443.031.931.8VAT Gap (% of VTTL)32.734.911.210.5Dividends, Interests and Royalties (paid and received) as a share of GDP (%)2.52.32.110.710.5FDI flows through SPEs (Special Purpose Entities), % of total FDI flows (in and out)0.047.846.236.7Tax structureProgressivity & fairnessTax administration & complianceFinancial Activity RiskRomaniaEU-27 
                                                 
 
   
 
ANNEX 19: KEY ECONOMIC AND FINANCIAL INDICATORS 
ANNEX 19: KEY ECONOMIC AND FINANCIAL INDICATORS 

Table A19.1: Key economic and financial indicators 

(1) NIIP excluding direct investment and portfolio equity shares. 
(2) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
Source: Eurostat and ECB as of 2 May 2022, where available; European Commission for forecast figures (Spring forecast 2022) 

60 

2004-072008-122013-1820192020202120222023Real GDP (y-o-y)7.60.64.54.2-3.75.92.63.6Potential growth (y-o-y)6.22.53.54.13.13.43.13.3Private consumption (y-o-y)12.8-0.16.13.9-5.17.92.93.5Public consumption (y-o-y)1.91.21.47.31.80.40.1-0.1Gross fixed capital formation (y-o-y)23.6-3.71.112.94.12.34.88.1Exports of goods and services (y-o-y)13.97.010.45.4-9.412.54.55.2Imports of goods and services (y-o-y) 27.91.310.58.6-5.214.65.05.3Contribution to GDP growth:Domestic demand (y-o-y)15.2-1.24.36.5-2.05.53.04.3Inventories (y-o-y)-1.40.00.4-0.6-0.31.80.1-0.3Net exports (y-o-y)-6.41.4-0.3-1.6-1.5-1.4-0.5-0.4Contribution to potential GDP growth:Total Labour (hours) (y-o-y)-0.8-1.1-0.3-0.5-0.8-0.9-0.5-0.4Capital accumulation (y-o-y)2.12.31.01.71.71.61.61.7Total factor productivity (y-o-y)4.81.32.82.82.32.72.02.0Output gap5.0-0.8-0.52.0-4.8-2.5-3.0-2.7Unemployment rate8.98.57.44.96.15.65.55.3GDP deflator (y-o-y)13.46.13.66.83.95.49.54.9Harmonised index of consumer prices (HICP, y-o-y)8.15.71.43.92.34.18.95.1Nominal compensation per employee (y-o-y)15.87.99.210.92.65.78.37.0Labour productivity (real, hours worked, y-o-y)7.82.84.73.1-2.214.21.52.5Unit labour costs (ULC, whole economy, y-o-y)7.45.24.56.64.7-9.06.44.1Real unit labour costs (y-o-y)-5.3-0.80.9-0.20.8-13.7-2.8-0.8Real effective exchange rate (ULC, y-o-y)9.1-3.03.01.5....Real effective exchange rate (HICP, y-o-y)8.5-2.90.3-0.21.30.1..Net savings rate of households (net saving as percentage of net disposable income)........Private credit flow, consolidated (% of GDP)14.03.00.12.01.3...Private sector debt, consolidated (% of GDP)43.770.756.546.748.4...of which household debt, consolidated (% of GDP)12.021.417.215.516.2...of which non-financial corporate debt, consolidated (% of GDP)31.849.339.331.332.2...Gross non-performing debt (% of total debt instruments and total loans and advances) (2)1.4.10.23.33.0...Corporations, net lending (+) or net borrowing (-) (% of GDP)-2.78.011.78.98.98.310.510.7Corporations, gross operating surplus (% of GDP)26.631.730.929.729.431.834.835.5Households, net lending (+) or net borrowing (-) (% of GDP)...:-5.6-8.3-10.7-11.7Deflated house price index (y-o-y)..0.9-1.92.2...Residential investment (% of GDP)2.02.92.42.22.42.6..Current account balance (% of GDP), balance of payments-10.3-6.3-1.9-4.9-5.0-7.0-7.4-7.3Trade balance (% of GDP), balance of payments-11.4-7.5-1.5-4.1-4.3-5.7..Terms of trade of goods and services (y-o-y)7.50.91.01.13.3-0.1-0.9-0.5Capital account balance (% of GDP)0.50.62.01.31.92.2..Net international investment position (% of GDP)-37.4-61.7-52.6-43.6-47.9-45.7..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (1)-5.0-22.2-10.6-4.1-7.1-6.7..IIP liabilities excluding non-defaultable instruments (% of GDP) (1)36.157.843.733.642.040.6..Export performance vs. advanced countries (% change over 5 years)84.169.124.715.621.2...Export market share, goods and services (y-o-y)13.92.36.31.62.42.3-0.20.9Net FDI flows (% of GDP).-2.8.-2.2-1.4-3.0..General government balance (% of GDP)-1.7-6.1-2.0-4.3-9.3-7.1-7.5-6.3Structural budget balance (% of GDP)..-1.8-4.9-7.8-6.3-6.5-5.4General government gross debt (% of GDP)14.827.036.935.347.248.850.952.6forecast 
 
 
 
 
 
 
 
 
 
   
 
ANNEX 20: DEBT SUSTAINABILITY ANALYSIS 
ANNEX 20: DEBT SUSTAINABILITY ANALYSIS 

less  favourable  snowball  effect  than 
in  the 
baseline.  In  the  ‘financial  stress’  scenario,  the 
country  temporarily  faces  higher  market  interest 
rates in 2022.  

Graph 2 shows the outcome of the stochastic 
projections.  These  projections  show  the  impact 
on  debt  of  2  000  different  shocks  affecting  the 
economic 
government’s 
growth,  interest  rates  and  exchange  rates.  The 
cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

budgetary 

position, 

Table  2  shows  the  S1  and  S2  fiscal 
sustainability 
indicators  and  their  main 
drivers.  S1  measures  the  consolidation  effort 
needed to bring debt to 60% of GDP in 15 years. 
S2  measures  the  consolidation  effort  required  to 
stabilise  debt  over  an  infinite  horizon.  The  initial 
budgetary position measures the effort required to 
cover  future  interest  payments,  the  ageing  costs 
component  accounts  for  the  need  to  absorb  the 
projected 
public 
expenditure  such  as  pensions,  health  care  and 
requirement 
long-term  care,  and 
measures  the  additional  adjustment  needed  to 

in  ageing-related 

the  debt 

change 

This  annex  assesses  fiscal  sustainability 
risks  for  Romania  over  the  short,  medium 
and  long  term.  It  follows  the  same  multi-
dimensional  approach  as 
the  2021  Fiscal 
Sustainability  Report, updated  on the basis  of the 
Commission 2022 spring forecast. 

Table  1  presents 
the  baseline  debt 
projections.  It  shows  the  projected  government 
debt  and  its  breakdown  into  the  primary  balance, 
the  snowball  effect  (the  combined  impact  of 
interest payments and nominal GDP growth on the 
debt  dynamics)  and  the  stock-flow  adjustment. 
These projections assume that no new fiscal policy 
measures  are  taken  after  2023,  and  include  the 
expected  positive  impact  of  investments  under 
Next Generation EU.  

Graph  1  shows  four  alternative  scenarios 
around the baseline, to  illustrate the impact 
of changes in assumptions. The ‘historical SPB’ 
scenario  assumes  that  the  structural  primary 
balance (SPB) gradually returns to its past average 
level.  In  the  ‘lower  SPB’  scenario,  the  SPB  is 
permanently  weaker  than  in  the  baseline.  The 
‘adverse interest-growth rate’ scenario assumes a 

Table A20.1: Debt sustainability analysis for Romania 

Source: European Commission  

61 

Table 1. Baseline debt projections20192020202120222023202420252026202720282029203020312032Gross debt ratio (% of GDP)35.347.248.850.952.653.253.954.657.759.962.565.568.972.7Change in debt0.511.91.62.01.70.60.70.73.12.22.63.03.43.8of whichPrimary deficit3.28.05.76.04.73.83.32.93.43.53.53.53.73.8Snowball effect-2.41.4-3.5-3.8-2.5-3.2-2.6-2.2-0.3-1.3-0.9-0.5-0.30.0Stock-flow adjustment-0.32.6-0.6-0.1-0.50.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)7.615.810.211.010.110.210.110.111.211.812.413.114.014.8S1S2Overall index (pps. of GDP)3.54.3of whichInitial budgetary position3.94.3Debt requirement-0.5Ageing costs0.10.0of whichPensions-0.2-1.0Health care0.30.8Long-term care0.10.3Others0.0-0.1                                                                       Table 2. Breakdown of the S1 and S2 sustainability gap indicators253545556575852019202120232025202720292031BaselineHistorical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioGraph 1. Deterministic debt projections (% of GDP)p10-p20p20-p40p40-p60p60-p80p80-p902535455565758520192020202120222023202420252026Graph 2. Stochastic debt projections(% of GDP)MedianBaseline 
 
 
 
   
 
Table A20.2: Heat map of fiscal sustainability risks for Romania 

(1) Debt level in 2032: green: below 60% of GDP, yellow: between 60% and 90%, red: above 90%. (2) The debt peak year 
indicates whether debt is projected to increase overall over the next decade. Green: debt peaks early; yellow: peak towards the 
middle of the projection period; red: late peak. (3) Fiscal consolidation space measures the share of past fiscal positions in the 
country that were more stringent than the one assumed in the baseline. Green: high value, i.e. the assumed fiscal position is 
plausible by historical standards and leaves room for corrective measures if needed; yellow: intermediate; red: low. (4) Probability 
of the debt ratio exceeding in 2026 its 2021 level: green: low probability, yellow: intermediate, red: high (also reflecting the initial 
debt level). (5) The difference between the 90th and 10th percentiles measures uncertainty, based on the debt distribution under 
2000 different shocks. Green, yellow and red cells indicate increasing uncertainty.  
Source: European Commission (for further details on the Commission’s multi-dimensional approach, see the 2021 Fiscal 
Sustainability Report) 

sustainability gap indicator S1 points to high risks. 
It  signals  that  a  large  consolidation  effort  of  3.5 
pps.  of  GDP  would  be  needed  to  bring  the  debt 
ratio  to  60%  of  GDP  in  15  years’  time  (Table 2). 
Overall,  the  high  risk  reflects  the  currently  large 
deficit,  rising  debt,  and  sensitivity  to  adverse 
shocks.  

the 

long 

term,  both 

Long-term  risks  to  fiscal  sustainability  are 
the 
medium.  Over 
sustainability gap indicator S2 (at 4.3 pps. of GDP) 
and  the  DSA  point  to  medium  risks.  The  S2 
indicator  suggests  that,  to  stabilise  debt  over  the 
long  term,  it  will  be  necessary  to  address  the 
unfavourable 
initial  budgetary  position,  while 
containing increasing health care costs (Table 2).  

reach the 60% of GDP debt target. 

Finally,  the  heat  map  presents  the  overall 
fiscal  sustainability  risk  classification  (Table 
A20.2).  The  short-term  risk  category  is  based  on 
the  S0  indicator,  an  early-detection  indicator  of 
fiscal  stress  in  the  upcoming  year.  The  medium-
term  risk  category  is  derived  from  the  debt 
sustainability  analysis  (DSA)  and  the  S1  indicator. 
The DSA assesses risks to sustainability based on 
several  criteria:  the  projected  debt  level  in  10 
years’  time,  the  debt  trajectory  (‘peak  year’),  the 
plausibility  of  fiscal  assumptions  and  room  for 
tighter  positions  if  needed  (‘fiscal  consolidation 
space’),  the  probability  of  debt  not  stabilising  in 
the  next  5  years  and  the  size  of  uncertainty.  The 
long-term  risk  category  is  based  on  the  S2 
indicator and the DSA.  

short-term 

Overall, 
fiscal 
sustainability are low. The Commission’s early-
detection indicator (S0) does not signal short-term 
fiscal risks (Table A20.2).  

risks 

to 

Medium-term  risks  to  fiscal  sustainability 
are high. On the one hand, the debt sustainability 
analysis  (DSA)  points  to  medium  risks.  It  shows 
that government debt, currently at 48.8% of GDP, 
is  projected  to  continue  rising  significantly,  from 
around  51%  in  2022  to  around  73%  of  GDP  in 
2032  in  the  baseline  (Table 1).  This  debt  path  is 
also  sensitive 
to  fiscal, 
financial  variables,  as 
macroeconomic  and 
illustrated  by  alternative  scenarios  and  stochastic 
simulations,  all  pointing  to  medium  risks  (Tables 
A20.1  and  A20.2).  On  the  other  hand,  the 

to  possible  shocks 

62 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallMEDIUMMEDIUMMEDIUMMEDIUMMEDIUMMEDIUMDebt level (2032), % GDP7365787873Debt peak year20322032203220322032Fiscal consolidation space75%73%80%75%100%Probability of debt ratio exceeding in 2026 its 2021 level65%Difference between 90th and 10th percentiles (pps. GDP)40MEDIUMMEDIUMDeterministic scenariosStochastic projectionsLOWHIGHHIGHMEDIUMShort termMedium termLong termOverall                               (S0)Overall     (S1+DSA)S1Debt sustainability analysis (DSA)S2Overall     (S2+DSA)Overall 
 
 
 
   
 
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