COMMISSION STAFF WORKING DOCUMENT 2023 Country Report - Romania Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Romania and delivering a Council opinion on the 2023 Convergence Programme of Romania
Date: 2023-05-24
Institutions: European Commission, Secretariat-General
Subjects: Romania, economic policy, economic recovery, economic reform, energy policy, fiscal policy, green economy, renewable energy, stability pact, stability programme

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.5.2023  SWD(2023) 623 final  COMMISSION STAFF WORKING DOCUMENT 2023 Country Report  - Romania Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Romania and delivering a Council opinion on the 2023 Convergence Programme of Romania         {COM(2023) 623 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Romania is growing fast, but 
economic vulnerabilities are 
building-up  

financed  by  EU  funds,  including  the  Recovery 
and Resilience Facility (RRF). Exports are set to 
grow at a slower pace due to subdued activity 
by  Romania’s  main  trading  partners,  thus 
maintaining  the  gap  with  respect  to  imports 
and fuelling trade and current account deficits. 

In  2023,  price 

Inflation  has  peaked  but  remains  high. 
The  annual  inflation  rate  averaged  12%  in 
2022.  Energy  and  food  prices  contributed 
most, due to their high shares in the consumer 
goods  basket. 
levels  are 
expected to increase at a slower rate of 9.7%, 
as  energy  prices  have  fallen  and  are  capped 
until 
inflationary 
pressures  have  broadened,  affecting  wages 
and  core  HICP  components  such  as  services 
and  non-energy  industrial  goods,  hence  a 
reversal  of  the  inflationary  trend,  back  closer 
to  the  Romanian  central  bank  target  levels 
(2.5%±1 pp.). is going to take longer. 

Nevertheless, 

2025. 

The fiscal deficit declined to 6.2% of GDP 
in  2022.  The  reduction  in  the  deficit  in  the 
past  two  years  reflected  very  fast  growth  in 
government  revenues,  boosted  by  strong 
activity  and  high 
inflation.  Fiscal  support 
packages  helped  shield  the  economy  against 
the  consequences  of  the  pandemic  and  the 
energy  shock 
these 
measures  were  necessary,  but  could  have 
been better targeted. The deficit is projected to 
decline  further  in  2023-24.  However,  going 
below  3%  of  GDP  by  2024,  in  line  with  the 
ongoing  excessive  deficit  procedure,  will  be 
challenging  without 
corrective 
measures.  Romania  currently  has  the  second 
highest  bond  yield  spread  in  the  EU  and  its 
debt is just at investment-grade level.  

(Box  1.1).  Overall, 

further 

inflation  and 

economy  weathered 

Romania’s 
the 
fallout from Russia’s invasion of Ukraine 
well.  In  2022,  real  GDP  increased  by  4.7%. 
Despite  high 
continuous 
monetary tightening, private consumption and 
investment  grew,  on  the  back  of  unleashed 
pent-up demand and government support. This 
more than compensated for the contraction in 
some  energy-intensive  sectors  like  chemicals, 
(see  Annex  12). 
mining,  and  metallurgy 
Imports  grew  more  than  exports  (see  Graph 
1.1) and the current account deficit widened to 
9.3% of GDP.  

Graph 1.1: Demand, output and trade Balance 

Source: European Commission 

Growth  is  expected  to  be  resilient,  but 
slower.  Due  to  the  deceleration  in  the  euro 
area, ongoing high inflation and tight financing 
conditions,  real  GDP  is  projected  to  grow 
around  3-3.5%  in  2023  and  2024.  Activity  is 
investment 
expected  to  be  supported  by 

2 

 
 
  
 
Box 1.1:  Energy policy response 

Romania  adopted  various  support  measures  to  cushion  the  impact  of  energy  price  inflation  on 
households  and  businesses.  For  2023,  their  net  budget  costs  are  projected  in  the  Commission 
2023 spring forecast to amount to 0.3 % of GDP. Many measures have the effect of removing 
the  price  signal  as  an  incentive  for  consumers  to  use  less  energy  and  are  rather  untargeted. 
About  half  of  the  measures  adopted  represent  interventions  in  the  wholesale  and  the  retail 
market, and most are short-term measures. 

Measures aiming to support vulnerable households include subsidies for electricity and gas bills, 
covering  around  6  million  families  (approximately  85%  of  the  Romanian  population).  Several 
measures aimed at preventing excessive increases in energy prices were introduced in the form 
of ceilings on household and industrial electricity prices, as well as a ceiling on natural gas price 
for  households  and  industrial  customers,  both  initially  introduced  for  one  year  starting  in  April 
2022, but later extended to31 March 2025. 

The interventions in the market caused serious concerns among energy companies: in September 
2022  a  98%  tax  was  introduced,  which  applied  retroactively  to  wholesale  electricity  and  gas 
market  participants, and a  100%  windfall  tax  on  electricity, applied  on  the  difference  between 
the reference price set at Lei 450.00/MWh (€93.00/MWh) and the actual price. 

Romania  applies  the  EU  solidarity  contribution  in  application  of  Council  Regulation  (EU) 
2022/1854.  Due  to  its  own  domestic  production  of  natural  gas,  and  a  reasonably  balanced 
energy mix, Romania’s dependence on Russian natural gas is rather low. The measures taken to 
reduce gas consumption (such as temporarily restarting stopped coal-fired power plants, and a 
solidarity tax of 60% imposed on the additional revenues made by energy producers and other 
participants in the value chain such as traders and suppliers, with the contributions going directly 
to the energy transition fund), helped to further reduce this dependency. 

Regional  disparities  remain  high,  driven 
mainly  by 
labour  productivity  gaps 
between  regions.  In  2021,  productivity  was 
below  the  EU  average  (at  86%)  and  varied 
extensively  between  regions,  from  162%  of 
the  EU  average  in  the  Bucharest-Ilfov  capital 
region to 51% in Nord-Est (see Annex 17).  The 
less developed regions lack key assets such as 
transport infrastructure or skilled workers and 
have  been  more  strongly  affected  by 
depopulation.  

Labour market activity slightly improved. 
The  employment  rate  increased,  from  67.1% 
in  2021  to  68.5%  in  2022,  due  to  strong 
growth  and  the  phasing  out  of  pandemic 
restrictions,  allowing  the  services  sector  to 
scale  up  employment.  Still,  the  employment 
rate remains one of the lowest in the EU. The 
unemployment  rate  (5.6%  in  2022)  is  below 
the  EU  average  and  is  forecast  to  stay 
constant as growth slows.  

Nominal  wages  increased  significantly  in 
2022,  but  slightly  behind 
inflation. 
Nominal  wage  growth  was  13.4% (1)  in  2022, 
but  due  to  high  inflation,  real  wages (2)  fell 
slightly.  In  early  2023,  the  government  raised 
the  minimum  gross  salary  to  RON  3 000 
(approx.  EUR  610)  and to RON  4 000 (approx. 
EUR  813)  for  construction  workers,  with  both 
inflation  rate. 
increases  being  above  the 
However,  in-work  at-risk-of-poverty  in  2021 
was the highest in the EU, affecting 15.2% of 
employees,  especially  due  to  the  high  tax 
burden on low-income earners. The increase in 
public wages was kept well below inflation last 
year  but  should  re-accelerate  in  2023.  Wage 
growth  is  expected  to  remain  elevated  in 
2023, 
in 
purchasing power and ongoing high inflation. 

to  compensate 

loss 

the 

for 

(1)  National Statistical Institute.  

(2)  Proxied by compensation per employee, adjusted for 

inflation. 

3 

 
                                                 
 
Challenges persist in several areas 

The  energy  crisis  is  likely  to  increase 
demand  for  social  services  and  social 
protection.  Levels  of  income  inequality  and 
the risk of poverty and social exclusion remain 
among  the  highest  in  the  EU  (see  Annex  14). 
Moreover,  with  more  than  10%  of  the 
population already unable to keep their homes 
warm  in  2021,  higher  energy  prices  likely 
increased the  risk  of  poverty.  Access  to  social 
services  should  be  made  easier  and  the 
shortfall in long-term care and unmet medical 
needs, among the highest in the EU (see Annex 
16), should be improved. 

Poor  quality  education,  and  unequal 
access  to 
it,  persist,  and  vulnerable 
groups  face  labour  market  challenges. 
The  education  sector  would  benefit  from 
improving the skills of teachers and increasing 
the  attractiveness  of  the  teaching  profession. 
Only 8.4% of vocational education and training 
graduates  were  exposed 
to  work-based 
learning in 2022 and the employment rate for 
recent graduates (57.5%) is well below the EU 
average and decreasing (76.7%  in 2022). The 
skills  of  graduates  from  the  VET  and  higher 
education streams are not sufficiently aligned 
to  labour  market  needs,  requiring  changes  to 
the  curriculum (3).  The  rate  of  young  people 
neither  in  employment  nor  in  education  or 
training  is  among  the  highest  in  the  EU,  at 
19.8%  in  2022.  The  gender  employment  gap 
was  among  the  highest  in  the  EU  in  2022.  In 
2021  only  41%  of  the  Roma  population  were 
in  paid  work.  Better  capacity  to  provide 
effective  active  labour  market  policies  is  key 
to supporting these groups.  

Several  challenges  continue  to  hamper 
competitiveness,  as  also  assessed  in  the 
in-depth  review  for  Romania.  (4)  While 
certain  progress has  been  made,  the  judiciary 
staffing issues continue to pose a risk for the 

(3)  Thematic Review 2023 and OECD Economic Surveys: 

Romania 2022 

(4)  European Commission (2023), In-Depth Review for 
Romania, Commission staff working document 
(COM(2023) 642 final),   

the 

business 

quality  and  efficiency  of  the  system,  which 
impacts 
environment. 
Competition in procurement could be stronger. 
Markets  for  professional  services  remain 
highly restricted, while firms’ access to finance 
and  innovation  is  limited  and  with  regional 
asymmetries  (see  Annex  12).  Administrative 
capacity, especially at local and regional level, 
needs  to  be  strengthened.  In  addition,  an 
incomplete 
to 
undermine the security of property rights. The 
shortage  of  skilled  labour  remains  a  key 
challenge in light of the twin transition. Finally, 
the  lack  of  basic  infrastructure  in  several 
regions  reduces  their  attractiveness  for  firms 
and citizens. 

continues 

register 

land 

transition 

renewables, 

Romania’s  green 
requires 
continued  action  on  several  aspects, 
including 
sustainable 
transport  and  air  quality,  and  climate 
adaptation. 
in 
Challenges 
decarbonisation  and  energy  efficiency.  The 
Romanian Decarbonisation Law, investment in 
renewable  energy  production  and  prioritising 
green  energy  deployment  are  essential  (see 
Annex  8).  Lower  greenhouse  gas  emissions  in 
the building  and transport  sectors  are  needed 
to  achieve  national  targets  (see  Annexes  6,  7 
and 8).  

remain 

Romania’s  circular  economy  transition  is 
insufficient  and  needs  accelerating  to 
meet  the  EU’s  circular  economy  goals. 
Irregular  and  substandard  landfills  are  still 
widespread  and  present  serious  risks  for 
health  and  the  environment.  Recycling  rates 
are  stagnant  and  remain  below  EU  targets. 
Romania risks missing the 2025 targets for re-
use  and  recycling  of  municipal  waste  and 
packaging waste recycling (see Annex 9). 

Digitalisation  challenges,  as  captured  by 
the  Digital  Economy  and  Society  Index 
(DESI),  persist.  Romania  has  been  a  long-
time  laggard  in  the  DESI  index (5),  the  EU’s 
monitoring  tool  for  digital  transformation. 
However,  the  country  performs  relatively  well 
on fixed connectivity. And progress is expected 

(5)  Digital Economy and Society Index, European 

Commission, 2022. 

4 

 
                                                 
                                                 
in  spite  of 

in  5G  deployment,  due  to  measures  taken  in 
2022 
including  a  spectrum  auction.  Still, 
digitalisation of public services (such as cloud, 
e-government  services  and  telemedicine)  is 
recent  RRP  measures 
low, 
implemented 
in  2022.  Finally,  small  and 
medium-sized  Romanian  firms  need  to  adopt 
e-commerce,  e-invoicing  and  use  of  AI  and 
other advanced digital technologies (see Annex 
10). 

Romania  is  making  progress  on  most  of 
the  UN’s  Sustainable  Development  Goals 
(SDGs), but challenges remain. The country 
is  moving  away  from  several  targets,  in 
particular  on  climate  action  and  affordable 
and  clean  energy,  as  well  as  responsible 
consumption  and  production  (see  Annex  1). 
Significant progress is also needed to catch up 
with the EU average on three SDGs: education, 
clean  water  and  sanitation  and  poverty.  Poor 
quality  and 
in  research, 
low  expenditure 
development and innovation continue to affect 
industrial capabilities. 

5 

 
 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

Romania’s  recovery  and  resilience  plan  (RRP) 
aims to address the key challenges related to 
the green and digital transitions and economic 
and social resilience. It consists of 64 reforms 
and  107  investments  that  are  supported  by 
EUR  14.24  billion  in  grants  and  EUR  14.94 
billion  in  loans,  representing  12.15%  of  GDP 
(see Annex 3 for more details).   

The  following,  more  detailed 
review  of 
measures being implemented under the RRP in 
no way implies formal Commission approval or 
rejection of any payment requests. 

Green transition 

of 

implementation 

Romania’s 
The 
recovery and resilience plan is underway, 
however  with  increasing  risk  of  delays. 
Romania  submitted  two  payment  requests, 
corresponding to 72 milestones and targets in 
the  plan  and  resulting  in  a  disbursement  of 
EUR  2.6  billion  net  of  pre-financing  for  the 
first  payment  request,  while  the  assessment 
of the second one is ongoing. Measures under 
the RRP adopted since December 2021 include 
in  the  areas  of  digital 
several  reforms 
mobility, 
sustainable 
transition, 
decarbonisation,  audit  and  control,  education 
and health, as well as preliminary steps in tax 
and  pension  reforms.  Still,  there  are  risks  of 
significant  delays  with  the  implementation  of 
the  plan  due  to  the  weak  governance  and 
limited  capacity  of  the  public  administration. 
Tackling 
through 
securing adequate human resources, is key for 
a better coordination of the plan and a timely 
implementation of investments. Moreover, the 
completion of important structural reforms will 
need  continued  political  commitment  and 
ownership. 
considerable 
macroeconomic  and  fiscal  relevance  of  the 
plan,  a  timely  and  full  implementation  of  the 
measures would be crucial to contain external 
and fiscal vulnerabilities. The plan is expected 
to be revised in 2023, to include among others 
into 
a  REPowerEU  chapter,  while 
account  the  reduced  non-repayable  support 
due  to  Romania’s  strong  economic  recovery. 
Discussions to this end are ongoing.   

including 

issues, 

taking 

Given 

these 

the 

to 

funds 
consumption. 

There  is  progress  in  establishing  the 
reduce 
Renovation  Wave 
building 
The 
energy 
publication  of  the  guidelines  and  calls  will 
trigger 
renovate  a 
significant  number  of  public  and  private 
buildings  across  the  country  (ranging  from 
moderate to deep renovations), to significantly 
improve  their  energy  efficiency  and  seismic 
resistance (see Annex 7). 

financial  support 

to 

and 

road 

safety. 

The implementation of reforms related to 
sustainable  transport,  decarbonisation 
and road safety is advancing. Romania has 
adopted  new  strategies  to  develop  railway 
infrastructure 
Their 
implementation  is  expected  to  reduce  road 
accidents  and  improve  the  efficiency  and 
competitiveness  of  railways.  The  use  of  clear 
performance 
corporate 
governance  standards  in  road  construction 
companies  should  improve  their  performance 
and  the  quality  of  projects.  The  REPowerEU 
initiative  provides  a  unique  opportunity  to 
scale up and support energy-related measures 
to further enhance Romania’s decarbonisation 
objectives. 

indicators 

and 

Romania  took  the  first  steps  towards 
reforming  the  management  system  for 
protected natural areas.  It set  up  an inter-
ministerial  committee  to  analyse  the  legal 
framework  applicable  to  sectors  with  an 
impact  on  biodiversity.  This  committee  will 
propose  amendments  to  the  legal  framework 
information  on  the 
based  on  up-to-date 

6 

 
 
 
distribution and conservation status of species 
and habitats. 

Education and social policies 

The 
implementation  of  reforms  and 
investment  in  the  education  and  social 
sectors  is  progressing,  thereby  helping 
implement  the  European  Pillar  of  Social 
Rights.  Romania  has  adopted  updated 
legislation  to  ensure  the  design,  endowment, 
and operation of schools in the context of the 
transition  to  green  buildings.  Contracts  were 
signed to construct energy-efficient crèches, to 
increase  access  and  participation  in  early 
childhood education and care.  

The  national  programme  to  reduce  early 
school  leaving  was  launched,  with  1 409 
projects  being  implemented  to  help  pupils 
transition  from  lower  to  upper  secondary 
education. A technical assistance contract was 
signed  to  analyse  the  governance  of  the  pre-
university  education  system.  Romania  also 
adopted  a  set  of  minimum  standards  for 
technical equipment for schools, to ensure the 
quality  of  online  educational  activities, 
alongside  a  legal  framework  setting  out  a 
digital  skills  profile  for  teachers.  In  addition, 
61  universities  were  granted  funds  to  finance 
better  digital  infrastructure  and  develop  the 
skills of students and university staff.  

to 

The  plan  also  tackles  poverty  and 
inequality in Romania, which is among the 
highest  in  the  EU.  Romania  passed  the 
methodological  norms  for  implementing  the 
minimum  inclusion  income  reform.  This  aims 
to lift 1.5 million people out of severe material 
deprivation  by  promoting  adequate  income 
support  for  vulnerable  families,  coupled  with 
measures 
labour  market 
promote 
integration  for  those  who  can  work.  It  also 
took  the  first  steps  to  create  a  new  legal 
framework  to  prevent  the  separation  of 
children  from  their  families, 
including  by 
launching  a  call  for  150-day  service  centres. 
law 
Furthermore,  Romania  approved  a 
establishing a labour voucher system to boost 
formal employment for domestic workers who 
are  currently  recorded  as  unemployed  or 
the  adopted  social 
inactive.  Additionally, 
dialogue law has the potential to enhance the 

Digitalisation of the public 
administration 

without 

Romania is progressing in key reforms to 
digitalise 
the  public  administration, 
paving  the  way  for  modern  public  digital 
unnecessary 
services 
bureaucratic  barriers.  Relevant  milestones 
include 
a  National 
Cybersecurity  Strategy,  a  5G  network  security 
law,  an  interoperability  law  and  a  unitary 
framework for developing a government cloud 
system,  this  being  a  pioneering  piece  of 
legislation in Europe.  

adoption 

the 

of 

Fiscal and pension reform 

Romania  has  advanced  in  implementing 
investment to address key tax challenges. 
More  than  500 000  cash  registers  have  been 
connected  to  the  National  Agency  for  Fiscal 
Administration’s  electronic  system.  The  full 
connection  of  cash  registers  will  ensure  that 
transactions  performed  by  cash  registers  are 
tracked and stored electronically. This will help 
address  fraud  in  trade  and  ultimately  help 
reduce the VAT gap.  

Initial  steps  have  also  been  taken  to 
implement  the  comprehensive  pension 
system  reform,  a  central  element  of  the 
plan.  Romania  has  contracted 
technical 
assistance 
the  analysis  and 
to  prepare 
proposals  for  reforming  the  pension  system, 
including both the general and special regimes, 
in line with the principles set out in the RRP. A 
monitoring  committee  with  experts  from 
relevant  ministries 
independent 
institutions  has  also  been  established  to 
review  policy  interventions  in  the  pension 
system.  This  comprehensive  reform  aims  to 
ensure  fiscal  sustainability  in  an  environment 
of ageing population and to correct inequities.  

and 

7 

 
role  of  social  partners’  in  improving  labour 
market outcomes.  

Health resilience 

Business support, research, 
development and innovation 
(R&D&I)  

to 

improve 

The  first  steps  were  taken  to  promote 
private 
the 
investment 
innovation 
research,  development  and 
system.  A  number  of  financial  instruments 
were  launched,  including  portfolio  guarantees 
to small and medium firms, equity support for 
start-ups, 
large  companies  for 
climate  and  digital  objectives  and  guarantees 
to promote energy efficiency in the residential 
buildings  sector.  A  call  for  support  for 
Important  Projects  of  Common  European 
Interest in semiconductors was also launched.  

loans  for 

New 

projects. 

A first set of reforms have been adopted, 
which  aim  to  improve  the  healthcare 
system.  An  Agency  for  the  Development  of 
Health  Infrastructure  has  been  set  up  to 
manage  priority  public  health  infrastructure 
legislative 
investment 
frameworks  have  entered 
to 
increase  the  skills  of employees in  healthcare 
services  management,  promote  the  overall 
development of human resources and increase 
the  capacities  and  cost  effectiveness  of  the 
health  sector.  Moreover,  a  methodology  was 
adopted  prioritising  investment  in  integrated 
community 
marginalised 
communities,  aiming  to  increase  access  to 
primary and community healthcare services.  

into  force 

centres 

in 

Public administration  

track 

Romania  has  continued  to  maintain  a 
positive 
in  combating 
record 
corruption, to  increase the  independence, 
justice 
quality  and  efficiency  of  the 
system  and  to  support  better 
law-
to  provide  effective 
making.  Measures 
protection to whistleblowers have entered into 
force.  Further  reforms  include  streamlined 
public  procurement  rules,  a  strengthened  role 
for  the  National  Agency  for  the  Management 
of  Seized  Assets  and  a  new  inter-ministerial 
climate  committee 
to  coordinate  climate 
action.  To  improve  the  quality  of  policy-
making, Romania introduced new requirements 
for  government  strategies,  procedures  for 
budget  programming  and  an  effective 
regulatory control mechanism.  

8 

 
Box 2.1:  Key deliverables under the recovery and resilience plan 2023-24 

  Signature of contracts for modernising and renewing railway infrastructure and making road 

infrastructure  sustainable in the TEN-T network.  

  Entry into force of the legislative acts amending and supplementing the existing legislation 

on forests. 

  Entry into force of the legislative package implementing the ‘Educated Romania’ project. 

  Entry  into  force  of  the  law  setting  out  the  National  Digital  Skills  Reference  Framework  for 

pre-university education. 

  Publication and implementation of a Governance Reform Action Plan, including a training and 

coaching programme for managers and inspectors. 

  Complementary services set up, equipped and operational, to provide educational support to 

disadvantaged groups. 

  Entry into force of updated legislation for state-owned companies. 

  Amendment of the Criminal Code and Criminal Procedure Code. 

  Amendment  of  the  “Justice  laws”  (laws  on  the  status  of  magistrates,  judicial  organisation, 

Superior Council of Magistracy).  

  Entry into force of legislative amendments creating a favourable environment for public and 

private investment in research, development and innovation. 

  Entry  into  force  of  a  new  mechanism  to  objectively  set  the  minimum  wage  level  in  a 

systematic manner, in consultation with social partners. 

  Entry into force of the new law on the pension system. 

  Entry into force of amendments to the Fiscal Code, to reduce and/or eliminate tax incentives 

and legislation to expand green taxation. 

  Entry  into  force  of  a  new  Energy  Law  to  implement  the  contracts  for  difference,  establish 
renewable  power  purchasing  agreements  and  simplify  licensing  and  permitting  procedures 
for renewables investment. 

  Entry  into  force  of  the  amendments  to  the  regulatory  framework  based  on  the  National 

Hydrogen Strategy and the related action plan. 

  Signature of contracts for the energy-efficiency and integrated renovation of public buildings 

9 

 
 
FURTHER PRIORITIES AHEAD 

Beyond  the  major  challenges  tackled  in 
the RRP, Romania faces additional issues. 
Highly  restricted  markets  for  professional 
services,  an  incomplete  land  register,  the  lack 
of skills for the twin transition and ineffective 
public procurement may hamper private sector 
competitiveness,  innovation  and  the  efficient 
deployment of EU funds. In addition, access to 
quality  education  for  disadvantaged  groups, 
especially  in  rural  areas  and  for  the  Roma, 
remains  a  challenge  and  spending  on  active 
labour  market  policies 
low.  Finally, 
infrastructure development will also be crucial, 
to  boost  renewable  energy  development  and 
energy efficiency. Addressing these challenges 
will  also  help  to  make  further  progress  in 
to  quality 
achieving 
education  (SDG 4),  climate  action  (SDG  13), 
affordable  and  clean  energy 
(SDG  7), 
responsible  consumption  and  production  (SDG 
12), and sustainable development (SDG 9) (see 
Annex 1). EU funds can contribute significantly 
to  addressing  these  challenges,  but  improved 
governance and strong administrative capacity 
will  be  needed  to  ensure  they  are  used 
effectively. 

the  SDGs 

related 

is 

External sustainability risks 
increased 

is 

fuelling 

Strong domestic demand pushed by fiscal 
expansion 
external 
vulnerabilities.  The  current  account  deficit 
widened  to  9.3%  of  GDP  in  2022,  second 
highest 
in  the  EU,  due  to  fast-growing 
domestic  absorption  and  high  fiscal  spending, 
income 
as  trade 
balances  deteriorated 
further.  Transitory 
factors  such  as  the  energy  price  shock  also 
played  a  role,  although  Romania 
is  less 
dependent  on  energy  imports  than  other  EU 
Member  States.  The  financing  of  the  current 
account  deficit  seems  safe  for  now,  but 

in  goods  and  primary 

protracted  high  external  deficits,  especially 
during  volatile  and  uncertain  periods,  create 
risks. Due to its high fiscal  deficit, Romania is 
under  an  excessive  deficit  procedure  (EDP), 
while  macroeconomic  vulnerabilities  linked  to 
the  high  and  persistent  external  deficit  have 
been identified by the Commission through the 
Macroeconomic  Imbalance  Procedure (6)  (see 
Annex 22).    

adjustment 

vulnerabilities. 

Fiscal 
combined  with 
structural reforms and investment should 
be  the  preferred  way  to  address  the 
macroeconomic 
Going 
forward, reducing the fiscal deficit would bring 
demand more into line with supply and contain 
domestic and external deficits. This would also 
avoid  unnecessarily  burdening  other  macro 
policy  instruments  and  would  reduce  the 
medium-term 
cost  of  adjustment.  Full 
implementation  of  many  relevant  reforms 
(such  as  tax  and  pension)  and  investment 
contained  in  the  RRP,  and  adherence  to  fiscal 
targets under the EDP, would go a long way to 
reducing current trends. 

Romania continues to face 
competitiveness challenges 

Facilitating  firms’  access  to  finance  and 
innovation  could  spur  competitiveness 
and  support  the  digital  transformation. 
issue  for 
Access  to  finance  remains  an 
companies,  especially  smaller  ones,  that  are 
scaling  up.  Science-industry  partnerships  are 
uncommon.  However,  measures  already 
included  in  the  RRP  will  help  facilitate  access 

(6)  European Commission (2023), In-Depth Review for 
Romania, Commission staff working document 
(COM(2023) 642 final). 

10 

 
 
                                                 
to  finance,  scale-ups  and  business-researcher 
partnerships. 

including  the  National  Agency  for  Public 
Procurement, should be strengthened.  

a 

level, 

across 

institutions 

Administrative  capacity,  especially  at 
challenge. 
remains 
local 
Coordination 
and 
collaboration  across 
levels  of  government 
need  to  be  strengthened.  The  capacity  of  the 
public  administration  in  Romania  to  provide 
services  and  carry  out  reforms  is  limited,  and 
government  effectiveness 
is  significantly 
below the EU average (see Annex 13). 

An 
incomplete  cadastre  continues  to 
affect  the  security  of  property  rights  in 
Romania. Only around 42% of properties are 
registered  in  the  integrated  IT  system  for  the 
cadastre  and  land  book.  Filling  in  the  gaps  in 
the  cadastre  could  help  attract  investment.  It 
would  also  broaden  the  tax  base  and  local 
authorities’  revenues  from  taxes  on  buildings 
and  land.  These  taxes  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).  The  reform  of  the  tax  framework 
included in the RRP aims to identify distortions 
and areas where relevant legislation should be 
adjusted in the area of property taxes, among 
other things. 

to 

Regulatory  restrictions 
in  professions, 
such  as  lawyers  and  civil  engineers,  are 
stricter  in  Romania than  the  EU  average. 
form, 
subject 
are 
Lawyers 
incompatibility 
rules  and  multidisciplinary 
restrictions,  all  of  which  could  affect  the 
potential  of  this  sector  for  innovation.  The 
fragmented  system  regulating  civil  engineers 
and  their  activities  seems  to  be  a  barrier  to 
their 
the 
free  movement  and  hampers 
efficiency of service provision.  

legal 

could 

procurement 

Public 
be 
strengthened.  The  high  levels  of  single  bids 
(42%  of  contracts  in  2022),  direct  awards 
(23%), unsuccessful bids (40%, highest in the 
EU) and price-only award criteria (86%) signal 
a  lack  of  competition  resulting  potentially  in 
low  value  for  money in  public procurement  in 
Romania.  The  staffing  and  administrative 
capacity  of  public  procurement  authorities, 

remain 

shortages 

Skills 
sizeable, 
especially in view of the green and digital 
transitions.  Despite  recent  efforts,  such  as 
the  introduction  of  the  post  of  ‘sustainable-
development 
the  public 
expert’  within 
administration,  specific  skills  are  missing 
across  all  professions,  in  particular  in  those 
related  to  the  digital  and  green  transitions. 
Less  than  a  third  of  the  adult  population  has 
basic or above basic digital skills, compared to 
54%  in  the  EU.  According  to  the  European 
Skills  Index  Romania  is  among  the  worst 
performers,  especially  in  skills  development 
and  activation (7).  Only  24.7%  of  people  aged 
25-34  had  a  tertiary-education  degree  in 
2022  and  less  than  a  third  of  the  population 
aged 16-74 demonstrate basic or above-basic 
digital  skills.  While  Romania  has  a  higher 
proportion  of  ICT  graduates  than  the  EU 
average  (6.7%  of  all  graduates,  vs  EU  3.9%), 
the proportion of ICT specialists as part of the 
active  workforce  is  significantly  below  the  EU 
average (2.6% versus 4.5%). 

Labour  shortages  in  most  key  sectors 
have  increased,  as  people  with  relevant 
skills are missing, creating bottlenecks in 
the  transition  to  a  net-zero  economy.  In 
labour  shortages  were  reported  in 
2022, 
Romania  for  27  occupations  that  required 
specific  skills  or  knowledge  for  the  green 
transition,  including  insulation  workers,  civil 
construction  managers. (8) 
engineers  and 
Business reported these shortages as a factor 
constraining production in industry (for 11.6% 
of  firms)  and  construction  (for  17.4%  of 
firms). (9) Upskilling and reskilling for the green 
labour 
transition,  and  promoting 
levers  for 
markets,  are  essential  policy 

inclusive 

(7)  European skills index | CEDEFOP (europa.eu). 

(8)  European Labour Authority (2023), EURES Report on 
labour shortages and surpluses 2022. Skills and 
knowledge requirements are based on the ESCO 
(European Skills Competences and Occupations) 
taxonomy of skills for the green transition (for 
occupations at ISCO 4-digit level of which there are 
436 in total). Examples are identified based on their 
ESCO ‘greenness’ score and relevant sectors.  

(9)  European Business and Consumer Survey 

11 

 
                                                 
accelerating  the  transition  to  net-zero  and 
ensuring it is fair (see Annex 8). 

Active labour market, education 
and social policies still do not fully 
address disparities 

and 

skills 

shortages 

Labour 
and 
mismatches  remain  a  pressing  challenge 
for employability. Around 18% of employers 
in  the  construction  sector  reported  labour 
shortages  in  2022,  while  health  and  public 
administration  are  the  sectors  with  the  most 
difficulties  in  filling  positions.  According  to 
latest  available  data (10),  36.6%  of  people 
aged  15-34  with  at  least  upper  secondary 
education  worked  outside  their  field  of  study 
and  16.6%  of  workers  with  higher  education 
qualifications  were  employed  in  occupations 
that did not require that level of qualification. 
The  share  of  adults  participating  in  learning 
activities  stood  at  just  5.4%  in  2022.  This 
indicates  the  need  to  improve  quality,  better 
align  education  and  training  with 
labour 
demand  and  boost  efforts  to  upskill  and  re-
skill workers – for example through vocational 
education  and  training  (VET)  and  second-
chance 
Such 
measures  would  help  achieve  the  2030 
national  target  for  the  participation  of  adults 
in learning. 

programmes. 

education 

is  further  aggravated  by 

labour 
Focusing  on  effective  active 
market  policies  remains  a  key  priority. 
Spending  on  active  labour  market  policies, 
including  reskilling  and  upskilling,  is  very  low, 
preventing  higher  labour  market  participation. 
This 
low 
the  public  employment 
effectiveness  of 
labour  market 
services.  Access  to  active 
policies is even lower in rural areas and among 
disadvantaged  groups.  Public  employment 
services  could  deliver  effective  active  labour 
market  policies  (and  thereby  help  implement 
the  European  Pillar  of  Social  Rights)  by  using 
digital tools for services and internal processes 
and  implementing  skills  forecasting  models, 

the 

(10)  Skills - Experimental statistics - Eurostat (europa.eu); 

12 

intensive 

individual 
complemented  with 
support and assistance to those furthest from 
the  labour  market.  Better  engagement  of  the 
social partners can also improve labour market 
conditions,  enabling  stronger  and  more 
inclusive  growth.  Addressing  these  challenges 
would  help  Romania 
its  national 
employment  rate  target  by  2030  (see  Annex 
14). 

reach 

The  teaching profession  faces significant 
challenges.  Initial  teacher  education  offers 
very  little  preparation  in  the  core  domains  of 
pedagogics.  Among  a  number  of  factors,  low 
entry  requirements  for  teacher  education 
programmes  and  traditionally  low  salaries 
the 
the  attractiveness  of 
reduced 
have 
profession (11). 
Incentives  to  attract  highly 
qualified  teachers  to  disadvantaged  schools 
are  limited,  particularly  in  rural  areas,  where 
working  conditions  are  more  challenging.  To 
complete their teaching norm, teachers in rural 
areas  often  cover  subjects  for  which  they  are 
not  qualified,  which  affects  the  quality  of 
education there. 

Raising  the  quality  of  education  depends 
on  improving  the  policies  related  to  the 
teaching  profession.  30%  of  Romania’s 
school  teachers  are  older  than  50,  and  the 
overall  number  of  teachers  is  expected  to 
decline  in  line  with  the  student  population. 
Therefore, any reform of recruitment or initial 
teacher education will affect only a minority of 
the  profession  in  the  coming  decades (12).  So 
involves  working 
teaching  quality 
raising 
teachers.  A  high 
primarily  with  existing 
percentage  of 
in 
take  part 
teachers 
professional development, but the content and 
is  not  perceived  as 
delivery  of  courses 
sufficiently  adapted  to  their  needs (13).  In  the 

(11)  OECD (2017), Reviews of Evaluation and Assessment in 

Education, Kitchen, H., et al., Romania 2017. 
http://dx.doi.org/10.1787/9789264274051-en 

(12)  OECD (2019), Policy brief: Improving the teaching 

profession in Romania 
https://doi.org/10.1787/5cc2d673-en 

(13)  IŞE (2018), Institutul pentru Ştiinţe ale Educaţiei, 

Analiza de nevoi a cadrelor didactice din învățământul 
primar și gimnazial. Raport al investigației realizate în 
cadrul proiectului CRED http://www.ise.ro/wp-
content/uploads/2018/06/Raport-final-analiza-
nevoi.pdf 

 
                                                 
                                                 
last  few  years,  specially  during  the  pandemic, 
Romanian teachers have reported a high need 
for the development of ICT skills, for teaching 
students  with  special  educational  needs  and 
cross-curricular  skills (14).  Some  steps  were 
taken  to  address  these  needs, 
including 
through  the  CRED  project  and  RRP  measures 
expected  to  meet  training  needs,  including 
digital  skills.  Some  of  the  challenges  for  the 
teaching profession might be addressed by the 
ongoing revision of the education act. 

Addressing  widespread  poverty  and  the 
need  for  access  to  social  and  essential 
services remains a key challenge. Romania 
has  one  of  the  highest  rates  of  both  adults 
and  children  at  risk  of  poverty  and  social 
exclusion  within  the  EU.  The  situation  is 
expected  to  worsen  due  to  the  current  high 
inflation environment, which is putting further 
pressure  on  low-income  households.  Ensuring 
adequate measures targeted at mitigating the 
effects of increased prices on those at risk of 
poverty will therefore remain a key challenge.  

Energy-related challenges linked 
to decarbonisation remain  

the  share  of 

Romania  faces  decarbonisation-related 
challenges,  as  the  country  still  relies 
significantly  on  fossil  fuels.  The  share  of 
(coal,  oil  and  gas)  slightly 
fossil  fuels 
increased  in  2021  compared  to  2020  and 
stood  at  a  significant  share  of  72%  in  2021, 
while 
renewable  sources 
represents  only  about  20%  (see  Annex  6). 
Romania is the second largest gas producer in 
the  EU,  serving  mostly  the  domestic  market 
(see  Annexes  7  and  12).  A  focus  on  an 
renewables  and  a 
effective 
significantly  more  energy-efficient  residential 
sector  (given  the  updated  and 
increased 
targets in the building sector as part of effort 
sharing  national  targets)  would  significantly 
help  the  country  meet  increasingly ambitious 
EU/national  energy  and  climate targets  for 
2030, as set out in the fit-for-55 package.   

rollout  of 

with 

disabilities. 

The  coverage  of  social  services  remains 
low,  with  significant  gaps  between  rural 
and  urban  areas  (and  between  different 
regions).  The  insufficient  provision  of  non-
residential  community-based  care  services  is 
also  delaying  the  deinstitutionalisation  of 
EU-funded 
people 
programmes  for  2021-27  contain  significant 
investment  in this  area,  with  almost  EUR  680 
million  allocated  to  the  delivery  of  integrated 
rural 
services 
communities.  Other 
target 
improved  access  to  health  and  employment 
services,  with  a  focus  on  vulnerable  groups, 
including  people  with  disabilities  and  those 
from 
or  marginalised 
communities. 

for  2 000  disadvantaged 

investments 

remote 

areas 

renewable 

In  the  building  sector,  poor  access  to 
information  on  energy 
finance  and 
energy 
renovations  and 
installations  seriously  hamper  further 
improvements. The Romanian RRP envisages 
the  renovation  of  2.4  million  m2  of  public 
buildings  and  4.4  million  m2  of  residential 
ones,  while  cohesion  policy  has  earmarked 
funding  for  1.6  million  m2  of  renovation  in 
both sectors. Higher national targets for 2030 
require  additional  financing  for  the  country’s 
building  stock.  Notably,  better  access  to 
finance  by  private  households  and  smaller 
firms,  to  increase  energy  efficiency,  would 
significantly  help 
country’s 
dependency  on  fossil  fuels  (see  Annex  6). 
Additionally,  this  endeavour  would  benefit 
information  dissemination  by 
from  better 
regional and local authorities on how to access 
energy  renovation  funds  and  what  type  of 
small  renewable  energy  installations  could  be 
deployed in buildings and private households.  

reduce 

the 

(14)  IŞE (2018), OECD (2019a), OECD (2019), Results 

(Volume I): Teachers and School Leaders as Lifelong 
Learners, TALIS 

Increasing grid capacity is essential for a 
speedy  deployment  of  new  renewables 
capacity.  Decommissioned  coal  and  lignite-
power  capacity,  planned  to  be  completed  by 
2032,  as  committed  in  the  RRP,  should  be 

13 

 
                                                 
renewable  energy  sources. 
replaced  by 
However, the transmission infrastructure limits 
the  absorption  of  new  renewables  capacity. 
There are currently bottlenecks in the grid that 
hinder  the  deployment  of  renewable  energy. 
Sufficient  and  advanced  integrated  system 
planning  for  grid  upgrades  and  expansion 
(both at transmission and distribution level) is 
needed  to  respond  to  demand  and  flexibility 
needs  in  time  for  the  capacity  being  on  the 
ground.  Additionally,  permitting  rules  could be 
significantly  simplified  by  the  designation  of 
further  streamlining  of 
go-to-areas  and 
related  procedures.  This  would  improve  the 
current  situation,  where  obtaining  permits  for 
installing  renewable  power  plants  is  relatively 
easy,  but  obtaining  the  necessary  permits  to 
connect them to the grid is more challenging.  

appears 

insured 
to 

Between 1980 and 2020, only around 1% 
in 
losses  were 
of  disaster 
Romania,  which 
be 
particularly  vulnerable  to  floods.  The 
current  protection  gap  for  floods  in  Romania 
suggests that the insurance coverage remains 
low compared to projected risk, and this could 
result  in  losses  to  be  covered  by  the  public 
sector,  thereby  potentially  posing  a  risk  to 
public finances. 

14 

 
 
 
 
 
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  the  fiscal  sustainability  of 
the public pension system, while increasing 
its  fairness.  More  than  500 000  cash 
registers  have  been  connected  to  the 
National  Agency  for  Fiscal  Administration’s 
electronic  system,  to  reduce  fraud  and 
increase tax collection.  

  A  commitment  to  phase  out  coal  and 
lignite-fired power production by 2032 and 
concrete  targets  for  increased  renewable 
energy production. 1 695 MW of coal-fired 
installed  electricity  production  capacity 
have been decommissioned so far. 

Romania’s 

  Financing  of  the  “Renovation  Wave”  to 
reduce 
energy 
consumption and related reforms, for which 
Romania published  guidelines and calls for 
proposals. 

building 

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

  Taking  the  necessary  fiscal  measures  to 
put an end to the excessive deficit situation 
by 2024 at the latest, while enhancing the 
quality  of  public  finances  and  reinforcing 
the growth potential of the economy. 

  Removing 

regulatory 
unnecessary 
restrictions in certain professions, including 
lawyers, 
architects, 
accountants  and  notaries.  Completing  the 
cadastre.  Improving  skills  development  for 
the digital and green transitions.  

engineers, 

civil 

  Improving  the  staffing  and  administrative 
capacity  of  public  procurement  authorities, 
to increase competition.  

  Addressing 

skills 

shortages 

and 
mismatches  by  aligning  education  and 
training  with  the  needs  of  the  labour 
market, including through improved teacher 
the 
by 
policies, 
attractiveness of adult learning.  

increasing 

and 

  Digitalisation  of  public  administration  and 
public  services,  including  the  creation  of  a 
government  cloud.  Romania  adopted  a 
National  Cybersecurity  Strategy,  a  5G 
network security law and an interoperability 
law, among other reforms. 

  Strengthening  the  capacity  of  the  public 
employment  services  to  provide  targeted 
and  integrated  support,  in  particular  for 
vulnerable  groups  such  as  Roma,  and 
increasing 
the  effectiveness  of  active 
labour market policies. 

  Improving 

the  situation  of  vulnerable 
groups  such  as  Roma  by  addressing  high 
levels  of  poverty,  inequality,  and  material 
deprivation,  including  by  improving  access 
to 
and 
educational, 
employment services. 

health 

social, 

  Reducing  overall  reliance  on  fossil  fuels, 
accelerating 
renewable 
energy,  upgrading  high-  and  medium-
infrastructure  and 
voltage  transmission 

rollout  of 

the 

  Reform  of  the  pension  system  and  the 
minimum wage. Romania has implemented 
a first set of measures on pension reform. 

  Romania  should  ensure  an  effective 
governance  structure  and  strengthen  the 
administrative  capacity  to  allow  for  a 
continued swift and steady implementation 
of  the  recovery  and  resilience  plan  and 
swiftly finalise the REPowerEU chapter with 
a 
its 
rapidly 
to 
view 
implementation. 

starting 

15 

 
 
streamlining  permitting,  to  connect  green 
capacities to the grid. 

  Improving 

access 

and 
information  for  energy  renovation  and 
renewable energy installations.  

finance 

to 

16 

 
ANNEXES 

 
 
 
 
 
 
 
LIST OF ANNEXES 

Cross-cutting indicators 

A1.  Sustainable Development Goals 

A2.  Progress in the implementation of country-specific recommendations 

A3.  Recovery and resilience plan - overview 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy security and affordability 

A8.  Fair transition to climate neutrality 

Productivity 

A9.  Resource productivity, efficiency and circularity 

A10.  Digital transformation 

A11.  Innovation 

A12.  Industry and single market 

A13.  Public administration 

Fairness 

A14.  Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

A15.  Education and training 

A16.  Health and health systems 

A17.  Economic and social performance at regional level 

Macroeconomic stability 

A18.  Key financial sector developments 

A19.  Taxation 

A20.  Table with economic and financial indicators 

A21.  Debt sustainability analysis 

A22.  Macroeconomic imbalance procedure assessment matrix 

22 

22 

24 

27 

30 

33 

34 

34 

39 

43 

46 

46 

48 

51 

54 

58 

60 

60 

63 

66 

68 

70 

70 

73 

75 

76 

79 

 
 
 
 
LIST OF TABLES 

A2.1. 
Summary table on 2019-2022 CSRs 
A3.1. 
Key elements of the Romanian RRP('s) 
A5.1. 
Resilience indices summarising the situation across RDB dimensions and areas 
A6.1. 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
A7.1. 
Key energy indicators 
A8.1. 
Key indicators for a fair transition in Romania 
A9.1. 
Overall and systemic indicators on circularity 
A10.1.  Key Digital Decade targets monitored by DESI indicators 
A11.1.  Key innovation indicators 
A12.1. 
Industry and the Single Market 
A13.1.  Public administration indicators 
A14.1.  Social Scoreboard for Romania 
A14.2.  Situation of Romania on 2030 employment, skills and poverty reduction targets 
A15.1.  EU-level targets and other contextual indicators under the European Education Area strategic framework 
A16.1.  Key health indicators 
A17.1.  Selected indicators at regional level in Romania 
A18.1.  Financial soundness indicators 
A19.1.  Taxation indicators 
A20.1.  Key economic and financial indicators 
A21.1.  Debt sustainability analysis - Romania 
A21.2.  Heat map of fiscal sustainability risks - Romania 
A22.1.  Assessment of macroeconomic 

LIST OF GRAPHS 

Progress towards the SDGs in Romania in the last 5 years 
Romania’s progress on the 2019-2022 CSRs (2023 European Semester) 
Disbursements per pillar 
Total grants disbursed under the RRF 
Total loans disbursed under the RRF 
Fulfilment status of milestones and targets 
Cohesion policy funds 2021-2027 in Romania: budget by fund 
Synergies between cohesion policy funds and the RRF six pillars in Romania 
Cohesion policy funds contribution to the SDGs in 2014-2020 and 2021-2027 in Romania 
Thematic – greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2021 
Energy mix (top) and electricity mix (bottom), 2021 
Thematic – environmental investment needs and current investment 
Underground gas storage levels in Romania 
Share of gas consumption per sector, 2021 
Romania´s retail energy prices for industry (top) and households (bottom) 
Public R&I investment in Energy Union R&I priorities 
Fair transition challenges in Romania 
Distributional impacts of energy prices due to rising energy expenditure (2021-2023) 
Trend in material use 
Treatment of municipal waste 
Innovation performance 2015-2022 

A1.1. 
A2.1. 
A3.1. 
A3.2. 
A3.3. 
A3.4. 
A4.1. 
A4.2. 
A4.3. 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2. 
A7.3. 
A7.4. 
A8.1. 
A8.2. 
A9.1. 
A9.2. 
A11.1. 
A11.2.  R&D intensity 2010-2021 
A12.1.  Real labour productivity per hour worked, annual average growth rate by country, 1999-2008 and 2010-2019 
A12.2.  Productivity by sector 
A12.3.  Business environment and productivity drivers 
A13.1.  Romania: a) Regulatory impact assessment and b) ex post evaluation of legislation 
A13.2.  Romania. Participation rate of 25-64 year olds in adult learning (%) by sector and occupation 
A15.1.  The share of underachievers in reading, maths and science (combined) by socio-economic status, PISA 2018 
A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2019-2070 
A17.1.  Evolution of labour productivity (real GVA per worker) in Romania (2000-2020) 

25 
27 
33 
34 
39 
43 
47 
48 
51 
55 
59 
60 
61 
63 
66 
69 
70 
73 
75 
77 
78 
79 

22 
23 
26 
27 
27 
28 
29 
29 
30 
33 
34 
35 
38 
38 
39 
40 
42 
43 
45 
46 
50 
50 
53 
53 
55 
58 
58 
62 
65 
65 
67 

 
 
 
A18.1.  Evolution of credit activity 
A19.1.  Tax revenues from different tax types as % of total taxation 
A19.2.  Tax wedge for single and second earners as a % of total labour costs, 2022 

LIST OF MAPS 

A17.1.  Regional Competitiveness Index in Romanian Regions (2022) 

69 
73 
73 

67 

 
 
 
CROSS-CUTTING INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

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  and  the 
environmental crisis, 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  is  based  on  the  EU  SDG  indicator  set 
developed  to monitor progress  on  the  SDGs  in  an 
EU context. 

Romania is moving away from the targets on 
SDG  13  (Climate  action),    SDG  7  (Affordable 
and  clean  energy)  and  SDG  12  (Responsible 
consumption and production). While Romania is 
improving  on  several  SDG  indicators  related  to 

environmental sustainability (SDGs 11, 14, 15) and 
clean  water  and  sanitation  (SDG  6),  it  needs  to 
catch  up  with  the  EU  average  in  most  of  these 
(SDGs  6,  11  and  14).  Romania  has  been  moving 
away from SDG 13 on climate action including the 
share  of  renewable  energy  in  gross  final  energy 
consumption  (from  25%  in  2016  to  23.6%  in 
2021) and net greenhouse gas emissions (from 4 
tonnes per capita in 2016 to 4.3 tonnes per capita 
in  2021).    As  for  affordable  energy  (SDG  7), 
Romania  has  been  moving  away  from  the  goal, 
and  the  percentage  of  the  Romanian  population 
unable  to  keep  their  homes  adequately  warm  is 
higher than the EU average (10.1% against the EU 
average of 6.9% in 2021). Romania’s recovery and 
resilience plan (RRP) includes measures to address 
some  of  the  energy-related  challenges,  namely 
decarbonisation  of  energy  production,  energy 
renovation  of  buildings,  and  creating  a  circular 
economy. 

While Romania has made significant progress 

Graph A1.1: Progress towards the SDGs in Romania in the last 5 years 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings - Sustainable development 
indicators - Eurostat (europa.eu). The status of each SDG in a country is the aggregation of all the indicators for the specific goal 
compared to the EU average. A high status does not mean that a country is close to reaching a specific SDG, but signals that it is 
doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 5 
years. The calculation does not take into account any target values as most EU policy targets are only valid for the aggregate EU 
level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of early April 2023, except for the EU Labour Force Survey (LFS) indicators released on 27 April 
2023. Data mainly refer to 2016-2021 or 2017-2022. 

21 

 
 
 
 
 
 
institutions  and  the  respect  for  the  rule  of  law.  
The RRP is expected to further improve the quality 
of  legislation,  increase  the  effectiveness  of  the 
judicial  system  and  the  fight  against  corruption 
and help increase trust in public administration. 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other Annexes. 

on  some  SDG  indicators  related  to  fairness 
(SDGs 1, 3, 8), it is moving away from SDG 5 
(Gender  equality)  and  is  moving  away  from 
and still needs to catch up on SDG 4 (Quality 
education).  In  general,  poverty  and  deprivation 
decreased  and  basic  health  outcomes  improved 
between  2016  and  2021.  However,  Romania’s 
track  record  on  gender  equality  is  concerning  as 
labour  market 
in 
women’s  participation 
remains low: between 2016 and 2021, the gender 
employment  gap  widened  from  17.7  percentage 
points (pps) to 17.3 pps while it remained stable at 
around  11  pps  in  the  EU.  Romania  also  needs  to 
catch  up  on  SDG  4  (Quality  education)  as 
participation 
education 
decreased  by  6.4  pps  between  2015  and  2020 
(against  no  change  for  the  EU).  Measures  in  the 
RRP to digitalise education and a system of grants 
to  reduce  the  drop-out  rate  intend  to  address 
these challenges.  

childhood 

early 

the 

in 

In  2022,  Romania’s 

While Romania is improving on SDG 8 (Decent 
work  and  economic  growth),  it  still  needs  to 
improve on some SDGs on productivity (SDGs 
4  and  9). 
long-term 
unemployment  rate  remained  below  the  EU 
average 
(2.2%  vs  2.4%).  However,  public 
expenditure on R&D was low and static (0.47% in 
2021  vs  an  EU  average  of  2.3%)  which  affects 
industrial  capabilities  and  its  and  its  ability  to 
develop  products 
to  be  patented  Tertiary 
educational  achievement  (at  24.7%  in  2022)  has 
slightly  declined  compared  to  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, by 
means  of  giving  grants  for  IT  laboratories  and 
technological  hubs,  developing  open  educational 
resources,  and  supporting  research,  development 
and innovation. 

Weaknesses on access to justice and trust in 
institutions  persist  (SDG  16),  while  Romania 
is  improving  on  SDG  indicators  related  to 
macroeconomic  stability  (SDGs  8,  16,  17). 
Romania’s  real  GDP  per  capita  (SDG  8)  increased 
from EUR 8 360 in 2017 to EUR 10 110 in 2022 
(EU  average:  EUR  28  820).  However,  the  country 
faces challenges in relation to the sustainability of 
public  finances.  The  Romanian  RRP 
includes 
several  measures  related  to  taxation  and  the 
effectiveness  of  public  spending,  which  are 
expected  to  improve  the  sustainability  of  public 
regarding 
finances.  The  situation 

is  mixed 

22 

 
 
ANNEX 2: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 

Graph A2.1: Romania’s progress on the 2019-2022 
CSRs (2023 European Semester) 

The Commission has assessed the 2019-2022 
country-specific  recommendations  (CSRs) (30) 
addressed  to  Romania  as  part  of  the  European 
Semester. These recommendations concern a wide 
range of policy areas that are related to 14 of the 
17 Sustainable Development Goals (see Annexes 1 
and 3). The assessment considers the policy action 
the 
taken  by  Romania 
commitments  in  its  recovery  and  resilience  plan 
(RRP) (32).  At  this  stage  of  RRP  implementation, 
45%  of  the  CSRs  focusing  on  structural  issues 
from  2019-2022  have  recorded  at  least  ‘some 
progress’,  while  52%  recorded  ‘limited  progress’ 
(see  Graph  A2.1).  As  the  RRP  is  implemented 
further,  considerable  progress 
in  addressing 
structural CSRs is expected in the years to come. 

to  date (31)  and 

Source: European Commission. 

(30)  2022 CSRs: EUR-Lex - 32022H0901(23) - EN - EUR-Lex 

(europa.eu) 

      2021 CSRs: EUR-Lex - 32021H0729(23) - EN - EUR-Lex 

(europa.eu) 
2020 CSRs: EUR-Lex - 32020H0826(23) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(23) - EN - EUR-Lex 
(europa.eu) 

(31)  Including policy action reported in the national reform 

programme and in Recovery and Resilience Facility (RRF) 
reporting (twice a year reporting on progress in implementing 
milestones and targets and resulting from the payment 
requests assessment). 

(32)  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 considers the 
degree of implementation of the measures included in the 
RRP and of those carried out outside of the RRP at the time 
of assessment. Measures laid down in the Annex of the 
adopted Council Implementing Decision on approving the 
assessment of the RRP, which are not yet adopted or 
implemented but considered 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. 

23 

No progress3%Limited progress52%Some progress37%Substantial progress5%Full implementation3% 
 
                                                 
   
 
 
 
Table A2.1: Summary table on 2019-2022 CSRs 

(Continued on the next page) 

24 

RomaniaAssessment in May 2023*RRP coverage of CSRs until 2026**Relevant SDGs2019 CSR 1Limited 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 applicableSDG 8, 16Ensure the full application of the fiscal framework. No progressSDG 8, 16Strengthen tax compliance and collection.Limited progressRelevant RRP measures planned as of 2022SDG 8, 162019 CSR 2Some progressSafeguard financial stability and the robustness of the banking sector. Substantial progressSDG 8Ensure the sustainability of the public pension system and Limited progressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023SDG 8the long-term viability of the second pillar pension funds.Some progressSDG 82019 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 2022 SDG 4, 8, 10Improve skills, including digital, notably by increasing the labour market relevance of vocational education and training and higher education. Limited progressRelevant RRP measures being implemented as of 2022SDG 4Increase the coverage and quality of social services and Limited progressRelevant RRP measures planned as of 2022SDG 1, 2,10complete the minimum inclusion income reform. Some progressRelevant RRP measures planned as of 2022SDG 1, 2, 10Improve the functioning of social dialogue. Some progressRelevant RRP measures planned as of 2022SDG 8Ensure minimum wage setting based on objective criteria, consistent with job creation and competitiveness. Limited progressRelevant RRP measures planned as of 2024SDG 8Improve 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 2023SDG 32019 CSR 4Some 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 2023SDG 6, 7, 9, 10, 11, 12, 13Improvepreparationandprioritisationoflargeprojectsandaccelerate their implementation. Some progressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023SDG 16Improvetheefficiencyofpublicprocurementandensurefullandsustainableimplementationofthenationalpublicprocurementstrategy.Some progressRelevant RRP measures planned as of 2023SDG 92019 CSR 5Limited progressEnsurethatlegilsativeinitiativesdonotunderminelegalcertaintybyimprovingthequalityandpredictabilityofdecision-making,includingbyappropriatestakeholderconsultations,effectiveimpactassessments and streamlined administrative procedures.Limited progressRelevant RRP measures being implemented as of 2021 and planned as of 2022SDG 16Strengthen the corporate governance of state-owned enterprises.Limited progressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023SDG 92020 CSR 1Limited progressPursuefiscalpoliciesinlinewiththeCouncil’srecommendationof3April2020,whiletakingallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuing recovery. Not relevant anymoreNot applicableSDG 8, 16Avoidtheimplementationofpermanentmeasuresthatwouldendanger fiscal sustainability. Limited progressRelevant RRP measures being implemented as of 2021 and planned as of 2022SDG 8, 16Strengthen 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 2022SDG 32020 CSR 2Limited progressProvide adequate income replacement and Substantial progressSDG 1, 2, 10extend social protection measures and Limited progressRelevant RRP measures planned as of 2022 SDG 1, 2, 10extend access to essential services for all. Limited progressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023SDG 1, 2, 10Mitigatetheemploymentimpactofthecrisisbydevelopingflexibleworking arrangements and activation measures. Some progressRelevant RRP measures planned as of 2024SDG 8Strengthen skills and digital learning and Limited progressRelevant RRP measures being implemented as of 2022SDG 4ensure equal access to education. Limited progressRelevant RRP measures being implemented as of 2021 and 2022 and planned as of 2023SDG 4, 8, 10 
 
 
 
  
 
Table (continued) 

Note: 
* See footnote (31). 
** RRP measures included in this table contribute to the implementation of CSRs. Nevertheless, additional measures outside the 
RRP may be necessary to fully implement CSRs and address their underlying challenges. Measures indicated as ‘being 
implemented’ are only those included in the RRF payment requests submitted and positively assessed by the European 
Commission. Measures included in the second payment request under assessment are classified as planned.  
Source: European Commission. 

25 

2020 CSR 3Some 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 2022SDG 8, 9Front-load mature public investment projects and Limited progressRelevant RRP measures planned as of 2022 and 2023SDG 8, 16promote private investment to foster the economic recovery. Some progressRelevant RRP measures being implemented as of 2021 and planned as of 2022SDG 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularonsustainable transport,Some progressRelevant RRP measures being implemented as of 2021 and planned as of 2022SDG 11digital service infrastructure,Some progressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023SDG 9cleanandefficientproductionanduseofenergyandenvironmentalinfrastructure, including in the coal regions.Limited progressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2023SDG 6, 7, 9, 10, 11, 12, 132020 CSR 4Limited progressImprove the quality and effectiveness of public administration and Some progressRelevant RRP measures planned as of 2022 and 2023SDG 16improvethepredictabilityofdecision-making,includingthroughanadequate involvement of social partners.Limited progressRelevant RRP measures being implemented as of 2021 and planned as of 2022 SDG 162021 CSR 1Not relevant anymorePursuefiscalpoliciesinlinewiththeCouncilRecommendationof18June2021withaviewtobringinganendtothesituationofanexcessive government deficit in Romania.Not relevant anymoreNot applicableSDG 8, 162022 CSR 1Some progressPursuefiscalpoliciesinlinewiththeCouncilRecommendationof18June2021withaviewtobringinganendtothesituationofanexcessive government deficit in Romania.Some progressNot applicableSDG 8, 162022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestonesandtargetsincludedintheCouncilImplementing Decision of 3 November 2021.SwiftlyfinalisethenegotiationswiththeCommissiononthe2021-2027cohesionpolicyprogrammingdocumentswithaviewtostarting their implementation.2022 CSR 3Some progressReduce overall reliance on fossil fuels.Some progressRelevant RRP measures being implemented as of 2021SDG 7, 9, 13Facilitatethefurtherexpansionofsustainableenergyproductionbyaccelerating the development of renewables,Limited progressRelevant RRP measures planned as of 2022SDG 7, 9, 13upgradingenergytransmissiongridsandincreasinginterconnectionwith neighboring Member States.Limited progressNot applicableSDG 7, 9, 13Increasethepaceandambitionofrenovationstoadvancetheenergy efficiency of the building stock.Some progressRelevant RRP measures planned as of 2022SDG 7RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports.Progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN - OVERVIEW 

the RRF as a whole, in a transparent manner. The 
graphs in this Annex show the current state of play 
of  the  milestones  and  targets  to  be  reached  by 
Romania 
as 
subsequently 
satisfactorily  fulfilled  by  the  Commission.  No 
revision  was  submitted  at  the  time  of  publication 
of this country report yet. 

assessed 

and 

EUR  6.3  billion  has  so  far  been  disbursed  to 
Romania  under  the  RRF.  The  Commission 
disbursed  EUR 3.79  billion  to  Romania  in  pre-
financing  on  2  December  2021  (for  the  grants) 
and 13 January 2022 (for the loan), equivalent to 
13% of the financial allocation.  

of 

(net 

first  payment 

Romania’s 
request  was 
positively  assessed  by  the  Commission, 
taking 
into  account  the  opinion  of  the 
Economic  and  Financial  Committee,  leading 
to EUR 2.6 billion being disbursed in financial 
on 
support 
27 October 2022. The related 21 milestones and 
targets  cover  reforms  contributing  to  the  digital 
transition,  as  well  as  reforms  in  the  areas  of 
sustainable  mobility,  decarbonisation,  audit  and 
control,  education  and  health,  and  preliminary 
steps  in  tax  and  pension  reforms.  Measures  to 
support  businesses  and  to  ensure  the  country's 
good governance are also included.   

pre-financing) 

In  December  2022,  Romania  submitted  its 
second  payment  request,  for  which  the 
Commission’s  assessment  is  ongoing.  Overall, 
Romania  reports  a  timely  implementation  of  the 
milestones  and  targets  covered  by  the  second 
request,  which  does  not  however 
payment 
prejudge 
the  submission  of 
the 
subsequent payment requests or the Commission’s 
formal  assessment  of  the  fulfilment  of  the 
relevant milestones and targets.  

timing  of 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the centrepiece of the EU’s efforts to help it 
recover  from  the  COVID-19  pandemic,  speed 
up  the  twin  transition  and  strengthen 
resilience  against  future  shocks.  The  RRF 
also  contributes  to  implementation  of  the 
SDGs  and  helps  to  address  the  Country 
Specific  Recommendations  (see  Annex 4). 
recovery  and 
its 
Romania  submitted 
(RRP)  on  31 May 2021.  The 
resilience  plan 
Commission’s 
on 
positive 
28 September 2021  and  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 over the 2021-2026 period.   

assessment 

initial 

into  force  of  the  RRF 
Since  the  entry 
Regulation  and  the  assessment  of  the 
national  recovery  and  resilience  plans, 
geopolitical  and  economic  developments 
have caused major disruptions across the EU. 
In  order  to  effectively  address  these  disruptions, 
the  (adjusted)  RRF  Regulation  allows  Member 
States to amend their recovery and resilience plan 
for  a  variety  of  reasons.  In  line  with  article  11(2) 
of the RRF, the maximum financial contribution for 
Romania was moreover updated on 30 June 2022 
to an amount of EUR 12.1 billion in grants.  

Table A3.1: Key elements of the Romanian RRP('s) 

Source: European Commission  

Romania’s  progress  in  implementing  its  plan 
is  published  in  the  Recovery  and  Resilience 
Scoreboard (18).  The  Scoreboard  also  gives  an 
overview  of  the  progress  made  in  implementing 

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

resilience-scoreboard/country_overview.html 

26 

Current RRPScope Initial planCID adoption date 29 October 2021Total allocation EUR 14.2 billion in grants and EUR 14.9 billion in loans (12.15% of 2021 GDP)Investments and reforms 122 investments and 64 reforms Total number of milestones and targets507 
 
 
  
 
 
                                                 
 
 
Graph A3.1: Disbursements per pillar 

Note:  Each disbursement reflects progress in the implementation of the RRF, across the six policy pillars. This graph displays how 
disbursements under the RRF (excluding pre-financing) relate to the pillars. The amounts were calculated by linking the milestones 
and targets covered by a given disbursement to the pillar tagging (primary and secondary) of their respective measures. 
Source:  Recovery and Resilience Scoreboard 

Graph A3.2: Total grants disbursed under the RRF 

Graph A3.3: Total loans disbursed under the RRF 

Note: This graph displays the amount of grants disbursed so 
far under the RRF. Grants are non-repayable financial 
contributions. The total amount of grants given to each 
Member State is determined by an allocation key and the 
total estimated cost of the respective RRP. 
Source: Recovery and Resilience Scoreboard 

Note: This graph displays the amount of loans disbursed so 
far under the RRF. Loans are repayable financial contributions. 
The total amount of loans given to each Member State is 
determined by the assessment of its loan request and cannot 
exceed 6.8% of its 2019 GNI.   
Source: Recovery and Resilience Scoreboard 

27 

€ 3.62billion€ 2.73billion0 mn100 mn200 mn300 mn400 mn500 mn600 mn700 mn800 mn900 mn1000 mnGreen transitionDigitaltransformationSmart,sustainable andinclusive growthSocial andterritorialcohesionHealth, andeconomic,social andinstitutionalresiliencePolicies for thenext generation 
 
       
 
       
 
      
Graph A3.4: Fulfilment status of milestones and 
targets 

This graph displays the share of satisfactorily fulfilled 
milestones and targets. A milestone or target is satisfactorily 
fulfilled once a Member State has provided evidence to the 
Commission that it has reached the milestone or target and 
the Commission has assessed it positively in an implementing 
decision. 
Source: Recovery and Resilience Scoreboard 

28 

Satisfactorily fulfilledNot fulfilled 
       
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The  EU  budget  of  over  EUR  1.2  trillion  for 
2021-2027  is  geared  towards  implementing 
the  EU’s  main  priorities.  Cohesion  policy 
investment amounts to EUR 392 billion across the 
EU and represents almost a third of the overall EU 
budget, including around EUR 48 billion invested in 
line with REPowerEU objectives. 

Graph A4.1: Cohesion policy funds 2021-2027 in 
Romania: budget by fund 

(1) million EUR in current prices, % of total; (total amount 
including EU and national co-financing) 
Source: European Commission, Cohesion Open Data 

(ERDF) will  boost  R&D, 

In  2021-2027,  in  Romania,  cohesion  policy 
funds (19)  will  invest  EUR  21.7  billion  in  the 
green  transition  and  EUR  2.2  billion  in  the 
digital 
transformation  as  part  of  the 
country’s total allocation of EUR 46.6 billion. 
In  particular,  the  European  Regional  Development 
Fund 
innovation  and 
digitalisation  by  supporting  more  than  32 000 
companies. Significant investments (EUR 1.5 billion 
of  ERDF  and  EUR  200  million  of  Cohesion  Fund) 
will support energy efficiency and the reduction of 
carbon  emissions.  Particular  attention  should  be 
paid  to  the  project  planning  and  administrative 
and  organisational  capacities  of  key  beneficiaries, 
through  tailor-made  capacity  building  roadmaps. 
(JTF)  will  provide 
The  Just  Transition  Fund 
economic  diversification  for  the  regions  most 
transition,  enabling 
affected  by 
productive 
the 
development  of  business  support  infrastructure 
and services. The JTF will help create 11 000 jobs 
and  provide  reskilling  and  active  labour  market 
support  for  about  30 000  workers.  This  will  help 
Romania  fulfil  its  commitment  to  phase  out  the 

in  SMEs  and 

the  energy 

investment 

(19)  European Regional Development Fund (ERDF), Cohesion Fund 
(CF) European Social Fund+ (ESF+), Just Transition Fund 
(JTF), excluding Interreg programmes. The total amount 
includes national and EU contributions. Data source: 
Cohesion Open Data.   

29 

use  of  coal  by  2032.  Under  the  European  Social 
Fund  Plus  (ESF+),  Romania  allocates  more  than 
EUR  2.2  billion  to  promote  social  inclusion  and 
implement  the  Child  Guarantee.  Benefits  will 
include 
integrated  community  centres  helping 
2 000  rural  communities  access  essential  social, 
educational  and  health  services. 
In  addition, 
almost  EUR  900  million  will  fund  basic  material 
assistance to those most in need, and EUR 2 billion 
will facilitate access to quality education. 

Of  the  investments  mentioned  above,  EUR 
2.8  billion  will  be  invested  in  line  with 
REPowerEU objectives. This is on top of the EUR 
1.5  billion  dedicated  to  REPowerEU  under  the 
2014-2020  budget.  EUR  2  billion  (2021-2027) 
and  EUR  1.1  billion  (2014-2020)  is  for  improving 
energy efficiency; EUR 79 million (2021-2027) and 
EUR  429  million  (2014-2020)  is  for  renewable 
energy  and  low-carbon  R&I;  and  EUR  631  million 
(2021-2027) is for smart energy systems. 

Graph A4.2: Synergies between cohesion policy 
funds and the RRF six pillars in Romania 

(1) million EUR in current prices (total amount, including EU 
and national co-financing)   
Source: European Commission  

In  2014-2020,  cohesion  policy  funds  made 
EUR  24  billion  available  to  Romania (20),  with 
an  absorption  of  77% (21). 
Including  national 
financing,  the  total  investment  amounts  to  EUR 
28.5 billion - around 2.2% of GDP for 2014-2020. 

Romania  continues  to  benefit  from  cohesion 
policy flexibility to support recovery, step up 
convergence  and  provide  vital  support  to 
regions  following  the  COVID-19  pandemic. 

(20)  Cohesion policy funds include the ERDF, CF, ESF and the 
Youth Employment Initiative (YEI). ETC programmes are 
excluded here. According to the ‘N+3 rule’, the funds 
committed for 2014-2020 must be spent by 2023. REACT-
EU is included in all figures. The total amount includes EU 
and national co-financing. Data source: Cohesion Open Data. 

(21)  2014-2020 Cohesion policy EU payments by MS is updated 

daily on Cohesion Open Data.   

7 284 16%27 435 59%9 333 20%2 531 5%CFERDFESF+JTF13 9135663 7594 6792 81432721 6662 1675 4026 3564 9502 8610500010000150002000025000Green transitionDigitaltransformationSmart, sustainableand inclusivegrowthSocial and territorialcohesionHealth, economic,social andinstitutionalresiliencePolicies for the nextgenerationEU CP 2014-2020 (million EUR)EU CP 2021-2027 (million EUR) 
 
   
                                                 
   
                                                 
 
 
top  of 

The  Recovery  Assistance  for  Cohesion  and  the 
Territories  of  Europe  instrument  (REACT-EU) (22) 
under  NextGenerationEU  provides  EUR  1.5  billion 
on 
the  2014-2020  cohesion  policy 
allocation  for  Romania.  It  included  over  EUR  210 
million  in  health  equipment  and  over  EUR  50 
million in IT for online education. It also supported 
over  15 000  SMEs,  and 
renewable  energy 
production  received  EUR  105  million.  In  addition, 
Cohesion’s  Action  for  Refugees  in  Europe  (CARE) 
supports  Romania  and  its  regions  in  providing 
emergency  assistance  to  people  fleeing  from 
Russia’s invasion of Ukraine with a total budget of 
EUR  118.4  million.  With  SAFE 
(Supporting 
Affordable  Energy),  the  2014-2020  cohesion 
policy  funds  may  also  be  mobilised  to  support 
jobs  and  companies 
vulnerable  households, 
particularly affected by high energy prices. 

Graph A4.3: Cohesion policy funds contribution to 
the SDGs in 2014-2020 and 2021-2027 in 
Romania 

(1) 5 largest contributions to SDGs in million (EUR) current 
prices 
Source: European Commission  

In both 2014-2020 and 2021-2027, cohesion 
policy  funds  have  contributed  substantially 
to 
the  Sustainable  Development  Goals 
(SDGs).  These  funds  support  11  of  the  17  SDGs, 
notably  SDG  9 
innovation  and 
‘Industry, 
infrastructure’ and  SDG  8 
‘Decent  work  and 
economic growth’ (23). 

Other  EU  funds  make  significant  resources 
available for Romania. The common agricultural 
policy  (CAP)  made  EUR  25.7  billion  available  in 
2014-2022, and will continue to support Romania 

(22)  REACT-EU allocation on Cohesion Open Data. 

(23)  Other EU funds contribute to the SDGs. In 2014-2022, they 

include the European Agricultural Fund for Rural 
Development (EARDF) and the European Maritime and 
Fisheries Fund (EMFF). 

for 

Fund 

Agricultural 

with  EUR  15  billion  in  2023-2027.  The  two  CAP 
Funds  (European  Agricultural  Guarantee  Fund  and 
European 
Rural 
Development),  contribute  to  the  European  Green 
Deal while ensuring long-term food security. They 
promote  social,  environmental  and  economic 
sustainability  and  innovation  in  agriculture  and 
rural  areas,  in  coordination  with  other  EU  funds. 
The  European  Maritime  and  Fisheries  Fund  made 
EUR  168  million  available  to  Romania  in  2014-
2020  and  the  European  Maritime,  Fisheries  and 
Aquaculture  Fund  allocates  EUR  162  million  in 
2021-2027. 

Romania  also  benefits  from  other  EU 
programmes,  notably  the  Connecting  Europe 
Facility  having  allocated  EUR  1.090  billion  under 
CEF  2  (2021-2027)  from  the  Cohesion  fund. 
Priorities  are  oriented  for  finalising  the  main 
railway  transport  corridors,  Rhine-Danube  and 
Orient/East-Med  (Baltic  -  Black  -  Aegean  Seas). 
Similarly,  Horizon  Europe  has  so  far  allocated 
nearly  EUR  74  million to Romanian  R&I  on top  of 
the EUR 302 million earmarked under the previous 
programme (Horizon 2020). The Public Sector Loan 
Facility  set  up  under 
the  Just  Transition 
Mechanism  makes  EUR  162  million  of  grant 
support  from 
the  Commission  available  for 
projects located in Romania for 2021-2027, which 
will  be  combined  with  loans  from  the  EIB,  to 
support  investments  by  public  sector  entities  in 
just transition regions. 

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  ancillary  health-
related  measures,  to  mitigate  the  impact  of 
financial 
Council 
COVID-19. 
assistance  to  Romania  of  EUR  4.099  billion  in 
loans,  which  supported  around  15%  of  workers 
and  10%  of  firms  in  2020,  and  around  2%  of 
workers and 1% of firms in 2021. 

granted 

The 

Instrument 
designing 

The  Technical  Support 
(TSI) 
supports 
in 
Romania 
and 
reforms, 
implementing  growth-enhancing 
including  those  set  out  in  its  recovery  and 
resilience  plan  (RRP).  Romania  has  received 
significant  support  since  2016.  Examples (24) 

(24)  Country factsheets on reform support are available here. 

30 

8 5995 5112 8141 2042 62115 2916 3714 5803 5973 54302 0004 0006 0008 00010 00012 00014 00016 00018 000SDG 9 Industry,innovation,infrastructureSDG 8 Decent work andeconomic growthSDG 3 Good health andwellbeingSDG 1 No povertySDG 7 Affordable andclean energyEU CP 2014-2020 (millions EUR)EU CP 2021-2027 (millions EUR) 
   
                                                 
                                                 
include  support  to  strengthen  the  education 
system; to improve digital competencies for health 
and  care  providers,  and  to  identify  the  most 
suitable  reforms  and  investments  for  decreasing 
dependency on fossil fuels from Russia in line with 
the REPowerEU plan. 

31 

 
ANNEX 5: RESILIENCE 

This  Annex  illustrates  Romania’s  relative 
resilience capacities and vulnerabilities using 
the  Commission’s 
resilience  dashboards 
(RDB) (25).  Comprising  a  set  of  124  quantitative 
indicators,  the  RDB  provide  broad  indications  of 
Member  States’  ability  to  make  progress  across 
four interrelated dimensions: social and economic, 
green, digital, and geopolitical. The indicators show 
vulnerabilities (26)  and  capacities (27)  that  can 
become  increasingly  relevant,  both  to  navigate 
ongoing  transitions  and  to  cope  with  potential 
future shocks. To this end, the RDB help to identify 
areas  that  need  further  efforts  to  build  stronger 
and  more  resilient  economies  and  societies.  They 
in  Table  A5.1  as  synthetic 
are  summarised 
resilience 
illustrate  the  overall 
relative  situation  for  each  of  the  four  dimensions 
and  their  underlying  areas  for  Romania  and  the 
EU-27 (28). 

indices,  which 

RDB  indicators.  It  has  medium-low  resilience 
capacities  in  the  green,  digital  and  geopolitical 
dimensions,  and  low  capacities  in  the  social  and 
economic  dimension.  Romania  shows  stronger  or 
similar capacities than the EU  average in none of 
the  resilience  areas.  There  is  ample  room  for 
improving  capacities  compared  to  the  EU  in 
relation  to  'inequalities  and  social  impact  of  the 
and  work’, 
‘health, 
transitions’, 
‘sustainable  use  of 
‘ecosystems, 
biodiversity  and  sustainable  agriculture’,  all  areas 
of  the  digital  dimension,  as  well  as  ‘security  and 
demography’.  

education 
resources’, 

Table A5.1: Resilience indices summarising the 
situation across RDB dimensions and areas 

According  to  the  set  of  resilience  indicators 
under the RDB, Romania generally displays a 
similar  level  of  vulnerabilities  compared  to 
the  EU  average.  Romania  shows  medium-high 
vulnerabilities  in  the  social  and  economic  and 
digital  dimensions  of 
the  RDB,  medium 
vulnerabilities  in  the  green  dimension,  and  low 
vulnerabilities in the geopolitical dimension. It has 
higher  vulnerabilities  than  the  EU  average  in  the 
areas  of  ‘inequalities  and  social  impact  of  the 
transitions’, 
and  work’, 
‘sustainable  use  of  resources’,  ‘digitalisation’  and 
‘financial globalisation’. Romania has relatively low 
‘economic  and 
vulnerabilities 
financial  stability  and  sustainability’, 
‘climate 
change  mitigation  and  adaptation’,  ‘raw  material 
and energy supply’ and ‘security and demography’. 

education 

relation 

‘health, 

to 

in 

(1) Data are for 2021, and EU-27 refers to the value for the 
EU as a whole. Data underlying EU-27 vulnerabilities in the 
area ‘value chains and trade’ are not available as they 
comprise partner concentration measures that are not 
comparable with Member States’ level values. 
Source: JRC Resilience Dashboards - European Commission 

Compared to the EU average, Romania shows 
an overall lower level of capacities across all 

(25)  For details see https://ec.europa.eu/info/strategy/strategic-
planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en; see also 2020 Strategic 
Foresight Report (COM(2020) 493). 

(26)  Vulnerabilities describe features that can exacerbate the 

negative impact of crises and transitions, or obstacles that 
may hinder the achievement of long-term strategic goals. 

(27)  Capacities refer to enablers or abilities to cope with crises 
and structural changes and to manage the transitions.  

(28)  This Annex is linked to Annex 1 on SDGs, Annex 6 on the 
green deal, Annex 8 on the fair transition to climate 
neutrality, Annex 9 on resource productivity, efficiency and 
circularity, Annex 10 on the digital transition and Annex 14 
on the European pillar of social rights. 

32 

ROEU-27ROEU-27Vulnerabilities IndexHighMedium-highMediumMedium-lowLowNot availableCapacities IndexHighMedium-highMediumMedium-lowLowNot availableDimension/AreaVulnerabilitiesCapacitiesSocial and economicHealth, education and workInequalities and social impact of the transitionsGreenEconomic & financial stability and sustainabilitySustainable use of resourcesClimate change mitigation & adaptationDigitalEcosystems, biodiversity, sustainable agricultureDigital for industryDigital for personal spaceCybersecurityDigital for public spaceRaw material and energy supplyGeopoliticalValue chains and tradeFinancial globalisationSecurity and demography 
 
                                                 
 
  
 
 
 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

green 

transition 

requires 
Romania’s 
continued  action  on 
several  aspects, 
including  renewables,  sustainable  transport 
and  air  quality,  and  climate  adaptation. 
Implementation  of  the  European  Green  Deal  is 
underway  in  Romania;  this  Annex  provides  a 
snapshot of the key areas involved (29).  

less  than 

Romania  has  not  yet  defined  all  the  climate 
policy  measures  it  needs  to  reach  its  2030 
target  for  the  effort  sharing 
climate 
sectors (30).  Data  for  2021  on  greenhouse  gas 
emissions  in  these  sectors  are  expected  to  show 
its  annual 
the  country  generated 
emission  allocations (31).  Current  policies 
in 
Romania  are  projected  to  keep  the  increase  of 
these emissions contained at 5% relative to 2005 
levels  in  2030.  The  additional  measures  tabled 
would contain them at an increase of 2%. This still 
too  high  to  comply  with  the  effort  sharing  target 
even before the target was made more ambitious 
to  meet  the  EU’s  55%  objective, 
let  alone 
Romania’s  new  target  to  reduce  emissions  by 
12.7% (32). In its recovery and resilience plan (RRP), 
Romania  has  attributed  41 %  of its  Recovery  and 

(29)  The overview in this Annex is complemented by the 

information in Annex 7 on energy security and affordability, 
Aannex 8 on the fair transition to climate neutrality and 
environmental sustainability, Aannex 9 on resource 
productivity, efficiency and circularity, Aannex 11 on 
innovation, and Annex 19 on taxation. 

(30)  Member States’ greenhouse gas emission targets for 2030 
(‘effort sharing targets’) were increased by Regulation (EU) 
2023/857 (the Effort Sharing Regulation) amending 
Regulation (EU) 2018/842, aligning the action in the 
concerned sectors with the objective to reach EU-level, 
economy-wide greenhouse gas emission reductions of at 
least 55% relative to 1990 levels. The Regulation sets 
national targets for sectors outside the current EU Emissions 
Trading System, notably: buildings (heating and cooling), road 
transport, agriculture, waste, and small industry. Emissions 
covered by the EU ETS and the Effort Sharing Regulation are 
complemented by net removals in the land use sector, 
regulated by Regulation (EU) 2018/841 (the Land Use, Land 
Use Change and Forestry (LULUCF) Regulation) amended by 
Regulation (EU) 2023/839. 

(31)  Romania's annual emission allocations for 2021 were some 
86.1 Mt CO2eq, and its approximated 2021 emissions were 
at 82.3 Mt (see European Commission, Accelerating the 
transition to climate neutrality for Europe’s security and 
prosperity: EU Climate Action Progress Report 2022, 
SWD(2022)343). 

(32)  See the information on the distance to the 2030 climate 

policy target in Table A6.1. Existing and additional measures 
as of 15 March 2021. 

Resilience  Facility  allocation  to  key  reforms  and 
to  attain  climate  objectives (33). 
investments 
Romania’s 
to 
decarbonisation 
permanently close coal power plants and mines by 
2030.  

aims 

law 

Graph A6.1: Thematic – greenhouse gas emissions 
from the effort sharing sectors in Mt CO2eq, 
2005-2021 

Source: European Environmental Agency. 

use 

sector 

exceed 

Greenhouse gas removals through Romania’s 
agricultural 
land 
emissions.  For  2030,  Romania’s  land  use,  land-
use  change  and  forestry  (LULUCF)  net  removals 
target  implies  net  removals  of  25 665 kt CO2eq 
(see  Table  A6.1) (34).  In  recent  years,  removals 
through the land use sector have been higher than 
the  amount  of  agricultural  emissions,  therefore 
resulting  in  small  net  removals  in  the  combined 
land  sector.  Under  current  land  management 
practices,  however,  Romania  is  projected  to  see 
decreasing net removals by 2030. 

Fossil  fuels  still  play  a  substantial  role  in 
Romania’s  energy  mix,  while,  in  2021,  the 
share  of  renewable  energy  decreased.  The 
share of natural gas in Romania’s energy mix has 
been  stable,  from  31%  in  2011  to  29%  in  2021. 
The share of coal  and coal  products in Romania’s 
energy mix dropped from 23% in 2011 to 12% in 
2021.  On  the  other  hand,  the  share  of  oil 
increased significantly, from 24% in 2011 to 31% 
in 2021. While the share of renewable energy was 

(33)  For example, energy- and climate-related measures and 
flagship reforms on the phasing-out of coal and the 
decarbonisation of road transport, energy efficiency of 
private and public buildings, electric charging infrastructures, 
climate adaptation, and the circular economy.  

(34)  This value is indicative and will be updated in 2025 (as 

mandated by Regulation (EU) 2023/839). 

33 

010203040506070809020052021Domestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
 
 
                                                 
     
                                                 
 
 
close to 20% of the national energy mix in 2021, 
it  has  remained  stable  in  the  previous  7  years. 
Nuclear  energy  completes  the  picture,  comprising 
8% of the national energy mix. Romania envisages 
phasing  out  coal  and  decommissioning  the  coal 
power plants by  2032. However, more efforts are 
necessary to ensure the renewable energy plays a 
much  more  important  role  in  the  national  energy 
mix.  

Graph A6.2: Energy mix (top) and electricity mix 
(bottom), 2021 

renewables  as  well  as 
related  production 
processes,  and  hydrogen  (and  notably  green 
hydrogen), combined with the phasing-out of coal 
and lignite power production makes up a sizeable 
component  of  the  Romania’s  RRP.  The  main 
measures  included  in  this  component  will  allow 
for: i) the permitting procedures for renewables to 
be  simplified,  ii)  at  least  3  GW  of  renewable 
energy  (wind  and  solar)  to  be 
installed  by 
least  240 MW  of  new 
30 June 2026, 
electricity renewable storage capacity to be added 
by  end  2025,  iv)  green  hydrogen  to  be  generated 
(at least 100 MW in electrolysers), and  v) the coal 
capacity to be reduced by 85% by end 2025, with 
full phase-out by 2032. 

iii)  at 

in 

for 

call 

(FEC) 

the  RRP 

consumption 

The  ambitious  energy  efficiency  actions 
included 
swift 
implementation.  Romania’s  NECP  targets  for 
primary  energy  consumption  (PEC)  and  final 
in  2030  were 
energy 
considered to reflect a low, and respectively a very 
low  level  of  ambition  in  the  2020  Commission 
assessment.  Moreover,  based  on  the  energy 
consumption trajectory for 2018-2021, Romania is 
not  expected  to  be  on  track  to  meet  its  2030 
target for PEC, nor for FEC, as these were notified 
in  its  NECP (35).  Romania’s  RRP  includes  many 
energy efficiency measures: i) moderate and deep 
energy  and  seismic  renovation  of  public  buildings 
(2.4  million  m2)  and  private  buildings  (4.4  million 
m2);  ii) reform  of  district  heating  by  developing 
flexible  and  highly  efficient  gas-fired  electricity 
and  heat  cogeneration,  with  at  least  300 MW 
electricity  production  capacity,  and  iii)  reforms  to 
increase  decarbonisation  of  the  heating-cooling 
sector. 

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 

Renewable energy plays an important role in 
decarbonising  Romania’s  energy  system. 
Romania’s  target  of  30.7%  of  share  of  energy 
from  renewable  sources  in  gross  final  energy 
consumption  by  2030  included  in  its  NECP  was 
considered  unambitious  in  the  2020  assessment 
by 
to 
the  Commission.  Romania  will  need 
substantially  strengthen 
its  renewable  energy 
target  in  the  updated  NECP  to  reflect  the  more 
ambitious EU climate and energy targets in the Fit 
for 55 Package and in the REPowerEU Plan. Clean 
energy  production,  based  on  the  deployment  of 

The  transformation  of  Romania’s  transport 
system  has  to  be  accelerated,  while  air 
quality  remains  a  grave  concern.  On  mobility, 
the  share  of  zero-emission  vehicles  in  new  car 
registration  has 
increased  substantially  over 
recent  years  but  is  still  only  around  half  the  EU 
average.  In  terms  of  the  number,  power  capacity 
and  territorial  coverage  of  public  charging  points, 
Romania has room for improvement. Only slightly 
more than a third of the rail network is electrified, 
but nearly  all the Romanian section of the Trans-

(35)  After the conclusion of the negotiations for a recast EED, the 
ambition of both the EU and national targets as well as of 
the national measures for energy efficiency to meet these 
targets is expected to increase. 

34 

12%29%31%8%20%Solid fossil fuels, peatand oil shaleGasOilNuclearRenewables18%17%1%45%19%Solid fossil fuels, peatand oil shaleGasOilRenewablesNuclear 
      
                                                 
Individual 

European Transport network, where most traffic is 
transport  exacerbates 
concentrated. 
seasonal  problems  with  air  pollution  and  traffic 
congestion,  with  significant  health  and  economic 
costs. Air quality continues to give cause for grave 
concern  (see  Table  A6.5).  In  exceedances  of 
applicable  air  quality,  limits  were  registered  for 
nitrogen  dioxide  (NO2)  in  three  air  quality  zones 
and  for  particulate  matter  (PM10)  in  four  zones. 
Target  values  for  ozone  concentration  were 
surpassed  in  several  air  quality  zones.  Romania 
also has shortcomings in its air quality monitoring 
system  and  has  to  implement  its  national  air 
pollution  control  programme  that  was  adopted 
only recently.  

Graph A6.3: Thematic – environmental investment 
needs and current investment 

Source: European Commission. 

Romania  would  benefit  from  investing  more 
in environmental protection and in measures 
biodiversity  and  addressing 
protecting 
pollution (36).  Between  2014 
and  2020, 
environmental  investment  needs  were  estimated 
to  be  at  least  EUR  6.2  billion  while  investment 
stood at about EUR 2.7 billion, leaving a gap of at 
least EUR 3.5 billion, per year (see Graph A6.3) (37). 
Romania  legally  protects  23.4%  of  its  land  areas 

(36)  Environmental objectives include pollution prevention and 

control, water management and industries, circular economy 
and waste, biodiversity and ecosystems (European 
Commission, 2022, Environmental Implementation Review, 
country report Romania) 

(37)  When also accounting for needs estimated at EU level only 

(e.g., water protection, higher circularity, biodiversity 
strategy). 

35 

and  21.5%  of  its  marine  areas (38).  It  hosts  606 
Natura 2000 sites but still needs to complete the 
network,  specify  management  plans  for  many 
sites,  and  make  progress  with  effective 
management, 
allocating 
sufficient resources.  

including 

through 

Impacts  of  climate  change  in  Romania  call 
for  a  strategic  approach  to  adaptation (39). 
Romania  faces  several  challenges  from  climate 
change, particularly river and coastal flooding and 
a  higher  incidence  of  droughts,  projected  to 
increase  in  the  coming  years.  However,  Romania 
has no up-to-date climate adaptation strategy (40). 
Its  RRP  contains  measures  on  water  disposal  and 
storage,  the  reduction  of  flood  risks,  and  the 
adaptation  of  forest  ecosystems.  Romania  has  a 
pronounced gap in insurance protection for floods 
that  could  pose  a  risk  to  public  finances  if 
insurance penetration remains low (41).  

Romania  still  provides  fossil  fuel  and  other 
environmentally harmful subsidies that could 
be  considered  for  reform,  while  ensuring 
food  and  energy  security  and  mitigating 
social  effects.  Fossil  fuel  subsidies  in  Romania 
amounted  to  EUR  970  million  in  2021,  a  14% 
increase  since  2015,  which  puts  low  carbon 
alternatives  at  a  disadvantage.  Environmentally 
harmful  subsidies  have  been  identified,  via  an 
initial  assessment,  in the agriculture,  forestry  and 
fishing, electricity, gas, steam and air conditioning, 
transportation  and  storage  sectors.  Examples  of 
such  subsidies  include  the  reduced  VAT  rate  for 
fertilisers  and  pesticides (42).  A  mapping  of  all 

(38)  In 2021, Romania had 23.4% terrestrial protected areas 

(Natura 2000 and nationally designated areas), against the 
EU average of 26.4% (European Environment Agency, 2023, 
Natura 2000 Barometer). 

(39)  European Environmental Agency, Advancing towards climate 

resilience in Europe, forthcoming. 

(40)  An update and extension of the national climate change 
strategy 2013–2020 needs to be carried out in light of 
recent developments. The latest projections from the 
Intergovernmental Panel on Climate Change indicate that the 
climate will warm over this century and precipitation in the 
region will change, making the winters wetter and summers 
drier. In addition, an expected rise in the Black Sea’s water 
level will affect the country. 

(41)  European Insurance and Occupational Pensions Authority 
(EIOPA) dashboard on insurance protection gap for natural 
catastrophes. 

(42)  Fossil fuel figures in EUR of 2021 from the 2022 State of 

the Energy Union report. Initial assessment of 
environmentally harmful subsidies done by the Commission 

5428006075891861.2731.1348742.770197050010001500200025003000Pollutionprevention andcontrolWater (industries,excl. protection)Circular Economy(incl. waste)Biodiversity andecosystemsR&I&D and otherEUR million (at current prices)Current investmentTotal need 
      
                                                 
                                                 
 
environmentally  harmful  subsidies  by  Romania 
would help prioritise candidates for reform. 

is 

for 

potential 

There 
increased 
environmental taxes in Romania. Romania has 
the potential to rely more on environmental taxes 
to  further  internalise  the  cost  of  air  pollution,  to 
promote  waste  reduction  and  to  limit  water 
pollution (43) (see Annex 19), for example, through 
‘pay-as-you-throw' schemes to increase reuse and 
recycling rates. Romania has introduced a deposit 
refund system for reusable packaging. It also has 
a  system  of  tariffs  for  water  supply  and  sewage. 
The  RRP  recognised  the  need  for  a  shift  in 
taxation. An analysis of the tax framework in light 
of  expanding  green  taxation  and  shifting  taxation 
towards  green  taxes,  taking  distributional  impact 
into account, is planned. 

By  earmarking  a  higher  share  of  EU 
Emissions  Trading  System  (ETS)  revenue  for 
climate  action,  Romania  could  reduce  its 
exposure  to  the  cost  of  carbon.  In  2021,  its 
revenue  from  the  EU  ETS  amounted  to  almost 
EUR 490  million.  Since  2017,  the  amount  of  this 
revenue  that  Romania  has  spent  on  climate  and 
energy-related purposes has not reached 50%, the 
minimum set by the ETS Directive, with significant 
shortfalls up until 2021.  

in the 2022 toolbox for reforming environmentally harmful 
subsidies in Europe, using OECD definitions, and based on the 
following datasets: OECD Agriculture Policy Monitoring and 
Evaluations; OECD Policy Instruments for the Environment 
(PINE) Database; OECD Statistical Database for Fossil Fuels 
Support; IMF country-level energy subsidy estimates. Annex 4 
of the toolbox contains detailed examples of subsidies on 
the candidates for reform. 

(43)  European Commission, 2021, Green taxation and other 

economic instruments – Internalising environmental costs to 
make the polluter pay, Ensuring that polluters pay. 

36 

 
                                                                              
Table A6.1: Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources: (1) Historical and projected emissions, as well as Member States’ climate policy targets and 2005 base year emissions under 
the Effort Sharing Decision (for 2020) are measured in global warming potential (GWP) values from the 4th Assessment Report (AR4) of 
the Intergovernmental Panel on Climate Change (IPCC). Member States’ climate policy targets and 2005 base year emissions under the 
Effort Sharing Regulation (for 2030) are in GWP values from the 5th Assessment Report (AR5). The table above shows the base year 
emissions 2005 under the Effort Sharing Decision, using AR4 GWP values. Emissions for 2017-2021 are expressed in percentage change 
from 2005 base year emissions, with AR4 GWP values. 2021 data are preliminary. The table shows the 2030 target under Regulation 
(EU) 2023/857 that aligns it with the EU’s 55% objective, in percentage change from 2005 base year emissions (AR5 GWP). Distance to 
target is the gap between Member States’ 2030 target (with AR5 GWP values) and projected emissions with existing measures (WEM) 
and with additional measures (WAM) (with AR4 GWP values), in percentage change from the 2005 base year emissions. Due to the 
difference in global warming potential values, the distance to target is only illustrative. The measures included reflect the state of play as 
of 15 March 2021.  
(2) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2023 greenhouse gas 
inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 amending Regulation (EU) 2018/841 
(LULUCF Regulation) – Annex IIa, kilotons of CO2 equivalent, based on 2020 submissions. 
(3) Renewable energy and energy efficiency targets and national contributions are in line with the methodology established under 
Regulation (EU) 2018/1999 (Governance Regulation).  
(4) Percentage of total revenue from taxes and social contributions (excluding imputed social contributions). Revenue from the EU 
Emissions Trading System is included in environmental tax revenue.  
(5) Expenditure on gross fixed capital formation for the production of environmental protection services (abatement and prevention of 
pollution) covering government, industry, and specialised providers.  
(6) European Commission, Study on energy subsidies and other government interventions in the European Union, 2022 edition.  
(7) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters. This indicator is 
based on modelling of the current risk from floods, wildfires and windstorms as well as earthquakes, and an estimation of the current 
insurance penetration rate. The indicator does not provide information on the split between the private/public costs of climate-related 
disasters. A score of 0 means no protection gap, while a score of 4 corresponds to a very high gap (EIOPA, 2022).  
(8) Sulphur oxides (SO2 equivalent), ammonia, particulates < 10 µm, nitrogen oxides in total economy (divided by GDP).  
(9) Battery electric vehicles (BEV) and fuel cell electric vehicles (FCEV). 

37 

2030200520172018201920202021target/valueWEMWAMGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq; %; pp75,50%3%0%2%--12,7%-17,7-14,7Net carbon removals from LULUCF (2)kt CO2eq-33.494-50.533-48.208-48.223-50.407-49.258-25665n/an/a200520172018201920202021Share of energy from renewable sources in gross final consumption of energy (3)%18%24%24%24%24%24%31%Energy efficiency: primary energy consumption (3)Mtoe36,132,532,632,130,933,132,3Energy efficiency: final energy consumption (3)Mtoe24,623,323,623,923,525,425,7201620172018201920202021201920202021Environmental taxes (% of GDP)% of GDP2,42,02,02,11,92,02,42,22,2Environmental taxes (% of total taxation) (4)% of taxation 9,37,87,68,17,37,45,95,65,5Government expenditure on environmental protection% of total exp.1,81,52,12,01,61,81,71,61,6Investment in environmental protection (5) % of GDP0,40,20,30,3--0,40,40,4Fossil fuel subsidies (6)EUR2021bn1,11,01,00,60,81,053,050,0-Climate protection gap (7) score 1-41,72,11,5Net greenhouse gas emissions1990 = 10046,044,044,043,041,046,076,069,072,0Greenhouse gas emission intensity of the economykg/EUR'100,770,740,710,660,65-0,310,300,26Energy intensity of the economykgoe/EUR'100,210,210,200,190,19-0,110,11-Final energy consumption (FEC)2015=100101,816,8108,0109,3107,7116,1102,994,6-FEC in residential building sector2015=100100,5104,8105,4105,1108,6118,8101,3101,3106,8FEC in services building sector2015=100102,5105,5112,2111,4104,1105,2100,194,4100,7Smog-precursor emission intensity (to GDP) (8)tonne/EUR'102,322,081,981,951,86-0,90,9-Years of life lost due to air pollution by PM2.5per 100.000 inh.1271,41369,41369,11120,41210,9-581,6544,5-Years of life lost due to air pollution by NO2per 100.000 inh.225,6258,0274,8286,0174,7-309,6218,8-Nitrates in ground watermg NO3/litre------21,020,8-Land protected areas% of total22,223,4-23,423,423,426,226,426,4Marine protected areas% of total21,4--21,5-21,410,7-12,1Organic farming% of total utilised agricultural area1,71,92,42,93,64,48,59,1-201720182019202020212022202020212022Share of zero-emission vehicles (9)% in new registrations0,20,41,02,35,38,15,48,910,7Number of AC/DC recharging points (AFIR categorisation)---47812121518188626330028432518Share of electrified railways%37,437,437,437,437,437,556,6n/a56,6Hours of congestion per commuting driver per year31,930,532,432,7n/an/a28,7n/an/aMobility'Fit for 55'DistanceProgress to policy targetsNational contribution to 2030 EU targetRomaniaEUFiscal and financialindicatorsEnergyPollutionBiodiversityClimate 
 
 
 
   
 
ANNEX 7: ENERGY SECURITY AND AFFORDABILITY 

Thanks  to  its  significant  internal  production 
of  natural  gas,  Romania  is  less  exposed  to 
Russian gas than many other Member States. 
However,  it  is  highly  dependent  on  fossil  fuels  in 
general, in particular for oil, and the economy has 
been  severely  hit  by  energy  price  developments, 
requiring Romania to step up efforts on the energy 
transition  and  protect  vulnerable  consumers.  This 
Annex (44) sets out actions carried out by Romania 
to  achieve  the  REPowerEU  objectives,  including 
through  the  implementation  of  its  recovery  and 
resilience plan, in order to improve energy security 
and  affordability  while  accelerating  the  clean 
energy  transition,  and  contributing  to  enhancing 
the  EU’s  competitiveness  in  the  clean  energy 
sector (45).  

Romania  is  the  second  largest  gas  producer 
in  the  EU  after  the  Netherlands,  able  to 
generate  a  large  part  (up  to  80%)  of  the 
natural  gas  it  needs  and  importing  the 
difference  during  peak  demand  periods  in 
winter mainly from Russia. Gas production has 
been  decreasing  since  2017  to  8.8  billion  cubic 
metres (bcm) in 2021 (-4.5%/year); the downward 
trend  was  reversed  in  2022  (+2.5%  as  against 
2021),  with  a  contribution  from  tapping  offshore 
reserves. Production covered 76% of consumption 
in  2021,  while  imports  increased  to  3.6  bcm. 
Particularly  during  the  winter  season,  Romania 
depends on Russian gas. 

Romania’s  storage  facilities  significantly 
contribute to ensuring the security of its gas 
supply  in  case  of  gas  disruptions.  Romania 
fulfilled  its  gas  storage  obligations  last  winter, 
reaching  96.78%  by  1  November  (more  than  16 
percentage  points  above  its  legal  obligation),  and 
ended  the  heating  season  with  a  filling  gas 
storage at 42.92% at 15 April 2023 (46). Romania 

(44)  It is complemented by Annex 6 as the European Green Deal 
focuses on the clean energy transition, by Annex 8 on the 
actions taken to mitigate energy poverty and protect the 
most vulnerable ones, by Annex 9 as the transition to a 
circular economy will unlock significant energy and resource 
savings, further strengthening energy security and 
affordability; and by Annex 12 on industry and single market 
complementing ongoing efforts under the European Green 
Deal and REPowerEU.  

(45)  in line with the Green Deal Industrial Plan COM(2023) 62 
final, and the proposed Net-Zero Industry Act COM(2023) 
161 final 

(46)  Regulation of the European Parliament and of the Council 
amending Regulations (EU) 2017/1938 and (EC) No 
715/2009 with regard to gas storage and Implementing 

seven 

underground 

operates 
storage 
facilities (47)  with  a  gas  storage  capacity  of  3.36 
bcm  (covering  around  one  quarter  of  its  annual 
consumption,  and  almost  the  equivalent  of  its 
total gas imports in 2021). 

gas 

Graph A7.1: Underground gas storage levels in 
Romania 

Source: JRC calculation based on AGSI+ Transparency 
Platform, 2022 (Last update 2 May 2023) 

Graph A7.2: Share of gas consumption per sector, 
2021 

Source: Eurostat 

Romania  has  a  well-developed  natural  gas 
(transmission  and  storage 
infrastructure 
infrastructure), 
cross-border 
connections,  but  no  liquefied  natural  gas 
terminal for storage or regasification. Its gas 
storage  capacity  is  expected  to  increase  by  1.6 
bcm  by  2029.  There  are  several  gas  projects 

including 

Regulation (EU) 2022/2301 of 23 November 2022 setting 
the filling trajectory with intermediary targets for 2023 for 
each Member State with underground gas storage facilities 
on its territory and directly interconnected to its market area. 

(47)  Two storage operators manage the underground storage 
facilities: Depomures 0.3 bcm (UGS Târgu Mureş) and 
Depogaz Ploiesti 2.87 bcm (UGS Bălăceanca – 0.05 bcm, 
Bilciuresti – 1.31 bcm, Cetatea de Baltă, Ghercesti – 0.15 
bcm, Sărmășel – 0.9 bcm, Urziceni – 0.36 bcm). 

38 

29.9%28.6%0.1%7.6%32.7%1.1%EnergyIndustryTransportServices and public sectorHouseholdsAgriculture, forestry andfishery 
 
                                                 
 
 
 
   
                                                                              
 
 
involving  Romania,  pending  commissioning,  in  the 
fifth  list  of  Projects  of  Common  Interest  (PCIs): 
increase  underground  gas  storage  in  Depomures, 
expanding  in  Bilciuresti,  and  BRUA  phase  II,  a 
project  aimed  at  expanding  internal  transmission 
capacity  towards  Hungary  and  taking  over  Black 
sea gas. 

Graph A7.3: Romania´s retail energy prices for 
industry (top) and households (bottom) 

(1) On electricity, the band consumption is DC for households 
and ID for industry 
(2) On gas, the band consumption is D2 for households and I4 
for industry 
Source: Eurostat 

Recent  measures  adopted  by  Romania  and 
the  high  energy  prices  led  to  a  gas  demand 
reduction  of  about  20%  over  the  period 
August  2022  –  March  2023,  when  compared 
to  the  previous  5-years  average.  The  energy 
demand  reduction  has  been  achieved  exclusively 
based on voluntary measures, most of them being 
induced  by  the  high  level  of  the  prices.  The 
measures 
include 
temporarily  restarting  stopped  coal-fired  power 
for 
plants, 
households  and  non-household  consumers  until 
August  2023.  Romania  has  also  introduced  a 
measure  cutting  additional  revenues  made  by 
energy  producers  and  other  participants  in  the 
value chain such as traders and suppliers, with the 
contributions  going  directly 
the  energy 
transition  fund,  used  to  finance  measures  for 

implemented  by  Romania 

compensation  measures 

and 

to 

consumers  and  incentives  for  the  green  energy 
transition. 

Romania  has  made  good  progress  on  the 
auctions, and on adapting the legislative and 
regulatory  framework,  for  the  renovation 
component  of  its  recovery  and  resilience 
plan.  The  financial  support  provided  by  the 
authorities  for  the  renovation  of  multi-family 
blocks  of  flats  and  public  buildings  is  often  a 
100%  grant  limiting  the  impact  and  trigger  less 
the  continuation  at  market  level.  There  is  less 
financial  support  for  the  renovation  of  single-
family houses, and yet they represent the bulk of 
residential building stock. There is also only limited 
support for renewable energy technology and heat 
pumps  for  heating  in  buildings.  Although  energy 
renovation  of  the  building  stock  is  high  on  the 
agenda,  the  current  pace  of  it  would  need  to  be 
stepped up for Romania to reach the 2030 target 
of  a  3.4%/year  renovation  rate  and  make  the 
associated  energy  and  greenhouse  gas  emission 
savings  indicated  in  the  long-term  renovation 
strategy.  The  structural 
improvement  of  the 
buildings  sector  will  not  only  deliver  on 
decarbonisation  goals. 
shield 
households  and  businesses  from  high  energy 
prices,  while 
indoor  comfort  and 
contributing  to  the  alleviation  of  energy  poverty. 
Additional training and education activities related 
to  energy  renovation  and  renewable  energy 
into  buildings  are  not  developed 
integration 
enough  to  result  in  the  estimated  job  creation 
potential and ensure the proper implementation of 
measures  to  avoid  lock-in  effects  due  to  the 
improper execution of works. 

It  will  also 

improving 

Following  the  dramatic  increase  in  energy 
prices after October 2021, Romania adopted 
several  measures  to  mitigate  the  impact  of 
rising energy prices on vulnerable household 
and  non-household  consumers.  The  measures 
provide  compensation  for  energy  bills  under 
certain conditions, to domestic consumers, but also 
to  non-household  consumers  (e.g.  small  and 
medium-sized enterprises, public institutions). They 
are  expected  to  alleviate  the  impact  of  soaring 
energy  prices  on  households,  in  particular  low-
income families, and industries as energy poverty 
affects 10.1% of the population according to data 
collected in 2021 on the self-assessed inability to 
keep  one’s  home  adequately  warm,  and  7.3%  of 
households who declare arrears in utility bills.  

39 

050100150200250300350400€/MWhGas RomaniaGas EUElectricity RomaniaElectricity EU050100150200250300350400€/MWhGas RomaniaGas EUElectricity RomaniaElectricity EU 
      
products  covered  by  ecodesing  and  energy 
labelling.  This  generates  serious  concerns  with 
respect to the level playing field among economic 
operators    and  uncertainty  as  to  the  compliance 
levels  of  the  concerned  products,  ,  and  therefore 
possible missed energy and CO2 savings. (53) 

Graph A7.4: Public R&I investment in Energy Union 
R&I priorities 

Romania’s  deployment  of  renewable  energy 
reached a total of 11138 MW in 2021, increasing 
by 0.15% from 2020 (48). Most of this growth was 
in solar energy (+1% in 2021). Romania currently 
has no offshore wind electricity, and there were no 
new  onshore  wind  installations  in  2021.  A  tender 
was  launched  in  2022  for  the  deployment  of 
approximately  950  MW  of  renewable  energy 
capacity  (solar  and  wind  energy).  Romania  has 
also  taken  measures  to  clarify  the  status  of 
renewable self-consumers and to simplify permit-
granting procedures for renewable energy projects, 
including  the  introduction  of  a  simple  notification 
procedure. A national hydrogen strategy and action 
plan  is  being  developed  and  a  State  aid  scheme 
has  been  launched  to  commission  capacity  of  at 
least 100 MW in electrolysis installations. 

Source: JRC SETIS (2022) 

in  energy) 

Romania  invests  very  little  in  research  and 
innovation  (R&I)  supporting  Energy  Union 
priorities.  Public  R&I  investments (49)  have  been 
in  continuous  decline  in  recent  years:  EUR  8.9 
million  in  2017  (equivalent  to  0.005%  of  GDP), 
EUR 6.9 million  in  2018,  EUR  1.2  million  in  2019 
and  EUR 200 000  in  2020  (less  than  0.001%  of 
GDP).  Romania  has  one  of  the  lowest  rates  of 
participation  (notably 
in  the  EU’s 
Horizon  Europe  programme.  At  the  same  time, 
private  R&I  investments (50)  were  EUR  18.1,  32 
and  26.1  million  respectively (51)  (representing 
expenditure  of  roughly  one  order  of  magnitude 
higher as a share of GDP than public expenditure). 
Venture  capital  investments  in  climate  tech start-
ups totalled EUR 0.7 million in 2019, only 2.4% of 
total  venture  capital  investments.  The  number  of 
clean 
patent 
technologies  was  41 (52),  with  about  one  third  for 
renewables,  one  third  for  sustainable  transport, 
and  the  rest  for  other  technologies  (e.g.  energy 
efficiency  or  smart  energy  systems).  This 
represents  a  little  over  2  patent  families  per 
million  inhabitants,  or  10  times  less  than  the  EU 
average.  Romania  is  not  carrying  out  checks  on 

in  2019 

families 

filed 

for 

(48)  Renewable energy generation capacity has increased, but the 
share of renewable energy in total energy consumption 
decreased in 2021, mainly as a result of the significantly 
lower share of hydropower.  

(49)  Source: JRC SETIS (2022). The figures do not include EU 

funding.  

(50)  Idem. 

(51)  No figure available for 2020. 

(52)  Ibidem. 

(53)  The internet-supported information and communication 
system for the pan-European market surveillance 

40 

45%30%46%2%16%46%13%4%44%24%4%9%15%2%201020142020[% per priority]CCUSNuclear safetySustainable transportEfficient systemsSmart systemRenewables2100Total [mn Euro] 
                                                 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Table A7.1: Key energy indicators 

(1) The ranking of the main supliers is based on the latest available figures (for 2021) 
(2) FSRU included 
(3) Venture Capital investments include Venture Capital deals (all stages) and Private Equity Growth/Expansion deals (for 
companies that have previously been part of the portfolio of a VC investment firm). 
Source: Eurostat, Gas Infrastructure Europe (Storage and LNG Transparency Platform), JRC SETIS (2022), JRC elaboration based 
on PitchBook data (06/2022) 

41 

EU2018201920202021201820192020202124%30%28%32%58%61%57%56%of Solid fossil fuels 18%22%22%23%44%44%36%37%of Oil and petroleum products 63%65%65%68%95%97%97%92%of Natural Gas 12%23%17%23%83%90%84%83%Dependency from Russian Fossil Fuels [%]of Hard Coal93%99%99%99%40%44%49%47%of Crude Oil43%39%32%27%30%27%26%25%of Natural Gas 87%37%45%78%40%40%38%41%20152016201720182019202020212022Gross Electricity Production (GWh)66,29665,10364,29664,87659,62355,93559,470-Combustible Fuels28,60426,87128,67227,30823,78720,08822,162-Nuclear11,64011,28611,50911,37711,28011,46611,284-Hydro17,00718,53614,85318,09716,00615,70117,745-Wind7,0636,5907,4076,3226,7736,9456,576-Solar 1,9821,8201,8561,7711,7781,7331,703-Geothermal 0000000-Other Sources0000000-Net Imports of Electricity (GWh)-6,728-5,017-2,894-2,5441,5182,7922,199-   As a % of electricity available for final consumption -14%-11%-6%-5%3%6%4% -Electricity Interconnection (%)--6.90%10.02%9.1%9.3%7.6%14.6%20152016201720182019202020212022Gas Consumption (in bcm)11.211.412.312.011.211.812.110.2Gas Imports - by type (in bcm)0.21.51.21.52.72.13.6-Gas imports - pipeline0.21.51.21.52.72.13.6-Gas imports - LNG0.00.00.00.00.00.00.0-Gas Imports - by main source supplier (in bcm)* (1)Russia0.21.51.21.31.01.02.8-Bulgaria0.00.00.00.00.10.10.7-Hungary0.00.00.00.21.61.10.1-Greece0.00.00.00.00.00.00.0-2019202020212022LNG TerminalsNumber of LNG Terminals (2)0000LNG Storage capacity (m3 LNG)0000Underground StorageNumber of storage facilities7777Operational Storage Capacity (bcm)3.43.43.43.42019202020212022VC investments in climate tech start-ups and scale-ups (EUR Mln) (3)0.70.40.0n.a.as a % of total VC investments in Romania2.4%1.9%0.0%n.a.Research & Innovation spending in Energy Union R&i priorites (2)Public R&I (EUR mln)1.20.2n.a.n.a.Public R&I (% GDP)0.001%0.000%n.a.n.a.Private R&I (EUR mln)26.1n.a.n.a.n.a.Private R&I (% GDP)0.01%n.a.n.a.n.a.CLEAN ENERGYDIVERSIFICATION OF GAS SUPPLIESROMANIAENERGY DEPENDENCEELECTRICITY 
 
 
 
 
 
      
 
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

in 

the 

line 

with 

This  Annex  monitors  Romania’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
notably  for  workers  and  households 
in 
vulnerable  situations.  To  ensure  a  fair  green 
transition 
Council 
Recommendation (54),  upskilling  and  reskilling  of 
workers  in  declining  and  transforming  sectors  is 
key  and  has  increased  strongly  in  Romania.  The 
sizable share of jobs in energy-intensive sectors in 
total  employment  highlights 
for 
continued  investment  in  skills  to  support  the  fair 
transition  and  the  implementation  of  REPowerEU. 
Under  Romania’s  recovery  and  resilience  plan 
(RRP), investment will support the development of 
certification  schemes 
in  the  area  of  energy 
performance  of  buildings  for  specialists  and 
qualifications  for  construction  workers. (55).  The 
European  Social  Fund  Plus  (ESF+)  contributes  to 
green  skills  and 
in 
education and training. 

jobs  through 

investment 

the  need 

Employment in sectors most affected by the 
green  transition  remains  stable  and  the 
green  economy  is  expanding,  but  workers  in 
declining  activities  need  active  support.  The 
greenhouse  gas  (GHG)  emissions  intensity  of 
Romania’s  workforce  declined  between  2015  and 
2021, and stands at 11.5 tonnes per worker, below 
the  EU  average  of  13.7  tonnes  (see  Graph A8.1 
and  Table A8.1).  Employment  in  energy-intensive 
industries  represented  a  declining  share  of  total 
employment  and  stood  at  4.3% 
in  2020 
to  an  EU  average  of  3.0%). 
(compared 
Employment 
in  mining  and  quarrying  has 
decreased by 20.7% since 2015. Total jobs in the 
environmental  goods  and  services  sector  grew  by 
2.1% during 2015-19 (EU: +8.3%), reaching 1.9% 
of total employment, close to the EU average (see 
Annex  9  for  circular  jobs  specifically).  The  job 
vacancy 
in 
relatively 
construction,  a  key  sector for  the  green  transition 
(0.4%  vs  4.0%  in  EU  in  2022) (56).  The  National 
Strategy  for  Green  Jobs  (2018-2025)  sets  the 
policy  analysis  framework  for  the  transformative 
effects  of  the  green  transition  on  the  labour 

including 

rate 

low, 

is 

(54)  Council Recommendation of 16 June 2022 on ensuring a fair 
transition towards climate neutrality (2022/C 243/04) covers 
employment, skills, tax-benefit and social protection 
systems, as well as essential services and housing. 

(55)  See 2022 Country Report (Annex 6) and Annex 3 for an 

overview. 

(56)  Eurostat (JVS_A_RATE_R2) 

market,  including  on  the  demand  for  new  skills. 
Over  32  000  jobs  are  expected  to  be  lost  due  to 
the  impact  of  the  transition  on  declining  and 
transforming  sectors  in  the  six  counties  with  the 
most  carbon-intensive  industries.  Workers  in  the 
affected  regions  will  need  active  support  to 
acquire new qualifications. 

Graph A8.1: Fair transition challenges in Romania 

Source: Eurostat, EMPL-JRC GD-AMEDI/AMEDI+ projects and 
World Inequality Database (see Table A8.1). 

Romania’s 

RRP  will 

Upskilling  and  reskilling  in  declining  and 
transforming  sectors  strongly 
increased. 
Skills are key for smooth labour market transitions 
and  preserving  jobs  in  transforming  sectors.  In 
energy-intensive  industries,  workers’  participation 
in  education  and  training  has  strongly  increased 
from  2.3%  in  2015  to  9.4%  in  2022  ,  but  is  still 
below  the  EU  average  (10.4%).  In  Romania,  47% 
of citizens believe they do not have the necessary 
skills  to  contribute  to  the  green  transition  (EU: 
38%) (57). 
strengthen 
resource 
professional  skills  for  energy  and 
efficiency  intervention  on  historic  buildings  and 
support 
training  of  public  officials  as 
sustainable  development  experts  at  central  and 
local level. The Just Transition Mechanism provides 
training  for  reskilling  of  workers 
in  regions 
affected by the transition, together with a broader 
training  offer  at  national  level  and  flexibility 
mechanisms to encourage in-company training. In 
Romania,  EUR  117.5  million  of  ESF+  funding 
contributes  to  green  skills  and  jobs  through  the 
‘Education and Employment’ programme, providing 
training  and  professional  guidance  to  step  up  the 
development of green skills and related jobs. 

the 

(57)  Special Eurobarometer 527. Fairness perceptions of the 

green transition (survey in May – June 2022). 

42 

00.20.40.60.811.21.41.61.82GHG per workerEmployment EIIEducation &training EIIEnergy povertyTransportpoverty(proxy)CarboninequalityEU LatestRO Latest (vs EU Latest)RO 2015 (vs EU Latest) 
 
                                                 
  
                                                 
 
Table A8.1: Key indicators for a fair transition in Romania 

Source: Eurostat (env_ac_ainah_r2, nama_10_a64_e, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-
JRC GD-AMEDI/AMEDI+ projects and World Inequality Database (WID). 

in 

improvements 

Despite 
recent  years, 
Romania  had  a  relatively  high  share  of 
households  affected  by  energy  poverty 
already  before  the  recent  spike  in  energy 
prices, and this can be expected to aggravate 
the situation. The share of the population unable 
to  keep  their  homes  adequately  warm  declined 
from 13.1% in 2015 to 10.1% in 2021 (still above 
the  EU  average  of  6.9%) (58).  In  particular,  21.9% 
of the population at risk of poverty were affected 
in  2021  (EU:  16.4%  in  2021),  as  were  9.3%  of 
lower middle-income households (in deciles 4-5) in 
2021 (EU: 8.2% in 2021). Before the  energy price 
hikes, an estimated  53.2% of the total population 
and  52.4%  of  the  (expenditure-based)  at-risk-of-
poverty 
residential 
(AROP)  population  had 
expenditure  budget  shares  on  electricity,  gas,  and 
other  fuels (59)  above  10%  of  their  household 
budget  (above  the  estimated  EU  averages  of 
26.9% and 48.2%, respectively). A list of actions to 
improve social protection for vulnerable categories 
of energy poverty were listed in the national long 
term  renovation  strategy (60).  They  include  the 
extension  of  the  definition  of  vulnerable  groups, 
preparation  of  an  action  plan  for  energy  poverty 
and  the  implementation  of  buildings  renovation 
programmes  with  measures  aiming  to  ensure 
access to finance for socially vulnerable groups. 

(58)  Energy poverty is a multi-dimensional concept. The indicator 
used focuses on an outcome of energy poverty. Further 
indicators are available at the Energy Poverty Advisory Hub. 

(59)  Products defined according to the European Classification of 

Individual Consumption according to Purpose (ECOICOP): CP045.  

Graph A8.2: Distributional impacts of energy prices 
due to rising energy expenditure (2021-2023) 

Mean change of energy expenditure as a percentage (%) of 
total expenditure per income decile (D) due to observed price 
changes (August 2021 – January 2023 relative to the 18 
months prior), excl. policy support and behavioural responses. 
Source: EMPL-JRC GD-AMEDI/AMEDI+ projects, based on 
Household Budget Survey 2015 and Eurostat inflation data 
for CP0451 and CP0452. 

The  increased  energy  prices  in  2021-2023 
in 
negatively  affect  household  budgets, 
particular  for  low-income  groups.  As  a  result 
of  price  changes  during  August  2021  to  January 
2023  period  relative  to  the  18  months  prior    (cf. 
Annex  7),  in  the  absence  of  policy  support  and 
behavioural  responses,  the  share  of  individuals 
living  in  households  which  spend  more  than  10% 
of their budget on energy would have increased by 
16.0 pps for the whole population and by 14.7 pps 
among  the  (expenditure-based)  AROP  population, 
slightly less than the EU-level increases (16.4 pps 
and 19.1 pps, respectively) (61). Expenditure shares 
of  low  and  lower-middle  income  groups  would 
have  increased  the  most  for  electricity,  while  for 
gas the medium deciles would have been the most 
affected,  as  shown  in  Graph  A8.2.  Among  the 
(expenditure-based) AROP population, the share of 
individuals living in households with budget shares 

(60)  Assessment of the first long-term renovation strategies 

(61)  EMPL-JRC GD-AMEDI/AMEDI+ ; see details in the related 

under the Energy Performance of Building Directive (Art. 2a). 

technical brief. 

43 

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%ElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasD1D2D3D4D5D6D7D8D9D10RO GasRO ElectricityEU GasEU ElectricityIndicatorDescriptionRO 2015RO LatestEU LatestGHG per workerGreenhouse gas emissions per worker - CO2 equivalent tonnes11.811.5 (2021)13.7 (2021)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24), automotive (C29) - %4.74.3 (2020)3 (2020)Education & training EIIAdult participation in education and training (last 4 weeks) in energy-intensive industries - %2.39.4 (2022)10.4 (2022)Energy povertyShare of the total population living in a household unable to keep its home adequately warm - %13.110.1 (2021)6.9 (2021)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport - %3.24.3 (2023)37.1 (2023)Carbon inequalityAverage emissions per capita of top 10% of emitters vs bottom 50% of emitters6.46.5 (2020)5 (2020) 
 
                                                 
   
                                                 
 
  
 
for  private  transport  fuels (62)  above  6%  would 
have increased less than the EU average (1.0 pps 
vs  5.3  pps)  and  stands  at  4.3%  in  January  2023 
due  to  the  increase  in  transport  fuel  prices, 
significantly  below  the  EU  average  (37.9%).  The 
integrate  energy-
RRP 
efficiency technologies into educational and social 
infrastructure.  

includes  measures  to 

Access to public transport displays an urban-
rural divide. Citizens perceive public transport to 
be  relatively  available  (57%  vs  55%  in  the  EU), 
affordable  (58%  vs  54%)  and  of  good  quality 
(55% vs 60%). As regards these perceptions, rural 
areas in Romania perform worse than urban areas, 
but are, overall, at a similar level as rural areas in 
the EU (63). The average carbon footprint of the top 
10% of emitters among the population in Romania 
is about 6.5 times higher than that of the bottom 
50% (see Graph A8.1), more pronounced than the 
EU  average  (5.0  times).  In  Romania,  the  average 
levels of air pollution in 2020 stood above the EU 
average  (15.2  vs  11.2  µg/m  PM2.5),  with  all 
regions  exposed 
levels  of  air 
pollution (64), leading to significant health impacts, 
in  particular  on  vulnerable  groups,  and  21 560 
premature deaths annually (65). 

critical 

to 

(62)  ECOICOP: CP0722. 

(63)  EU (rural): 46%, 48% and 56% respectively. Special 

Eurobarometer 527. 

(64)  Two times higher than the recommendations in the WHO Air 

Quality Guidelines (annual exposure of 5µg/m3) 

(65)  EEA- Air Quality Health Risk Assessment 

44 

 
 
                                                 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

The  circular  economy  transition  is  key  to 
climate  and 
delivering  on 
the  EU’s 
environmental  goals  and  provides 
large 
socio-economic  benefits. It  spurs  job  growth, 
innovation  and  competitiveness  and 
fosters 
resilience  and  resource  security.  The  circularity 
transition  of  industry,  the  built  environment  and 
agri-food  can  generate  significant  environmental 
improvements (see Annex 6), as they rank among 
the most resource-intensive systems. 

Romania’s  circular  economy  transition  is 
insufficient  and  needs  accelerating  to  meet 
the  EU’s  circular  economy  goals.  The  EU’s 
2020 circular economy action plan (CEAP) aims at 
doubling  the  circular  material  use  rate  between 
2020  and  2030.  The  circular  (secondary)  use  of 
material  in  Romania  declined  from  1.7%  in  2016 
to 1.4% in 2021. It is very low compared to the EU 
average  of  11.7%  and  has  deteriorated  since 
2017.  The  CEAP  also  aims  to  significantly 
decrease  the  EU’s  material  footprint.  In  2020, 
Romania’s  material  footprint  (29.6  tonnes  per 
head)  was  well  above  the  2020  EU-27  average 
(13.7  tonnes  per  head)  and  confirms  the  upward 
trend  since  2017.  The  labour  market  benefits  of 
the  circular  transition  remain  limited,  with  minor 
growth  in  direct  circular  jobs  in  2019.  As  regards 
health and safety in circular jobs, fatal accidents in 
waste  management  and  materials  recovery  are 
above  the  average  of  all  economic  sectors  and 
above the EU average (66). 

Romania  recently  adopted  new  policies  to 
address  circular  economy  challenges,  but 
more measures are needed. In September 2022 
it  published  a  national  strategy  for  circular 
economy  that  was  developed  with  the  support  of 
the  Technical  Instrument  Facility  (TSI),  as  part  of 
the  RRP.  Progress  was  noted  with  the  adoption  in 
2021  of  the  41  county  waste  management  plans 
waste 
and 
management  plan.  The  2017  national  waste 
prevention  programme  and  waste  management 
plan still need revising. 

Bucharest  municipality 

the 

Romania’s 
has 
stagnated  over  recent  years,  remaining  well 

performance 

recycling 

(66)  Eurostat [HSW_N2_02] for NACE Rev. 2 sector E38; 13.8 
fatal accidents p. 100 000 employed in 2018-2020 in 
Romania vs 3.5 for all sectors in RO; 6.3 in the EU for E38 

45 

below  the  EU’s  binding  targets.  With  a 
municipal  waste  recycling rate  of  11.3%  in  2021, 
Romania  missed  the  EU  target  for  recycling  50% 
by  2020.  Romania  is  at  risk  of  missing  the  EU’s 
recycling  targets  for  packaging  and  municipal 
waste  for  2025  and  is  at  a  significant  distance 
from  the  landfill  reduction  target  of  10%  for 
2035.  In  2021,  Romania  landfilled  75.5%  of  its 
municipal  waste,  a  rate  over  three  times  the  EU 
average  of  23%.  The  recycling  rate  did  not  show 
significant  progress  in  the  last  5  years  (from 
13.4% in 2016 to 11.3% in 2021). Romania needs 
to  make  considerable  efforts  to  meet  the  EU’s 
recycling 
in 
through 
separate collection and treatment of waste with a 
view to recycling and improvements in waste data 
management  in  order  to  present  coherent  and 
verifiable  data  sets. 
Illegal  or  sub-standard 
landfilling  is  still  widespread,  diverting  materials 
and 
reused, 
remanufactured or recycled. 

improvements 

resources 

targets 

could 

that 

be 

Graph A9.1: Trend in material use 

Source: Eurostat 

The  industrial  system  is  not  sufficiently 
circular.  The  Romanian  economy,  particularly 
industry,  is  less  efficient  at  using  materials  than 
the EU average, with a resource productivity of 0.8 
purchasing power standard per kilogramme vs 2.3 
for  the  EU  in  2021.  This  is  an  impediment  to 
Romania’s  resilience  (see  Annex  5).  Resource 
productivity  has  remained  stable  but  low  since 
2016,  indicating  significant  potential  to  boost 
repair,  reuse  and  the  use  of  secondary  raw 
materials. The consumption footprint is increasing, 
but  remains  below  the  EU  average.  The  national 
strategy  for  circular  economy  sets  a  general 

0.020.040.060.080.0100.0120.00.05.010.015.020.025.030.035.0201620172018201920202021kg/capitatonnes/capitaMaterial footprint Romania (tonnes/capita)Material footprint EU-27 (tonnes/capita)Trade in recyclable raw materials Romania (imports extra EU, kg/capita)Trade in recyclable raw materials EU-27 (imports extra EU, kg/capita) 
 
 
                                                 
           
 
direction  for  accelerating  the  transition  from  a 
linear  to  a  circular  economy  model,  providing  an 
overview  of  14  economic  sectors  in  Romania  in 
terms  of  their  circularity  potential.  7  were 
identified as having the highest potential. 

Graph A9.2: Treatment of municipal waste 

Source: Eurostat 

The  built  environment  system  continues  to 
exacerbate 
resources 
the  depletion  of 
despite  recent  improvements.  The  recovery 
rate  of  construction  and  demolition  waste 
increased  in  2020  and  was  close  to  the  EU 

average  (88%  vs  89%).  However,  data  are  not 
available  for  2017  and  2019.  Soil  sealing 
progressed  between  2016  and  2018.  There  is 
scope  for 
renovating  existing  buildings  and 
improving  their  use  instead  of  building  new  ones, 
and  for  increasing  the  share  of  secondary  raw 
materials used in construction.  

The  agri-food  system  has  yet  to  progress 
towards  circularity.  Romania’s  composting  and 
anaerobic  digestion  per  head  remains  well  below 
the  EU  average,  with  14  kg  per  capita  vs  100  kg 
per  capita.  Romania  should  step  up  efforts  to 
increase  composting  and  anaerobic  digestion  to 
make  its  circular  economy  more  efficient  and 
enhance  its  strategic  autonomy  by  generating 
biomethane  and/or  producing  organic  fertilisers. 
The  Romanian  CAP  strategic  plan  includes  funds 
for circular economy in the agri-food sector.  

There remains a financing gap in the circular 
economy, 
including  waste  management.  
Additional  investments  will  be  required  to 
address  growing  needs.  The  financing  gap  was 
estimated  at  EUR  267  million  per  year  between 
2014  and  2020.  Over  this  period,  investment 
needs  were  estimated  to  be  at  least  EUR  874 
million  per  year,  while  investment  baselines  were 
EUR 607 million per year (see Annex 6).   

Table A9.1: Overall and systemic indicators on circularity 

(1) Persons employed in the circular economy only tracks direct jobs in selected sub-sectors of NACE codes E, C, G and S; (2) the 
circular material use rate measures the share of material recovered and fed back into the economy in overall material use; (3) the 
recovery rate of construction and demolition waste includes waste which is prepared for reuse, recycled or subject to material 
recovery, including through backfilling operations; (4) soil sealing: 2016 column refers to 2015 data; (5) food waste includes 
primary production, processing and manufacturing, retail and distribution, restaurants and food services, and households. 
Source: Eurostat, European Environment Agency 

46 

2612722722802903020100200300400500600201620172018201920202021Kg per capita Difference waste generated/treatmentLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27AREA201620172018201920202021EU-27 Latest year EU-27Overall state of the circular economyMaterial footprint (tonnes/capita)23.221.823.728.229.6-13.72020YoY growth in persons employed in the circular economy (%)12.6-2.5 -0.6 1.3--2.92019Water exploitation index plus (WEI+) (%)15.022.019.49.0--3.62019IndustryResource productivity (purchasing power standard (PPS) per kilogram)0.70.90.90.80.80.82.32021Circular material use rate (%)21.71.71.51.31.51.411.72021Recycling rate (% of municipal waste)13.414.011.111.511.911.349.62021Built environmentRecovery rate from construction and demolition waste (%)385.0-74.0-88.0-89.02020Soil sealing index (base year = 2006)4106.0-109.3---108.32018Agri-foodFood waste (kg per capita)5------131.02020Composting and digestion (kg per capita)18.018.09.012.018.014.0100.02021 
          
 
       
 
ANNEX 10: DIGITAL TRANSFORMATION 

transformation  by  2030, 

Digital  transformation  is  key  to  ensuring  a 
resilient and competitive economy. In line with 
the  Digital  Decade  Policy  Programme,  and  in 
particular  with  the  targets  in  that  Programme  for 
digital 
this  Annex 
describes  Romania’s  performance  on  digital  skills, 
digital 
the 
digitalisation  of  businesses  and  public  services. 
Where relevant, it makes reference to progress on 
implementing  the  Recovery  and  Resilience  Plan 
(RRP).  Romania  allocates  20.5%  of  its  total  RRP 
budget to digital (EUR 6 billion) (67). 

infrastructure/connectivity 

and 

The  Digital  Decade  Policy  Programme  sets 
out a pathway for Europe’s successful digital 
transformation  by  2030.  The  Programme 
provides  a  framework  for  assessing  the  EU’s  and 
Member States’ digital transformation, notably via 
the  Digital  Economy  and  Society  Index  (DESI).  It 
also  provides  a  way  for  the  EU  and  its  Member 
States  to  work  together,  including  via  multi-
country  projects,  to  accelerate  progress  towards 
the  Digital  Decade  digital  targets  and  general 
objectives (68).  More  generally,  several  aspects  of 
digital  transformation  are  particularly  relevant  in 
the current context. In 2023, the European Year of 
Skills, building the appropriate skillset to make full 
use of the opportunities that digital transformation 
offers  is  a  priority.  A  digitally  skilled  population 
increases the development and adoption of digital 
technologies  and  leads  to  productivity  gains (69). 
Digital  technologies,  infrastructure  and  tools  all 
play  a  role  in  the  fundamental  transformation 
needed to adapt the energy system to the current 
structural challenges (70). 

A 
ICT 
lack  of  basic  digital  skills  and 
specialists  are  key  challenges  for  Romania. 
The  country  scores  considerably  below  the  EU 

(67)  The share of financial allocations that contribute to digital 
objectives has been calculated using Annex VII of the RRF 
Regulation. 

(68)  The Digital Decade targets as measured by DESI indicators 
and complementary data sources are integrated to the 
extent currently available and/or considered particularly 
relevant in the MS-specific context.  

(69)  See for example OECD (2019): OECD Economic Outlook, 

Digitalisation and productivity: A story of complementarities, 
OECD Economic Outlook, Volume 2019 Issue 1 | OECD 
iLibrary (oecd-ilibrary.org). 

(70)  The need and possible actions for a digitalisation of the 
energy system are laid out in the Communication 
‘Digitalisation the energy system – EU action plan’ 
(COM(2022)552. 

47 

average  on  both  indicators.  Only  28%  of  people 
aged  between  16  and  74  have  at  least  basic 
digital  skills,  compared  with  an  EU  average  of 
54%.  The proportion of ICT specialists as part of 
the workforce is 2.6%, an ascending trend but still 
much  lower  than  the  4.5%  EU  average.  It  should 
however  be  noted  that  Romania  scores  second 
highest  in  the  EU  regarding  the  proportion  of  ICT 
graduates  (6.7%  among  all  higher  education 
graduates)  and  that  the  proportion  of  female  ICT 
specialists is also one of the highest in the EU. This 
discrepancy  is  explained  to  a  large  extent  by  the 
brain  drain.  Romania  is  already  implementing  a 
number of RRP measures expected to contribute to 
progress  in  this  area,  such  as  a  new  legislative 
framework  for  the  digitalisation  of  education,  a 
grant  scheme  to  support  digital  skills  in  SMEs, 
support  for  libraries  to  become  hubs  for  digital 
skills, support for the digitalization of universities.  

Digital  connectivity  is  the  area  in  which 
Romania  scores  best.  The  country  scores 
significantly  above  the  EU  average  and  keeps 
progressing quickly for very high capacity network 
(VHCN)  (96%  compared  to  73%  EU  average)  and 
fibre  to  the  premises  (FTTP)  coverage  (96% 
compared  to  56%).  Take  up  has  also  evolved 
positively,  and  is  significantly  above  the  EU 
average,  including  for  connections  of  or  above 
1GbPs.  These  results  are  due  to  a  mix  of  market 
dynamics  and  public  intervention.  On  the  other 
hand,  5G  coverage  is  well  below  the  EU  average, 
both  when  it  comes  to  the  overall  5G  coverage 
(27%  compared  to  the  81%  EU  average)  and  to 
coverage  in  the  3.4-3.8  GHz  band,  essential  for 
enabling  advanced  applications  requiring  large 
spectrum  bandwidth  (26%  compared  to  the  41% 
EU  average).  Several  measures 
implemented 
under  the  RRP  are  expected  to  lead  to  progress, 
including  an  auction  for  5G  licenses,  the  new  5G  
network security law, the adoption of the national 
cybersecurity strategy,  and the implementation of 
various  recommendations  set  out  in  the  EU 
connectivity  toolbox.  However,  this  progress  is 
expected  to  be  slow  due  to  a  variety  of  factors, 
including lack of market demand.   

scores  very  poorly  on 

the 
Romania 
digitalisation of businesses. The share of SMEs 
with  at  least  a  basic  level  of  digital  intensity  as 
well as the take-up  of advanced technologies like 
cloud computing services, artificial intelligence and 
big  data  remain  considerably  below  the  EU 
average. Only 53% of SMEs have at least a basic 
level  of  digital  intensity,  compared  to  an  EU 

 
 
                                                 
 
average  of  69%,  while  the  gap  with  the  EU 
average  is  even  wider  for  the  indicators  showing 
the  uptake  of  advanced  digital  technologies. 
Several  ongoing  RRP  measures  are  expected  to 
lead  to  progress  in  this  area,  including  Romania’s 
participation  in  the  Important  Project  of  Common 
European Interest (IPCEI) on low power processors 
and semiconductor chips, as well as various direct 
support  schemes, 
the  digitalisation  of 
businesses, via grants and financial instruments.    

for 

Digital  public  services  are  a  key  challenge 
for  the  country.  Romania  scores  significantly 
below the EU average on the availability of digital 
public  services  for  citizens  as  well  as  for 
businesses.  Moreover,  only  24%  of  Romanian 
online  users  engage  actively  with  e-government 
services,  compared  with  an  EU  average  of  74%. 
Various  RRP  measures  are  expected  to  make 
progress  in  this  area,  for  example  the  entry  into 
force  of  the  legislative  framework  necessary  for 
creating  a  government  cloud, 
including  an 
Emergency Ordinance setting up the governmental 
cloud  and  the  Interoperability  Law.  Currently,  no 
electronic identification (eID) scheme is notified by 
Romania.  However,  the  RRP  includes  measures  to 
deliver electronic ID cards to 8 million citizens until 
2026.  Romania also  is  involved  via  public  and 
private  entities  in  two  large-scale  pilot  projects 
testing  the  European  Digital  Identity  Wallet  in  a 
number  of  everyday  use  cases.  Finally,  Romania 
scores  also  significantly  below  the  EU  average 
regarding  access  to  electronic  health  records.  A 
centralised  access  service  for  citizens  exists,  but 
the  health  data  available  could  be  significantly 
extended,  and  access  services  should  be  further 
rolled  out  across  the  entire  population,  and  to 
different  types  of  healthcare  providers.  The  RRP 
in  eHealth 
foresees  significant 
services 
and 
infrastructure 
connecting patients and caregivers.   

telemedicine 

investments 

48 

 
 
Table A10.1: Key Digital Decade targets monitored by DESI indicators 

(1) The 20 million target represents about 10% of total employment. 
(2) The Fibre to the Premises coverage indicator is included separately as its evaluation will also be monitored separately and 
taken into consideration when interpreting VHCN coverage data in the Digital Decade. 
(3) At least 75 % of Union enterprises have taken up one or more of the following, in line with their business operations: (i) cloud 
computing services; (ii) big data; (iii) artificial intelligence. 
Source: Digital Economy and Society Index 

49 

EUDigital Decade target by 2030 DESI 2021DESI 2022DESI 2023DESI 2023(EU)Digital skillsAt least basic digital skillsNA28%28%54%80%% individuals2021202120212030ICT specialists (1)2.4%2.6%2.6%4.5%20 million% individuals in employment aged 15-7420202021202120212030Digital infrastructure/connectivityFixed Very High Capacity Network (VHCN) coverage76%87%96%73%100%% households20202021202220222030Fibre to the Premises (FTTP) coverage (2)76%87%96%56%-% households20202021202220222030Overall 5G coverage12%25%27%81%100%% populated areas202020212022202220305G coverage on the 3.4-3.8 GHz spectrum bandNANA26%41%-% populated areas202220222030Digitalisation of businessesSMEs with at least a basic level of digital intensityNANA53%69%90%% SMEs202220222030Big data (3)5%5%5%14%75%% enterprises20202020202020202030Cloud (3)NA11%11%34%75%% enterprises2021202120212030Artificial Intelligence (3)NA1%1%8%75%% enterprises2021202120212030Digitalisation of public servicesDigital public services for citizensNA444877100Score (0 to 100)2021202220222030Digital public services for businessesNA424584100Score (0 to 100)2021202220222030Access to e-health recordsNANA5771100Score (0 to 100)202320232030Romania 
 
 
  
 
 
 
 
 
 
ANNEX 11: INNOVATION 

This  Annex  provides  a  general  overview  of  the 
and 
performance 
innovation system, which is essential for delivering 
the twin green and digital transition. 

Romania’s 

research 

of 

of  GDP  by  2027 (74)  and  its  commitment  to 
introducing a biannual funding mechanism. 

Graph A11.2: R&D intensity 2010-2021 

Romania is an ‘emerging innovator’ with the 
weakest  innovation  performance  in  the  EU. 
According  to  the  2022  European 
Innovation 
Scoreboard (71)  Romania’s  innovation  performance 
is  just  50%  of  the  emerging  innovators’  average 
and the gap between Romania’s performance and 
the EU’s is widening. 

Graph A11.1: Innovation performance 2015-2022 

Source: Eurostat, 2022 

The  high  degree  of  fragmentation  in  the 
Romanian  public  research  system  has  led  to 
a  weak  public  science  base.  The  system 
consists  of  four  different  types  of  research 
institutions (75),  all  with  certain  degree  of 
autonomy,  different  funding  rules  and  are  under 
the responsibility of different ministries. They have 
not been subject to a regular evaluation process or 
performance-based 
Romanian 
recovery and resilience plan (RRP) aims to address 
regular 
the  fragmentation  by 
evaluation  mechanism  and  by  encouraging 
research  institutions  to  merge.  Both  the  National 
Plan  for  Research  Development  and  Innovation 
and  the  draft  law  on  higher  education  include 
elements  for  performance-based  funding  of 
research.  

introducing  a 

funding. 

The 

The lack of human capital for R&I is holding 
back  Romania’s  competitiveness  and 
its 
move  towards  a  knowledge  economy.  The 
number  of  researchers  (full-time  equivalents) 
employed by the public sector per thousand active 
population is stagnating well below EU average at 
the bottom end of all countries (1.6 in Romania in 
2020  compared  to  an  EU  average  of  4.0).  This 
problem  is  exacerbated  by  the  lowest  share  of 
population  aged  25-34  who  have  successfully 

Source: European Innovation Scoreboard, 2022 

Romania’s  total  R&D  intensity (72)  is  the 
lowest  in  the  EU.  At  0.48%  of  GDP  in  2021,  it 
remains far below EU average (2.26%) and below 
Romania’s  own  target  of  2%  (by  2020).  In 
particular,  public  expenditure  on  R&D  has  been 
decreasing in recent years and was 0.19% of GDP 
in 2021, just a quarter of the EU average (0.76%). 
This 
reflects  a  profound  underfunding.  The 
absence of multi-annual budgetint creates further 
unpredictabelity  for  the  research  and  innovation 
(R&I)  community (73).  A  promising  sign  for  the 
future  is  the  government’s  reaffirmation  of  its 
intention to increase public R&D expenditure to 1% 

(71)  2022 European Innovation Scoreboard (EIS), Country profile: 
Romania https://ec.europa.eu/assets/rtd/eis/2022/ec_rtd_eis-
country-profile-ro.pd fThe EIS provides a comparative 
analysis of innovation performance in EU countries, including 
the relative strengths and weaknesses of their national 
innovation systems (also compared to the EU average). 

(72)  Defined as gross domestic expenditure (GERD) on R&D as a 

(74)  See National Strategy for Research, Innovation and 

percentage of GDP 

(73)  European Commission (2022): PSF Country review of the 

Romanian Research and Innovation System. 
https://ec.europa.eu/research-and-
innovation/en/statistics/policy-support-facility/psf-
country/psf-country-review-romanian-research-and-
innovation-ri-system 

Intelligent Specialisation 2022-2027 and National RDI Plan 
2022-2027- PNCDI IV. 

(75)  They are: National R&D institutes (INCDs); Research units of 
the Romanian Academy; branch academies of the different 
ministries, higher education research institutions. Higher 
education institutions do not have any visible core research 
budget. 

50 

030609012020152016201720182019202020212022EURO00.511.522.520102015201620172018201920202021as % of GDPEURO 
 
     
                                                 
 
     
                                                 
 
Table A11.1: Key innovation indicators 

(1) EU average for the latest available year or the year with the highest number of country data. 
Source: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 

completed  tertiary  education (76)  as  well  as  poor 
working  conditions  and  career  prospects  for 
researchers.  The  Romanian  RRP  includes  various 
reform  and 
retain 
researchers in the country. 

investment  measures 

to 

scientific 

challenge. 

Weak  science-industry collaboration  remains 
a 
co-
Public-private 
publications  as  a  percentage  of  total  number  of 
publications  have  been  increasing  over  the  past 
decade  but  remain  below  the  EU  average  (6.1% 
compared to 7.1% in 2020). Public expenditure on 
R&D financed by business enterprise (national) has 
fallen significantly in recent years. Public research 
institutions  are  not  incentivised  or  well-equipped 
enough  to  seek  industry  collaborators,  as  they 
the 
possess  neither 

resources  nor 

in-house 

entrepreneurial culture to access public funding for 
collaborative projects (77). 

While  the  RRP  includes  measures  to  improve  the 
regulatory  framework  to  incentivise  collaboration, 
it  still  needs  to  encourage  the  higher  education 
institutions  to  engage  in  entrepreneurial  activities 
and technology and knowledge transfer (78). 

level  are 

Innovation  activity  and  R&D  absorption 
capacity  at  company 
limited. 
Business  enterprise  expenditure  on  R&D  (BERD) 
has been stagnating in recent years and, at 0.29% 
of BERD as % of GDP, is around one fifth of the EU 
average of 1.53% in 2020. It is concentrated in a 
few  big  companies  and  lacks  direct  government 
support (79).  Regarding 
commercialisation  of 
innovation,  Romania’s  performance  in  terms  of 
patents  applications  has  been  decreasing  and  is 

(76)  In 2021, 23.3% of the population aged 25-34 completed 
successfully tertiary education against the EU average of 
41.2%. 

(77)  Source: ibid. 

(78)  Source: ibid. 

(79)  https://www.oecd.org/sti/rd-tax-stats-romania.pdf 

51 

EUaverage (1)R&D intensity (GERD as % of GDP)0.460.490.480.470.482.26Public expenditure on R&D as % of GDP0.280.270.200.190.190.76Business enterprise expenditure on R&D (BERD) as % of GDP0.180.210.280.270.291.49Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 3.23.55.6::9.8PCT (Patent Cooperation Treaty) patent applications per billion GDP (in PPS)0.20.30.1::3.5Public-private scientific co-publications as % of total publications3.94.26.25.86.17.1New graduates in science & engineering per thousand pop. aged 25-3418.411.210.912:16Total public sector support for BERD as % of GDP0.0570.0450.018::0.194Share of environment-related patents in total patent applications filed under PCT (%)12.9  6.48.2 : :13.3Venture capital (market statistics) as % of GDP0.0130.0020.0050.0050.0090.074Employment in fast-growing enterprises in 50% most innovative sectors2.12.62::5.5Green innovation Finance 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)2021Romania2010201520192020 
                                                 
                                                 
 
  
 
the  lowest  in  the  EU.  Also,  the  scaling  up  of 
innovative  domestic  firms  is  hindered  by  the 
limited size of the local venture capital market. (80) 

(80)  Eurostat: Venture Capital (market statistics) as % of GDP. 

52 

 
                                                 
ANNEX 12: INDUSTRY AND SINGLE MARKET 

Romania  is  one  of  the  EU  top  performers  in 
terms  of  productivity  growth.  The  productivity 
growth of the Romanian economy was the highest 
in  the  EU  over  the  last  20  years (81).  Productivity 
grew  less  quickly  during  the  two  years  of  the 
pandemic but  rebounded strongly in  2022 (4.6 %, 
third  best  in  the  EU).  The  low  starting  point  is 
important,  but  the  consistent  performance  over  a 
long  period  allowed  a  significant  catching  up  in 
terms of real GDP per capita, from below 40 % of 
EU average at the time of joining the EU to 77 % 
in  2022  according  to  Eurostat.  Investment  is  a 
major  contributing  factor  to  this  performance,  as 
both  net  private  and  public  investment  are  well 
above the EU average. The capital intensity of the 
Romanian  economy  went  up  by  an  average  of 
4.5 %  per  year  between  2010  and  2019,  the 
second highest increase in the EU (82). 

Graph A12.1: Real labour productivity per hour 
worked, annual average growth rate by country, 
1999-2008 and 2010-2019 

* *1999 not available, calculation based on data from 2000 to 
2008 
Source: Eurostat 

Industry represents a relatively high share of 
GDP  and  contributes  to  the  diversification, 
resilience  and  productivity  performance  of 
the  economy.  In  2021,  the  share  of  industry 
(including  construction)  in  GDP  was  26.7 %,  well 
above  the  EU  average  of  22.8 % (83).  Industry 

(81)  See graph 1 and the 2023 Commission Spring Forecast, 

Statistical Annex, Table 28. 

(82)  CPB Netherlands, 2021 Annual Report. 

(83)  World Bank. For 2022, National Statistical Institute gives a 

GDP share for industry of 22.5 % and 6.3 % for construction. 

employs  31 %  of  the  workforce  in  the  private 
for  34 %  of  gross 
sector  and  accounts 
investment (84) 
leads  as  regards  the 
It  also 
productivity metrics (see graph A12.2). Real labour 
productivity  per  person  in  industry  decreased  in 
2019  and  2020,  recovered  forcefully  in  2021 
(6.5 %) and went down again in 2022 (- 2.7 %). 

Graph A12.2: Productivity by sector 

Source: European Commission. 

Industry  was  hit  hard  by  the  high  energy 
prices,  even  though  the  country  is  a  leading 
natural gas producer in the EU. In the first half 
of 2022, electricity prices in Romania were higher 
than the EU average for both households and non-
households,  according  to  Eurostat.  They  reached 
the  fourth  highest  level  in  the  EU  for  non-
households. For gas, the price for non-households 
was  also  above  the  EU  average  and  the  sixth 
highest in the EU (85). Gas consumption decreased 
over  the  whole  economy  by  35 %  in  January-
November compared to the same period of 2017-
21 (86). Company closures and reduced activity are 
the  main  factors  behind  this  significant  drop. 
Industrial  production  volume,  measured  by  the 
industrial  production  index,  was  1.8 %  lower  in 
2022 compared to 2021. The drops in the energy 
intensive  industries  were  severe –  22.1 %  for 

(84)  National Statistical Institute, 

https://insse.ro/cms/sites/default/files/com_presa/com_pdf/ac
tv_intrep_2021r.pdf. 

(85)  Eurostat. 

(86)  Eurostat, https://ec.europa.eu/eurostat/web/products-

eurostat-news/w/DDN-20221220-3#:~:text = 
The%20EU%20consumption%20of%20natural,November)%
20between%202017 %20and%202021 .  

53 

-2-1012345678RomaniaLatviaLithuaniaEstonia*SlovakiaHungaryCzechiaBulgariaPolandSloveniaIrelandCroatiaSwedenGreeceFinlandAustriaCyprusMalta*EUNetherlandsGermanyFrancePortugalBelgiumDenmarkSpainLuxembourgItaly1999-20082010-20196080100120140160180200220240260030507091113151719212003=100Market services (G_N)Manufacturing (C)Construction (F)Tradable (A_E, G_J)Non tradable (F, K_U) 
 
   
                                                 
 
   
                                                 
 
 
chemicals,  15.1 %  for  metalworking. (87)  The 
energy  support  provided  by  the  authorities  was 
limited  to  households,  SMEs,  public  institutions, 
and  food  companies.  The electricity  and  gas  price 
caps  agreed  in  December  2022  are  higher  than 
those in force in other Member States. No strategy 
seems  to  be  in  place  to  safeguard  the  country‘s 
strategic 
avoid 
players 
industry 
the  Romanian 
deindustrialisation.  90 %  of 
companies reported high energy costs as the main 
barrier  to  long-term  investment,  above  the  EU 
average of 82 % (88). 

and 

capita (89).  The 

Decarbonisation of industry will be based on 
renewables  and  nuclear.  Eurostat  statistics 
show  that in  2020,  Romania  had the third  lowest 
CO2 emissions per capita in the EU and the lowest 
energy  use  per 
sweeping 
deindustrialisation  that  took  place  during  the 
1990s, rather than energy efficiency, is the factor 
explaining  this  performance.  Installed  renewables 
electricity  capacity  is  almost  60 %  of  electricity 
consumption,  above  the  EU  average 
(50 %). 
Renewables  stakeholders  state  that  the  key  issue 
for  expanding  the  presence  of  renewables  in  the 
energy  mix  is  connection  to  the  grid.  To  improve 
renewables  generation,  two  studies  are  under 
preparation, 
led  by  the  Competition  Council. 
Significant  investment  is  under  way  in  nuclear, 
which  will  boost  its  share  in  the  energy mix  from 
the current 20 % to 36 % by 2030. 

Romania has the potential to help reduce the 
EU‘s  strategic  dependencies.  The  government 
has announced the adoption of a new strategy on 
mineral  resources and a new law on mining. As a 
country  with  promising  critical  resources  (e.g. 
lithium,  copper,  magnesium),  the  new  framework, 
if  rightly  designed,  can  incentivise  the  extraction 
and refining of those resources. 

Access to the Single Market is an opportunity 
that  many  SMEs  in  Romania  could  better 
exploit.  Romania‘s  trade  integration  into  the 
Single Market is below the EU average (33.3 % of 
GDP  vs  45.8 %  of  GDP).  The  bulk  of  intra-EU 
exports  in  value  terms  (70 %,  above  the  EU 

average)  came  from  large  companies (90),  which 
means  that  SMEs  are  not  as  present  as  they 
should  be  on  the  Single  Market.  The  fact  that 
Romania  has  still  not  been  admitted  to  the 
Schengen  area –  while  meeting  the  technical 
criteria  since  2011 –  is  a  significant  obstacle  for 
the  business  environment  and  for  attracting 
foreign investment. 

on 

the 

rules 

restrictive 

Acting 
regulated 
professions  may  boost  productivity.  Regula-
tory  restrictiveness  of  regulated  professions  in 
Romania  is  higher  than  the  EU  average  for  civil 
engineers,  architects,  accountants/tax  advisers, 
tourist  guides.  Lawyers in  Romania  are  subject  to 
incompatibility 
and  multidisciplinary 
restrictions, that  could  affect  the potential  of this 
sector  for  innovation  and  to  roll  out  digital 
solutions  and  new  business  models.  The 
fragmented  system  regulating  civil  engineers 
could  hinder  the  free  movement  of  professionals 
and 
responsibility  over 
different  categories  of  professionals  in  the  same 
area  of  activity  could  impact  on  the  efficiency  of 
service provision. (91) 

rules  spreading 

the 

Public  procurement  plays  an  important  role 
in  the  deployment of  EU  and  national  funds. 
is  a  significant  beneficiary  of  the 
Romania 
Recovery  and  Resilience  Facility  and  European 
cohesion policy funds. To maximise the benefits of 
these  funds,  several  important  milestones  related 
to  public  procurement  must  be  achieved.  In  this 
regard,  the  amendment  of  the  legislation  on 
remedies has already entered into force. Progress 
has  also  been  made  towards  operationalising  the 
use of standard electronic forms and establishing 
the updated National Public Procurement Strategy. 
The  level  of  stability  of  staff  resources  and  the 
administrative  capacities  of  public  procurement 
authorities,  including  the  National  Agency  for 
Public Procurement, remain insufficient. This must 
be  addressed,  as  these  are  key  to  ensuring  not 
implementation  of  the  procurement 
only  the 
strategy, but also strategic planning and efficiency 
in the public procurement system. In addition, the 
rate of single bids – after a slight decrease in the 

(87)  National Statistical Institute, Industrial Production Indices, 

press release, 14 February 2023. 

(88)  EIB Investment Survey 2022. 

(89)  https://ourworldindata.org/per-capita-energy 

(90)  Eurostat, https://ec.europa.eu/eurostat/statistics-

explained/index.php?title = 
File:Value_of_exports_of_goods_by_size_class,_intra-
EU,_2020.png 

(91)  Communication on updating the reform recommendations 
for regulation in professional services, COM(2021)385. 

54 

 
                                                 
                                                 
past year – has risen to one of the highest in the 
EU (42 % in 2022).  The rate of direct awards has 
also gone up to 23 % (2022), a value that is also 
considered one of the highest in the EU. 

Dispute resolution networks, such as SOLVIT, 
help companies in times of disruption to the 
single  market.  The  capacity  of  the  Romanian 
public  administration  to  apply  EU  rules  on  the 
single  market  can  still  be  improved  by  ensuring 
that  all  authorities  in  Romania  co-operate  with 
their national SOLVIT centre and respond promptly 
to its  requests. 

Business  environment  and  SMEs  are  key  to 
improving  the  productivity 
level  of  the 
economy  by  boosting  investment,  especially 
for  SMEs.  As  highlighted  above,  productivity  has 
improved but it is still well behind the EU average 
(74 %). Figures for business registration show that 
the  business  environment  is  dynamic.  The  same 
picture  is  conveyed  by  the  broader  business  birth 
and  death  figures  for  2020 (92).  However,  as 
Investment  Survey, 
shown  by  the  2022  EIB 
business  conditions  are  negatively  affected  by 
such factors as energy costs (reported by 90 % of 
companies,  well  above  the  EU  average  of  82 %), 
uncertainty  (87 %  vs  78 %  EU)  and  transport 
infrastructure  (71 %  vs  48 %  EU).  One  significant 
indicator 
the  business 
the  quality  of 
environment  is  the  level  of  FDI.  Even  if  the  last 
two  years  have  seen  a  notable  increase  in  FDI 
inflows  (see  National  Bank  of  Romania,  FDI  in 
Romania in 2021), the yearly flow and stock of FDI 
is still modest (9 billion inflow in 2021, 100 billion 
stock).  This  is  the  same  level  as  Hungary,  which 
has  half  the  population  of  Romania,  and  40 %  of 
the  level  of  Poland (93).  Around  40 %  of  the  FDI 
stock  was  invested  in  industry.  The  number  of 
SMEs  per  inhabitant  (29  per  1000  inhabitants  in 
Romania)  has been well below the EU  average of 
58  SMEs  per  1000  inhabitants. (94)  99.7 %  of 
Romanian  companies  are  SMEs  (vs  99.8 %  in  the 
EU),  and  their  productivity  is  around  40 %  lower 

for 

(92)  Eurostat, Enterprise Demography, 2020: births: 10.8 % RO, 

8.9 % EU; deaths 7.6 vs. 7.2. 

than that of large companies (95). As shown above, 
SMEs carry out only about 30 % of Romania‘s total 
exports. 

Graph A12.3: Business environment and 
productivity drivers 

Source: 1) % of GDP, 2021 Eurostat;  
2) composite indicator, 2021 European Investment Fund 
access to finance index;   
3) average payment delay in number of days, 2022 Intrum;  
4) % of firms in manufacturing facing constraints, 2022 
European Commission business consumer survey; 
5) proportion of contracts awarded with a single bidder, 2022 
Single Market Scoreboard. 

Access  to  finance  remains  an  issue  for 
scaling  up  companies,  especially  SMEs.  In 
order to grow and go both green and digital, SMEs 
need resources. At first glance, Romanian SMEs do 
not  appear  to  be  primarily  concerned  about 
financing.  The  2021  EIF  access  to  finance  for 
SMEs  index  ranks  Romania  20th,  largely  because 
the  public  support  provided  during  the  pandemic 
eased  access  to  finance –  two-thirds  (65 %)  of 
firms  received  financial  support  in  response  to 
COVID-19,  above  the  EU  average  of  56 %.  In  the 
last non-pandemic year (2019), the country ranked 
26th.  Romania  has  the  fourth  highest  share  of 
finance-constrained  firms  in  the  EU,  according  to 
the  EIB  Investment  Survey  2022.  The  bank  loan 
segment especially offers scope for improvement. 
In 2021, the share of companies that did not apply 
for a loan remained  high, at 77 % (96). Only 16 % 
have applied for such financing and have received 

(93)  OECD, https://data.oecd.org/fdi/fdi-stocks.htm 

(95)  SME Performance Review 2022 and own calculation, based 

(94)  Annual Report on SMEs, 2019. The number cannot however 
be correlated to other significant indicators such as per 
capita income. 

on value added per employee. 

(96)  National Bank of Romania, Survey on access to finance for 

non-financial corporations, June 2021. 

55 

1) Businessinvestments2) EIF access tofinance index3) Payment gap- G2B3) Payment gap- B2B4) Materialshortage4) Labourshortage5) Single bidsEuropean UnionRomania 
                                                 
   
                                                 
Table A12.1: Industry and the Single Market 

(*) Last available year 
Source: (1) AMECO, (2) Eurostat, (3) ECFIN BCS, (4) Eurostat, (5) COMEXT and Commission calculations, (6) Eurostat, (7) Eurostat, 
(8) OECD, (9) Single Market Scoreboard, (10) EIB survey, (11) Eurostat: (12) Intrum, (13) SAFE Survey, (14) EIF SME Access to 
Finance Index.  

approval for the entire amount requested. Banks in 
Romania  focus  on  government  debt  (the  highest 
exposure in the EU) and property loans. The share 
of private sector loans in GDP was 27.3 % in 2021 
(Poland 52%, Hungary 40%). Companies generally 
mistrust  banks.  SMEs  have  the  lowest  degree  of 
in  the  banking  sector.  Romanian 
confidence 
companies  have  structural  problems  that  prevent 
them  accessing 
the  number  of 
companies  with  negative  capital  is  the  second 
largest  in  Europe  with  only  20  %  of  active 

loans 

(e.g. 

companies  being  bankable) (97).  This  may  explain 
why  trade  credit  is  at  times  intensively  used  by 
Romanian  companies  as  a  way  of  financing.  In 
2021,  trade  credit  of  non-financial  companies 
amounted to 337 billion lei (68 billion EUR), which 
is  2.3  times  the  outstanding  value  of  banking 
loans  granted  to  non-financial  companies  (148.5 
billion lei). 

(97)  EIB, Investment: What Holds Romania Back? August, 2019; 
National Bank of Romania, Survey on access to finance for 
non-financial corporations, June 2021. 

56 

POLICY AREAINDICATOR NAME20182019202020212022EU27 average (*)Net private investment, level of private capital stock, net of depreciation, % GDP (1)3.54.75.65.86.53.7Net public investment, level of public capital stock, net of depreciation, % GDP (1)0.71.52.62.12.40.4Real labour productivity per person in industry (% yoy)(2)7.6-0.2-1.16.8-2.71.4Cost competitive-nessNominal unit labour cost in industry (% yoy)(2)-2.793-4.514.72.9Material shortage (industry), firms facing constraints, % (3)2237747Labour shortage using survey data (industry), firms facing constraints, % (3)11138101228Vacancy rate (business economy)(4)1.110.60.80.93.1Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials (5)0.160.170.180.190.190.18Installed renewables electricity capacity, % of total electricity produced (6)5056.657.263.6n.a.50.9Single Market integrationEU trade integration, % (7)31.430.628.731.633.345.8RestrictionsEEA Services Trade Restrictiveness Index (8)n.a.n.a.n.a.n.a.0.05Public procurement Single bids, % of total contractors (9)363141334229Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle (10)30.526.729.116.825.829.6Bankruptcies, Index (2015=100)(11)59.870.666.886.736.986.8Business registrations, Index (2015=100) (11)130147.7122.4161.1182.5121.2Payment gap - corporates B2B, difference in days between offered and actual payment (12)-1813121213Payment gap - public sector, difference in days between offered and actual payment (12)-5171391515Share of SMEs experiencing late payments in past 6 months, % (13)n.a.53.15252.645.243EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1 (14)0.270.20.210.27n.a.0.46EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 1 (14)0.080.090.060.1n.a.0.23BUSINESS ENVIRONMENT - SMEsBusiness demographyLate paymentsAccess to financeHEADLINE INDICATORSEconomic StructureRESILIENCEShortagesStrategic dependenciesSINGLE MARKET 
                                                 
 
  
 
ANNEX 13: PUBLIC ADMINISTRATION 

This  Annex  outlines  the  performance  of 
Romania’s  public  administration,  which  is 
essential for providing services and carrying 
out  reforms.  Government  effectiveness 
in 
Romania  is  significantly  below  the  EU  average. 
Despite  some improvements,  in  2021 it  remained 
below the 2017 score (-0.06 in 2017 and -0.13 in 
2021,  within  a  range  -2.5  to  +2.5) (98).  The 
recovery and resilience plan (RRP) defines a range 
of reforms in the public sector and the judiciary. It 
intendeds  to:  (i)  improve  decision-making;  (ii) 
create  a  new  national  recruitment  and  promotion 
system  for  civil  servants;  (iii)  design  a  new 
multiannual  recruitment  planning  system; 
(iv) 
reform  civil  servants’  pay;  (v)  create  a  new 
competency 
competition 
methodology.  There  are  also  measures  aimed  at 
improving 
the  public  procurement  process, 
including digitalisation and capacity building. 

framework 

and 

Romania  is  significantly  below  the  EU-27 
average  in  the  use  and  maturity  of  digital 
public services (Table A13.1 and Annex 10). Only 
17%  of  Romanian  citizens  use  the  internet  to 
interact  with  public  authorities,  11%  to  obtain 
public information, 9% to download administrative 
forms  and  9%  to  submit  these  forms  when 
completed. The trend in these indicators has been 
positive  over  the  past  5  years,  but  progress  has 
been  slow.  The  trend  in  the  provision  of  public 
services  improved  from  36%  in  2017  to  38%  in 
the 
2019.  Data 
Digitalisation  of  Romania (99)  show  that  practical 
steps  are  being  taken  to  develop  digital  services, 
including the use of the European Social Fund Plus 
and  the  launch  of  the  2020  national  strategy  on 
the  digital  agenda  for  Romania.  Reforms  and 
investment  in  the  RRP  to  reduce  fragmentation, 
improve  interoperability  and  remove  bureaucratic 
barriers  are  ongoing.  A  significant  gap  remains 
between  Romania  and  the  EU-27  average  in  the 
provision of digital public services. 

the  Authority 

from 

for 

Regulatory  governance  in  Romania  scores 
around  the  EU  average.  The  regular  impact 
assessment  of  new  draft  proposals  has  been 
established  in  recent  years.  The  presentation  of 
costs  and  benefits  however  varies  in  quality. 

(98)  Worldwide governance indicators, 2021 data 
(http://info.worldbank.org/governance/wgi/). 

legislative 

initiatives  weaken 

Frequent 
legal 
certainty. Romania also lacks a systemic approach 
to 
existing 
regulations (Graph A13.1). 

evaluation 

post 

ex 

of 

The  participation  of  civil  servants  in  adult 
learning  is  low  compared  to the  EU average. 
This 
public 
administration,  but  also  to  those  in  the  education 
and healthcare sectors (Graph A13.2).  

to  workers 

applies 

the 

in 

The efficiency of justice has improved, while 
some  remaining  aspects  as  regards  the 
quality  of  justice  and  the  fight  against 
corruption  need  further  action.  Romania 
performs  efficiently  overall  and  improved  across 
all indicators in 2021. The time it takes to resolve 
administrative  cases  decreased,  in  particular  at 
first  instance  where  it  dropped  from  690  days  in 
2020 to 293 days in 2021. The clearance rate for 
civil  and  commercial  cases  improved,  significantly 
so for administrative cases at first instance, from 
48.4%  in  2020  to  96.6%  in  2021.  The  quality  of 
the  justice  system  is  overall  good,  despite  the 
shortages  in  human  resources.  Digitalisation  of 
justice  can  be  improved,  though  digital  tools  are 
widely  used  in  courts.  However,  some  concerns 
about judicial independence persist (100)  

the 

across 

First, 
dispersed 

Romania  has  a  relatively  large  state-owned 
enterprise  (SOE)  sector.  A  recent  overview (101) 
of  the  governance  of  Romania’s  SOEs  reveals 
ownership 
several  weaknesses. 
framework 
line 
remains 
ministries  with  a  weak  coordination  function 
placed  in  the  Ministry  of  Finance.  Second,  the 
selection  procedures  of  board  members  depart 
from 
transparency  and 
professionalism.  Third,  some  SOEs  are  protected 
by  law  from  insolvency  procedures,  which  means 
that  they  do  not  operate  on  a  level  playing  field 
with  private  companies.  Against  this  backdrop, 
planned  amendments  to  Romania’s  legislation  on 
SOEs  aim  to  ensure  that SOEs  operate  on  a level 
playing  field  with  privately-owned  companies, 
financial  and  non-financial 
strengthen 

the  principles  of 

the 

(100) For a more detailed analysis of the performance of the 
justice system in Romania, see the 2023 EU Justice 
Scoreboard (forthcoming) and the country chapter for 
Romania in the 2023 Rule of Law Report (forthcoming). 

(99)  Authority for the Digitalisation of Romania 

(https://www.poc.research.gov.ro/uploads/2021-
2027/conditie-favorizanta/bariere-digitalizare.pdf). 

(101) OECD (2023), OECD Review of the Corporate Governance of 
State-Owned Enterprises in Romania, Corporate Governance, 
OECD Publishing, Paris, https://doi.org/10.1787/fabf20a8-en..  

57 

 
 
                                                 
                                                 
 
Table A13.1: Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2022 value. If not available, the 2021 value is shown. 
(3) 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. (4) Defined as the absolute value of the difference between the 
percentage of men and women in senior civil service positions. 
Flags: (b) break in time series; (d) definition differs; (u) low reliability. 
Source: ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Labour Force 
Survey, Eurostat (# 4, 5, 7), European Institute for Gender Equality (# 6); Fiscal Governance Database (# 8, 9); OECD Indicators of 
Regulatory Policy and Governance (# 10). 

reporting of SOEs and professionalise their boards 
of  directors.  In  addition,  the  RRP  sets  out  targets 
for  restructuring/listing  SOEs  on  the  Romanian 
stock exchange.  

Graph A13.2: Romania. Participation rate of 25-64 
year olds in adult learning (%) by sector and 
occupation 

Graph A13.1: Romania: a) Regulatory impact 
assessment and b) ex post evaluation of 
legislation 

Source: OECD. Indicators of Regulatory Policy and 
Governance Surveys 2017 and 2021 (http://oe.cd/ireg). 

(1) 2022 data 
Source: European Commission, based on the Labour Force 
Survey 

58 

0.000.501.001.502.002.503.0000.511.522.53RO2017RO2021RO2017RO2021Primary lawsSecondary lawsb) Ex-postevaluation of legislationMethodologyOversightSystematic adoptionTransparencyEU-270.000.501.001.502.002.503.0000.511.522.53RO2017RO2021RO2017RO2021Primary lawsSecondary lawsa) Regulatory impact assessmentMethodologyOversightSystematic adoptionTransparencyEU-270510152025ROEU-27ROEU-27ROEU-27ROEU-27Public admin.,defence andsocial securityEducationHealthcareTotal economyAdult learningHigh-skilled occupationsMedium-skilled occupationsUnskilled occupationsArmed forcesRO201720182019202020212022EU-27(2)112.612.114.615.916.7n/a64.82n/an/an/a40.141.845.872.93n/a0.60.60.70.80.70.8454.255.356.754.953.6 (b)54.252.05: (u): (u): (u): (u)6.9 (b)8.116.963.80.87.08.67.80.411.074.23.93.22.92.6 (b)2.41.580.70.70.70.80.8n/a0.791.81.82.32.32.3n/a1.5101.39n/an/an/a1.47n/a1.7Medium term budgetary framework indexIndicator (1)E-government and open government dataShare of individuals who used the internet within the last year to interact with public authorities (%)E-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with tertiary education (levels 5-8, %)Participation rate of public administration employees in adult learning (%)Gender parity in senior civil service positions (4)Ratio of 25-49 to 50-64 year olds in NACE sector OPublic financial management Strength of fiscal rules indexEvidence-based policy makingRegulatory governance 
   
 
  
 
 
   
 
FAIRNESS 
ANNEX 14: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The  European  Pillar  of  Social  Rights  is  the 
compass  for  upward  convergence  towards 
better  working  and  living  conditions  in  the 
EU. This Annex provides an overview of Romania’s 
progress in implementing the Pillar’s 20 principles 
and EU headline and national targets for 2030 on 
employment, skills and poverty reduction. 

Table A14.1: Social Scoreboard for Romania 

Update of 27 April 2023. Members States are classified on 
the Social Scoreboard according to a statistical methodology 
agreed with the EMCO and SPC Committees. It looks jointly at 
levels and changes of the indicators in comparison with the 
respective EU averages and classifies Member States in seven 
categories. For methodological details, please consult the 
Joint Employment Report 2023. Due to changes in the 
definition of the individuals’ level of digital skills in 2021, 
exceptionally only levels are used in the assessment of this 
indicator; NEET: neither in employment nor in education and 
training; GDHI: gross disposable household income (per capita 
growth indicator not yet available for 2021). 
Source: Eurostat 

is 

labour  market 

The 
facing  serious 
challenges.  The  employment  rate  has  been 
steadily increasing in line with the strong economic 
growth over the past decade. It reached 68.5% in 
2022 but remains one of the lowest in the EU. The 
unemployment  rate  (5.6%  in  2022)  is  below  the 
EU average, though above the pre-pandemic level. 

59 

Participation  in  the  labour  market  of  women, 
young people, persons with disabilities, low-skilled 
people  and  Roma  remains  limited.  The  gender 
employment gap was among the highest in the EU 
in 2022 (18.6 percentage points (pps) vs 10.6 pps 
in the EU). The low labour market  participation of 
women  is  mainly  due  to  care  responsibilities  and 
lack  of  employment  opportunities  in  rural  areas. 
Under  the  European  Social  Fund  Plus  (ESF+), 
Romania  adopted measures  to  support  employers 
to  set  up  childcare  facilities  and  make  flexible 
forms of work available. After declining before the 
pandemic, youth unemployment is on the rise, and 
in  education, 
the  rate  of  young  people  not 
employment or training is one of the highest in the 
EU  (19.8%  in  2022  vs  11.7%).  Challenges  also 
persist 
people,  whose 
employment rate was far from the EU average at 
44.9%  in  2022  and  significantly  lower  than  for 
people  with  tertiary  education.  Moreover,  the 
disability  employment  gap 
is 
significantly higher than the EU average (23.1 pps 
in  2021)  and  rising.  Only  41%  of  Roma  were 
engaged  in  any  form  of  paid  work  in  2021,  with 
more  than  half  of  Roma  youth  not  in  education, 
employment or training. 

(32.6  pps) 

qualified 

low 

for 

to 

increase 

the  need 

Strengthening  active  labour  market  policies 
is  crucial  to  tackle  labour  shortages  and 
employment  gaps  of  underrepresented 
groups. Spending on active labour market policies 
is very low (EUR 227 million in 2020, representing 
0.1%  of  GDP)  with  a  high  share  of  employment 
subsidies  that  are  poorly  targeted  and  do  not 
sufficiently  support  training.  Low  activity  rates 
also  highlight 
the 
effectiveness of public employment services (PES). 
In  addition,  the  high  number  of  displaced  people 
from  Ukraine  who  need  to  be  integrated  into  the 
labour  market  poses  new  challenges.  The 
digitalisation  of  the  PES  under  the  recovery  and 
(RRP)  and  substantial  ESF+ 
resilience  plan 
investments  are  expected  to 
labour 
market  integration.  The  role  of  social  partners  in 
implementation  of  policies 
the  design  and 
continues  to  be  limited.  Addressing  all  these 
challenges  would 
and 
employability, thereby contributing to reaching the 
national  employment  rate  target  of  74.7%  by 
2030. 

activation 

improve 

support 

15.627.819.818.67.1468.55.62.2142.7934.541.717.8832.67.69.54.4Critical situationTo watchWeak but improvingGood but to monitorOn averagePolicy areaHeadline indicatorEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24, 2022)Share of individuals who have basic or above basic overall digital skills (% of population aged 16-74, 2021)Youth NEET rate(% of population aged 15-29, 2022)Gender employment gap(percentage points, 2022)Income quintile ratio(S80/S20, 2021)Dynamic labour markets and fair working conditionsEmployment rate(% of population aged 20-64, 2022)Unemployment rate(% of active population aged 15-74, 2022)Long term unemployment(% of active population aged 15-74, 2022)GDHI per capita growth                                                              (2008=100, 2020)Social protection and inclusionAt risk of poverty or social exclusion rate                                            (% of total population, 2021)At risk of poverty or social exclusion rate for children                       (% of population aged 0-17, 2021)Impact of social transfers (other than pensions) on poverty reduction (% reduction of AROP, 2021)Disability employment gap(percentage points, 2021)Housing cost overburden(% of total population, 2021)Children aged less than 3 years in formal childcare(% of population under 3-years-old, 2021)Self-reported unmet need for medical care(% of population 16+, 2021)Better than averageBest performers 
 
 
 
  
 
 
Labour  and  skills  shortages  and  mismatches 
remain  pressing  challenges  worsened  by 
negative  demographic  trends.  The  projected 
rapid  decline  of  the  working-age  population  (by 
8.8%  in  2030)  risks  creating  significant  labour 
shortages and undermining the economy’s growth 
potential.  Low  levels  of  digital  skills  (27.8%  of 
people  aged  16-74  with  at  least  basic  skills)  and 
participation in adult learning (5.4% over the past 
4  weeks  in  2022  vs  11.9%  in  the  EU)  affect 
people’s  employability.  Only  8.4%  of  vocational 
education  and 
training  VET  graduates  were 
exposed to work-based learning in 2022 (vs 60.1% 
at  EU  level),  which  highlights  the  weak  links 
between  the  education  and  training  system  and 
labour  market  needs.  The  RRP  and  the  ESF+  plan 
measures  to  improve  the  quality  and  labour 
market relevance of VET and higher education and 
participation  in  lifelong  learning.  This  is  expected 
to contribute to achieving the national target of at 
least  17.4%  of  adults  participating  in  learning 
every  year  by  2030.  However,  further  efforts  to 
up-  and  reskill  the  population  will  be  necessary, 
considering  demographic  trends  and  the  labour 
market impact of the green and digital transitions. 

Table A14.2: Situation of Romania on 2030 
employment, skills and poverty reduction targets 

(1) Adult Education Survey, adults in learning in the past 12 
months 
(2) Number of persons at risk of poverty or social exclusion 
(AROPE), reference year 2019 
Source: Eurostat, DG EMPL 

Poor quality and unequal access to education 
and  training  persist.  Participation  of  children 
aged less than 3 years in formal childcare is very 
low  (9.5%  vs  36.2%  in  the  EU  in  2021)  and  has 
deteriorated  in  the  past  5  years.  Only  27%  of 
Roma  children  (aged  3  to  6)  attended  early 
childhood education and care in 2021. The country 
has made limited progress in improving the rate of 
early  school  leavers  over  the  past  decade  (from 
18.1%  in  2011  to  15.6%  in  2022)  and  is  still 
considerably  higher than  the  EU  average;  children 
in  rural  areas  and  Roma  pupils  are  at  a 
disproportionate  risk.  The  employment  rate  of 
recent  graduates  (57.5%  in  2022)  is  one  of  the 

60 

lowest in the EU, which highlights a misalignment 
with  labour  market  needs.  Support  from  the 
Recovery  and  Resilience  Facility  and  the  ESF+ 
totalling  over  EUR 5  billion  is  expected  to  help 
Romania  transform  its  education  and  training 
system (see Annex 15). 

Although  decreasing,  Romania  is  still  facing 
high  poverty  risks  and  inequality.  Income 
inequality  remains  among  the  highest  in  the  EU 
and increased in 2021. The share of people at risk 
of poverty or social exclusion (AROPE) continues to 
be  among  the  highest  in  the  EU  too  (34.4%  in 
2021  vs  21.7%).  People  living  in  rural  areas, 
marginalised communities, and vulnerable groups, 
including  persons  with  disabilities  and  Roma,  are 
particularly  affected.  For  example,  7  out  of  10 
poor  people  in  Romania  live  in  rural  areas.  The 
AROPE rate among children was one of the highest 
in  the  EU  at  41.5%  in  2021,  with  28.2%  of 
children  experiencing  severe  material  and  social 
deprivation.  The  share  of  older  people  at  risk  of 
poverty  or  social  exclusion  is  also  still  among  the 
highest.  The  impact  of  social  transfers  (excluding 
pensions) on reducing poverty is one of the lowest 
in  the  EU,  while  pension  adequacy  and  adequacy 
and  coverage  of  minimum  income  are  also  low. 
The  minimum  inclusion  income  reform  under  the 
RRP is expected to help address this issue. Gaps in 
access to social protection remain widespread and 
affect  unemployed  people  and  those  in  non-
standard forms of employment the most. 

Poor  access  to  social  and  health  services, 
notably for disadvantaged groups, contribute 
to  deepening  disparities.  Marginalised  groups, 
such  as  those  from  remote  rural  areas,  persons 
with  disabilities  and  the  Roma,  are  among  the 
most  affected.  70%  of  the  Roma  suffer  housing 
deprivation,  compared  to  28%  of  the  general 
population.  Many  Romanians  still  do  not  have 
medical  insurance,  especially  those  in  rural  areas 
and  those  without  identity  cards.  Disparities  in 
timely  access  to  care  are  also  due  to  an  uneven 
geographical  distribution  of  and  significant 
shortages  in  the  healthcare  workforce.  Unmet 
medical care needs have declined but remain one 
of  the  highest  in  EU,  with  significant  differences 
between  income  groups,  urban  and  rural  areas, 
and  regions.  Unmet  needs  for  long-term  care  are 
significantly  higher 
the  EU  average. 
than 
Deinstitutionalisation  continues  but  progress  is 
slow, especially for adults with disabilities, due to 
the  limited  availability  of  integrated  services. 
Under  the  RRP,  Romania  undertook  to  accelerate 

IndicatorsLatest dataTrend            (2015-2022)National target by 2030EU target by 203068.5(2022)5.8(2016)-446(2021)Adult learning1 (%)1760Employment (%)7578Poverty reduction2 (thousands)-2 532-15 000 
 
   
 
the  deinstitutionalisation  process (102).  Implemen-
ting  the  RRP  and  the  ESF+  will  contribute  to 
improving  the  situation  and  help  meet  the  2030 
target of reducing the number of people at risk of 
poverty or social exclusion by 2.5 million. 

(102) A National Strategy on Preventing the Institutionalization of 
Adults with Disabilities and the Law on supporting the 
process of deinstitutionalization of adults with disabilities 
and on implementing measures to accelerate it were 
approved, accompanied by a Guide accelerating the 
deinstitutionalisation process. 

61 

 
                                                 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  for 
Romania’s  education  and  training  system  in  light 
of  the  EU-level  targets  and  other  contextual 
indicators  under  the  European  Education  Area 
strategic framework, based on the 2022 Education 
and Training Monitor. 

Overall,  poor  performance  of  the  education 
and  training  system  is  a  key  obstacle  for 
equipping  people  with  the  right  skills. 
Educational attainment is one of the lowest in the 
EU  and  educational  outcomes  are  greatly 
impacted  by  socio-economic  factors.  Vocational 
education and training (VET) and higher education 
are  not  sufficiently  attuned  to  the  labour  market. 
Although  adult  participation 
learning  has 
improved,  it  remains  low  (4.9%  in  2021,  EU 
average:  10.8%).  These  long-standing  challenges 
translate  into  continuing  skills  shortages  and 
mismatches 
(see  Annex  14).  Government 
expenditure on education is also low (3.7% of GDP 
in 2020, EU average: 5%). 

in 

Participation  in  early  childhood  education 
and  care  (ECEC)  is  low  and  declining.  The 
enrolment  rate  for  children  between  3  years  and 
the  starting  age  of  compulsory  primary education 
is  one  of  the  lowest  in  the  EU  (78.2%  compared 
with  the  EU  average  of  93%).  Participation  rates 
are  generally  worse  for  disadvantaged  groups, 
Roma (103)  and  in  rural  areas (104).  Participation  in 
childcare  for  children  aged  0-3  was  also  low 
compared with the EU average (9.5% vs 36.6%), in 
part due to a lack of nurseries. With support from 
the Recovery and Resilience Facility (RRF), Romania 
is  expanding  infrastructure  capacities  for  ECEC, 
training staff and improving legislation. 

Improving  teacher  policies  is  a  pressing 
issue.  Many  reports (105)  identify  the  teaching 
profession 
improving 
fundamental 
Romania’s  low  educational  outcomes.  In  spite  of 
some  measures (106),  key  challenges  in  the  sector 

for 

as 

(103) According to estimations by the Council of Europe, Roma 

represent around 9% of Romania’s population 

(104) Gross enrolment rate (ages 3-5) of 80% in rural areas and 
89% in urban areas (National Institute for Statistics). 

(105) See Presidential Administration (2021), Educated Romania 

Report , OECD (2017), Review of Evaluation and Assessment 
in Education, and OECD (2020), Improving the Teaching 
Profession in Romania. 

(106) See European Commission, Education and Training Monitor 

2020, 2021 and 2022. 

62 

remain largely unaddressed. The attractiveness of 
the  profession  is  rather  low;  attracting  highly 
qualified  teachers  to  disadvantaged  schools  is 
especially  challenging.  In  particular,  this  affects 
rural  areas,  where  teachers  often  teach  subjects 
for  which  they  are  not  qualified,  in  order  to 
complete  their  teaching  norm  of  18h/week.  Initial 
and 
are 
teacher 
insufficiently  aligned  with  classroom  needs,  and 
teacher  appraisal  is  not  effective.  The  ongoing 
revision  of  the  education  act  is  expected  to 
address some of these points. 

continuous 

education 

Early school leaving remains high. In 2022, the 
rate  of  early  leavers  from  education  and  training 
among  18-24-year-olds 
increased  slightly  to 
15.6%  and  remains  significantly  above  the  EU 
average (9.6%). Early school leaving is particularly 
high  among  Roma  and  in  rural  areas  (24.5%).  A 
National  Programme for Reducing School  Dropout 
was rolled out in 2022 with funding from the RRF. 

Graph A15.1: The share of underachievers in 
reading, maths and science (combined) by socio-
economic status, PISA 2018 

Source: OECD (PISA 2018). 

A large proportion of Romanian students lack 
basic  skills.  The  2018  OECD  Programme  for 
International  Student  Assessment  (PISA)  found 
that  40.8%  of  15-year-old  students  did  not  have 
basic skills in reading, 46.6% in mathematics and 
43.9% in science. Lack of basic skills is particularly 
acute  among  disadvantaged  students  (e.g.  62% 
reading  vs  19%  among 
underperform 
advantaged 
of 
disadvantaged  pupils  underachieving  in  all  three 
tested subjects in PISA is one of the highest in the 
in  underachievement  between 
EU.  The  gap 
students  from  advantaged  and  disadvantaged 
backgrounds is the highest (39 pps, against the EU 
(see  Graph  A15.1). 
average  of  19.3  pps) 

in 
peers). 

percentage 

The 

0%10%20%30%40%50%60%RomaniaEUCountry averageHigh socio-economic statusLow socio-economic status 
 
                                                 
   
 
Furthermore, in 2021, only 50% of those aged 16-
19  had  at  least  basic  digital  skills  (EU  average: 
69%) (107).  The  RRF  supports  school  laboratories 
and  computer  labs  in  both  general  and  VET 
schools, digital skills training for 100.000 teachers, 
and digitalisation measures in 61 universities. 

The  rural-urban  gap  and  the  situation  of 
Roma in education remain critical. 79% (108) of 
Roma  children  aged  0-17  are  at  risk  of  poverty, 
leading to educational disadvantage due to socio-
economic and minority status. PISA data show that 
disadvantaged  students  tend  to  concentrate  in 
certain  schools,  resulting  in  segregation.  In  2020, 
51%  of  Roma  children  aged  6-15  attended 
schools  where  ‘all  or  most  of  schoolmates  are 
Roma’ (ibid.). Reflecting lower quality of education 
and  socio-economic  aspects,  all  educational 
indicators are typically worse in rural areas, where 
more than 40% of the population lives. 

(ICT) 

The  rate  of  tertiary  educational  attainment 
increased but is still the lowest in the EU. In 
2022,  the  rate  improved  but  only  24.7%  of 
Romanians aged 25-34 had a tertiary degree (EU 
average: 42%). Hence, despite the high proportions 
of  graduates  in  information  and  communications 
technology 
technology, 
engineering  and  mathematics  (STEM) (109),  the 
number  of  professionals  trained  is  low.  The  skills 
of  graduates  from  VET  and  higher  education  do 
not  meet  employer  expectations.  Employers  view 
the  curricula  of  secondary  and  tertiary  education 
as  being  too  abstract,  and  insufficiently  focused 
on  the  practical  application  of  knowledge  and 
problem solving (110). 

science, 

and 

(107) Digital Economy and Society Index (DESI) 2021, Romania. 

(109) For ICT, 6.7% (EU average: 3.9%) and for STEM, 29.1% (EU 

(108) Fundamental Rights Agency, 2022, Headline indicators for 

average: 24.9%), according to latest data available. 

the EU Roma strategic framework for equality, inclusion and 
participation for 2020–2030. 

(110) World Bank (2020), Markets and People: Romania Country 

Economic Memorandum. International Development in Focus. 

63 

 
                                                 
                                                 
Table A15.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Source: (1,3,4,5,7,8,9,10,11) = Eurostat; 2 = OECD (PISA); 6 = European Commission (Joint Research Centre). Notes: Data is not 
yet available for the remaining EU-level targets under the European Education Area strategic framework, covering 
underachievement in digital skills and participation of adults in learning. The equity indicator shows the gap in the share of 
underachievement in reading, mathematics and science (combined) among 15-year-olds between the lowest and highest quarters 
of socio-economic status. 

64 

96%84.6%91.9%78.2%202093.0%2020Reading< 15%38.7% 20.0%40.8%201822.5%2018Mathematics< 15%39.9% 22.3%46.6%201822.9%2018Science< 15%38.5% 21.1%43.9%201822.3%2018< 9 %19.1%11.0%15.6% 9.6%Men19.5%12.5%16.2%11.1%Women18.5%9.4%15.0%8.0%Cities5.9%9.6%3.9%8.6%Rural areas27.8%12.2%24.5%10.0%Native19.1%10.0%15.6%8.3%EU-born:u20.7%:u20.3%Non EU-born:u23.4%:u22.1%6Equity indicator (percentage points)::39201819.320187Exposure of VET graduates to work based learningTotal ≥ 60% (2025) : :8.4%60.1%45%25.5%36.5%24.7%42.0%Men22.9%31.2%21.2%36.5%Women28.3% 41.8%28.4%47.6%Cities44.7%46.2%46.5%52.2%Rural areas8.6%26.9%9.2%30.2%Native25.5%37.7%24.6%43.0%EU-born:32.7%:u39.5%Non EU-born:u27.0%:u35.7%28.6% 38.3%30.5%202039.2%2020Tertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth11Share of school teachers (ISCED 1-3) who are 50 years or over1Participation in early childhood education (age 3+)2Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)3Total3By gender4By degree of urbanisation5By country of birth20152022IndicatorTargetRomaniaEU27RomaniaEU27 
 
  
 
ANNEX 16: HEALTH AND HEALTH SYSTEMS 

A  healthy  population  and  an  effective, 
accessible  and  resilient  health  system  are 
prerequisites  for  a sustainable  economy and 
society.  This  Annex  provides  a  snapshot  of 
in 
population  health  and  the  health  system 
Romania.  

Life  expectancy  at  birth  in  Romania  is  the 
second  lowest  in  the  EU,  with  a  significant 
gender gap. In 2021, a steep increase (more than 
doubled)  in  reported  COVID-19  mortality (111)  led 
to  one  of  the  largest  year-on-year  drops  in  life 
expectancy of all EU countries, with a reduction by 
1.3 years (Graph A16.1). In 2020 leading causes of 
death  were  diseases  of  the  circulatory  systems 
(“cardiovascular  diseases”  with  the 
ischaemic 
disease death rate being more than double the EU 
average) followed by cancer. . The cancer mortality 
rate  is  above  the  EU  average  ,  driven  by  lung 
cancer  and  in  recent  years  by  colorectal  cancer. 
This  points  to  possible  weaknesses  in  diagnostic 
procedures and treatment outcomes in oncology. 

Graph A16.1: Life expectancy at birth, years 

Source: Eurostat 

in 

Total health spending per capita in 2020 was  
the  lowest  of  the  EU  despite  a  significant 
increase  in  the  last  5  years.  The  share  of 
government  healthcare  expenditure 
total 
government  expenditure  is  slightly  below  the  EU 
average  (and  decreased  during  the  COVID-19 
pandemic).  The  health  system  is  characterised  by 
an overuse of hospital services (having a relatively 
large  number  of  hospitals  beds  for  acute  care) 
driving  spending  on  inpatient  care  (as  a  share  of 
total  healthcare  expenditure)  to  above  the  EU 
average. Low spending on primary and ambulatory 
care – the second lowest in the EU in both relative 
and  absolute  terms  –  is  associated  with  an 
role  of  primary  care  as  a 
underdeveloped 

(111) “Based on data provided directly by Member States to ECDC 
under the European Surveillance System (data current as of 
13 April 2023)” 

65 

‘gatekeeper’ for referrals to second-line (specialist) 
care.  At  around  19%  of  total  current  health 
expenditure, the share of household out-of-pocket 
costs is above the EU average. Public spending on 
health  is  projected  to  increase  by  0.9  percentage 
points of GDP by 2070, in line with the EU average 
(see Annex 11 and Graph A16.2). 

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2019-2070 

AWG reference scenario  
Source: European Commission / EPC (2021) 

In  2020,  spending  on  prevention  in  Romania 
amounted  to  only  2%  of  total  spending  on 
healthcare  (compared  to  3.4%  for  the  EU 
overall). This is low, with six other Member States 
also reporting a level up to 2%. Between 2020 and 
2019,  spending  on  prevention 
in  Romania 
increased  by  28%  (compared  to  a  26%  increase 
for  the  EU  overall).  Across  the  EU,  this  increase 
was  primarily  driven  by  spending  on  disease 
detection,  surveillance,  control  and 
response 
programmes as part of the public health response 
to  COVID-19.  This  low  spending  on  prevention  is 
associated  with  reported  challenges  in  specific 
areas such as cancer or maternal and child health. 
Evidently, 
the  overall  elevated 
to 
avoidable  mortality  in  the  population.  Antibiotics 
is  significantly  higher  than  EU 
consumption 
average  and  is  increasing  (going  against  the 
overall  decreasing  trend  in  the  EU).  This  raises 
further  public  health  concerns  about  the  build-up 
of antimicrobial resistance. 

it  points 

Lagging  accessibility  of  healthcare  poses  a 
challenge to the health system and is linked 
to  staff  shortages  and  underdeveloped 
primary  care.  At  4.4%,  Romania  has  one  of  the 
highest rate of unmet needs in EU (see Annex 14), 
with  differences  between  income  groups  and 
regions.  Low  funding  levels,  reflected  in  low 
availability  of  staff  and  high  out-of-pocket  costs 
for  households,  hamper  access 
to  quality 
healthcare. The number of consultations in primary 

75.275.275.375.674.272.880.980.981.081.380.480.1201620172018201920202021RomaniaEU6.63.90.90.902468EURomania% of GDP20192070increase 
 
          
                                                 
        
 
Table A16.1: Key health indicators 

Note:  The EU average is weighted for all indicators, except for (*) and (**), for which the EU simple average is used. The simple 
average for (*) uses data for 2020 or most recent year if former not available. Doctors' density data refer to practising doctors in 
all countries except EL, PT (licensed to practice) and SK (professionally active). Nurses' density data refer to practising nurses in all 
countries except FR, PT, SK (professionally active) and EL (nurses working in hospitals only). 
Source: Eurostat; except: ** ECDC 

primary  care)  and  a  more  territorially-balanced 
development  of  health  services  (better  covering 
underserved areas or communities).  

is 

to  care 

and  ambulatory  care  per  person  per  year  in 
Romania is among the lowest in the EU (4.6 vs 7). 
Access 
influenced  by  significant 
shortages  and  territorial  imbalances  (not  only  in 
rural  areas)  of  healthcare  staff.  Despite  high 
the 
numbers  of  new  medical  graduates, 
availability  of  healthcare  professionals  is  below 
the EU average. This is likely explained by the high 
rate  of  workforce  emigration.  Romanian-trained 
doctors and nurses are estimated to make up 12% 
and  11%, 
respectively,  of  health  workforce 
emigration  in  the EU (112).  Moreover,  the  lack  of 
integration of different care settings poses risks to 
the success of planned future health reforms. 

resources 

Romania  allocated  9.8%  of  the  resources 
under  its  recovery  and  resilience  plan  to 
health investments. An ambitious set of reforms 
and  investments  worth  around  EUR  2.85  billion is 
earmarked  to  strengthen  the  physical  and  digital 
infrastructure  (measures  related  to  e-health  and 
telemedicine)  and 
improve  healthcare  quality, 
accessibility  and  efficiency.  A  framework  for 
in  health  and 
developing  human 
is 
professionalising  healthcare  management 
planned to help fill the gaps in human resources in 
the  healthcare  sector.  By  setting  up  the  National 
Agency  for  Development  of  Health  Infrastructure 
(ANDIS),  Romania  aims  to  improve  the  planning, 
managing and monitoring capacity for large-scale 
strategic investments in developing the healthcare 
infrastructure. Overall, investments are intended to 
underpin  a  balanced  reform  agenda  by  providing 
appropriate 
ambulatory 
infrastructure.  This  should  help  ensure  an 
increased  access  to  better  care  (especially  in 

outpatient 

and 

(112) See: Regulated Professions Database, 

https://ec.europa.eu/growth/toolsdatabases/regprof/home. 

66 

20172018201920202021EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)206.0210.6208.6235.1NA91.7 (2020)Cancer mortality per 100 000 population275.6273.2264.1260.3NA242.2 (2020)Current expenditure on health, % GDP 5.25.65.76.3NA10.9 (2020)Public share of health expenditure, % of current health expenditure78.779.780.580.3NA81.2 (2020)Spending on prevention, % of current health expenditure 1.81.41.52.0NA3.4 (2020)Acute care beds per 100 000 population525529533556NA387.4 (2019)Doctors per 1 000 population *2.93.03.23.3NA3.9 (2020)Nurses per 1 000 population *7.07.27.57.7NA8.3 (2020)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day (total consumption for CY and CZ) **NANA24.023.724.314.5 (2021) 
                                                 
  
 
   
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

than  the  EU  average  (productivity  shrank  in  the 
least developed region of Nord-Est). The evolution 
of  labour  productivity  (see  Graph  A17.1)  shows 
that  all  regions  are  catching  up  with  the  EU 
average, with the capital region converging at the 
fastest  rate  (133%  in  2018;  143%  in  2020)  and 
Nord-Est the slowest (39% in 2018; 43% in 2020). 
One obstacle to territorial development is the lack 
of key assets, such as transport infrastructure and 
skilled  workers,  in  the  less  developed  regions, 
combined  with  lack  of  administrative  capacity  in 
all  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 A17.1: Evolution of labour productivity (real 
GVA per worker) in Romania (2000-2020) 

This  Annex  showcases  the  economic  and 
social regional dynamics in Romania, providing 
an  update  on  economic,  social  and  territorial 
cohesion  in  and  among  the  Romanian  regions 
compared  with  the  EU  as  a  whole  and  the  main 
regional economic recovery challenges. 

Regional  disparities  in  Romania  remain  very 
high. This is due to labour productivity, investment 
and employment gaps between the capital and the 
other  regions.  Romanian  regions  have  however 
been  catching  up  in  terms  of  GDP  per  capita  and 
converging  on  the  EU  average  (from  52%  of  the 
EU  per  capita  average  in  2010  to  74%  in  2021), 
but  regional  disparities  persist.  In  the  capital 
region, GDP per capita is 166% of the EU average, 
followed  by  the  Vest  region  with  75%.  GDP  per 
capita  ranges  from  49%  to  71%  of  the  EU 
average in the other regions. Although five regions, 
including  the  capital  region,  grew  faster  than  the 
EU  average,  one  of  the  three  poorest  regions, 
Nord-Est,  saw  its  GDP  per  capita  fall  between 
2010 and 2021.  

Map A17.1:  Regional Competitiveness Index in 
Romanian Regions (2022) 

Source: EUROSTAT 

Disparities  in  GDP  per  capita  between  the 
capital  and  the  rest  of  the  country  reflect 
disparities  in  labour  productivity.  In  2020, 
labour  productivity  in  Romania  was  below  the  EU 
average  (at  76%).  It  varied  extensively  between 
regions,  from  143%  in  the  capital  region  of 
București-Ilfov  to  43%  in  Nord-Est,  Romania's 
least  developed  region.  There  are  also  significant 
differences 
Real 
productivity 
productivity grew fastest in 2011-2020 in the Vest 
region  (6.28%),  followed  by  the  capital  region 
(6.09%).  The  other  regions  experienced  lower 
productivity growth but, with the exception of Sud-
Muntenia  and  Sud-Vest  Oltenia,  still  grew  faster 

growth. 

in 

Innovation  performance 
is  weak  and 
investment  in  R&D  (0.5%  of  GDP  in  2019) 
remains  far  below  the  EU  average  of  2.3%. 
Only the capital region has a higher R&D intensity 
than  the  national  average  (1.1%  of  GDP),  due  to 
higher  employment 
in  high-technology 
rates 
sectors and knowledge-intensive services. 10% of 
employment  in  the  capital  region  was  in  high-
in  2020  and  44.7%  of 
technology  sectors 
employment 
in 
the  capital 
knowledge-intensive  services  in  2021.  Both  these 
figures are above the EU average. 

region  was 

in 

Digital disparities persist between Romania's 
regions.  ICT  uptake is  low.  Romania  ranks  last  in 
the EU in the 2022 edition of the digital economy 
and  society  index  (DESI)  while  also  having  the 
lowest annual growth in the EU. In 2021, only 15% 
of the population used the internet to interact with 
public authorities compared with an EU average of 

67 

5152535455565000102030405060708091011121314151617181920thousands of EUR per  personCapital regionOther NUTS2 regionsEU27National average 
 
 
 
 
 
  
 
 
Table A17.1: Selected indicators at regional level in Romania 

Source: EUROSTAT 

58%. This share is 28% in Bucuresti-Ilfov but very 
low in all the less developed regions, ranging from 
10% in Sud-Muntenia to 17% in Centru. 

the 

less  developed 

All 
regions  have 
experienced depopulation. The population in all 
the  less  developed  regions  shrank  to  a  varying 
extent  in  2011-2020.  The  two  worst  affected 
regions  were  Sud-Muntenia  and  Sud-Vest  Oltenia, 
whose  populations  fells  by  9.1%  and  9.4% 
respectively. These falls were due both to negative 
natural change and to negative net out-migration, 
with the highest share of people leaving the three 
poorest less developed regions. 

impact  on 

the  workforce 

The  share  of  the  population  at  risk  of 
poverty  or  social  exclusion  (AROPE)  is  the 
highest in the EU with major disparities between 
the  less  developed  regions  (shares  ranged  from 
25%  in  Nord-Vest  to  50.3%  in  Sud-Est)  and  the 
capital region with a share of 16.4%. Salaries are 
relatively low and poverty rates are high in regions 
is 
where  a  high  share  of 
concentrated in low productivity sectors. This has a 
negative 
cohesion.  The 
differences  in  productivity,  investment,  education 
and  poverty  are  only  partially  reflected  in  labour 
market  figures.  Unemployment  in  2021  was  low 
(5.6%  overall)  ranging  from  3.1% in  Nord-Vest  to 
7.7%  in  Sud-Muntenia  and  9.2%  in  Sud-Vest 
Oltenia,  the  only  two  regions  above  the  EU 
average.  Persistently  low  population  growth  and 
the  outward  migration  of  skilled  labour  generate 
significant  workforce  shortages.  The  rural-urban 
divide  is  considerable.  The  unemployment  rate  in 
2021  was  8.4%  in  rural  areas  compared  with 
2.8% in cities, and the rate of early school leavers 

social 

was  23.2%  in  rural  areas  compared  with  4.5%  in 
cities. 

The 

All  Romania's  regions  were  affected  by  the 
COVID-19  pandemic. 
socio-economic 
consequences of the pandemic seem to have been 
more  severe  not  only  in  regions  that  are  highly 
dependent on tourism and border regions, but also 
in the capital region. GDP per capita dropped in all 
Romanian  regions  in  2019-2020.  The  impact  of 
the  pandemic  was  most  severe  in  the  most 
developed  region  of  the  country,  Bucureşti-Ilfov 
(-1.9%)  but  milder  in  the  less  developed  regions 
(the fall ranged from -1.1% in Centru to -0.2% in 
and  Sud-Vest  Oltenia).  Regional 
Nord-Est 
disparities  in  terms  of  GDP  per  capita  therefore 
slightly  decreased  in  Romania  compared  with  the 
pre-pandemic period. 

68 

 Region nameGDP per head (purchasing power standard/PPS)Productivity (Gross value added (PPS) per person employed)Real productivity growthGDP per head growthPopulation growthUnemployment ratePeople at risk of poverty or social exclusion Early school leaversR&D expenditureInternet use by individuals: interaction with public authoritiesRegional Competitiveness IndexEU27=100, 2021EU27=100, 2021Avg % change on preceding year, 2011-2020Avg % change on preceding year, 2010-2020Total % change, 2011-2020% of active population, 2021% of active population, 2021% of population aged 18-24, 2021% of GDP, 2019% of individuals in the last 12 months, 2021Range 0-100, 2022European Union1001000.230.601.77.021.709.72.3258100.0România74863.243.48-5.15.622.6015.30.481556.4Nord-Vest70793.974.78-2.63.114.1016.30.181356.0Centru71942.133.09-2.65.120.2020.20.311752.5Nord-Est (RO)4951-2.03-0.28-4.16.835.6015.30.301247.0Sud-Est59753.324.10-8.16.030.5022.90.081346.1Sud - Muntenia57700.320.56-9.17.723.0015.10.361052.1Bucureşti - Ilfov1661626.096.802.03.52.907.91.072893.7Sud-Vest Oltenia58660.270.63-9.49.230.5010.50.121450.2Vest75966.286.23-4.23.520.7010.30.381257.8 
 
  
 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

of 

overall 

Romania  has  a  small  banking  sector,  with  a 
low 
financial 
degree 
intermediation.  In  Q3-2022,  the  total  assets  of 
monetary  financial  institutions  were  equivalent  to 
54.6%  of  GDP,  the  lowest  ratio  in  the  EU,  where 
the  average  is  276.8%.  This  is  partially  explained 
by: (i) the large share of undercapitalised firms in 
Romania;  (ii)  the  weak  payment  discipline  in  the 
real economy; and (iii) the elevated share of loans 
from  shareholders  and  trade  credit 
in  total 
company  debt.  Low  levels  of  financial  literacy 
among 
inadequate 
digitalisation (113) further impede the development 
of financial intermediation in Romania.  

borrowers 

and 

The  banking  sector  in  Romania  is  stable 
overall and it weathered the uncertainties of 
the  COVID-19  pandemic  relatively  well,  but 
Banking-sector 
remain. 
vulnerabilities 
capitalisation has been relatively stable for several 
years, with the capital adequacy ratio at 20.5% in 
Q3-2022,  above  the  EU  average  of  18.6%  and 
marginally  below  pre-pandemic  levels.  The  slight 
decrease in the capital adequacy ratio from a year 
before is due mainly to: (i) the marking-to-market 
of  losses  from  financial  instruments  measured  at 
fair value following the upward shift in the interest 
rate;  and  (ii)  the  distribution  of  dividends.  The 
revised  Capital  Requirements  Regulation  (CRR 
‘quick  fix’)  had  a  positive  impact  on  capital,  as 
Romanian  banks  have  a  high  share  of  assets 
invested  in  sovereign  debt  instruments  (21.8%  in 
Q3-2022 (114)).  The  revised  CRR  supported  banks’ 
liquidity,  but  increased  the  risk  of  the  sovereign-
bank nexus weighing on capital. Although loan-loss 
provisions 
the  pandemic, 
profitability  remained  resilient  throughout  the 
pandemic period, and improved further in the first 
three  quarters  of  2022  thanks  to  higher  net 
interest  income  and  growing  lending  activity. 
Lending  activity  increased  faster  than  deposit 
growth, resulting in a higher than in 2021 loan-to-
deposit ratio by Q3-2022 (71.8%), which is similar 
to  pre-pandemic  levels.  Bank’s  return  on  equity 
reached their highest level since 2017 in Q3-2022 
(16.2%).  Banks’  operational  activity  improved  on 
the back of both increased digitalisation and fewer 
employees  and  branches,  so  that  their  cost-to-

increased  during 

income  decreased  to  48.4%  by  Q3-2022,  the 
lowest  level  since  2017.  Second-round  effects 
from  the  war  in  Ukraine  pose  risks  to  the  sector, 
due  to  the  war’s  adverse  macroeconomic  impact. 
In  addition,  the  risk  of  cyber-attacks  has  also 
increased in recent years. 

Graph A18.1: Evolution of credit activity 

Source: ECB. 

(NFCs) 

corporations 

Following  the  progressive  tightening  of  the 
monetary  policy  stance  and 
increased 
economic  uncertainty,  it  is  important  to 
preserve the banking sector’s soundness and 
a healthy flow of credit to the real economy. 
Lending activity for households and especially for 
non-financial 
grew 
significantly  during  the  pandemic,  on  the  back  of 
governmental  support  measures (115),  low  interest 
rates,  and  moratoria  on  private  debt  repayment. 
Lending activity for households increased by 6% in 
Q3-2022  compared  to  Q3-2021,  while  lending  to 
jumped  by  19%.  The  credit  expansion 
NFCs 
generated  higher  profits 
for  banks,  while 
increasing their ties to the sovereign. At the same 
time,  the  quality  of  the  assets  held  by  Romanian 
banks  continued  to  improve,  as  non-performing 
loans (NPLs) have declined steadily in recent years. 
The  system-wide  NPL  ratio  stood  at  2.9%  in  Q3-
2022,  less  than  half  the  level  of  2017,  but  still 
above  the  EU  average  of  1.8%.  This  trend  might 
reverse  if  macroeconomic  conditions  deteriorate. 
Indeed,  some  macroeconomic  deterioration  can 

(113) Digital Economy and Society Index, 2021. 

(115) Two state guarantee schemes are currently in place; 

(114) NBR, Financial Stability Report, December 2022. 

https://www.fngcimm.ro/.  

69 

-10-5051015202530Total privateNFCHH% 
 
 
                                                 
  
                                                 
 
Table A18.1: Financial soundness indicators 

(1) Last data: Q3 2022. 
(2) Data is annualized. 
Source: ECB, Eurostat, S&P Global Capital IQ Pro 

(NBR) (117), 

already  be  seen  in  the  slight  increase  in  the 
impaired  loans  ratio (116)  as  of  July  2022.  In 
addition, according to the macroeconomic baseline 
scenario of the country’s central bank, the National 
the  average 
Bank  of  Romania 
probability  of  default  for  NFCs  that  took  bank 
loans  is  estimated  to  be almost  twice that  of  the 
previous  period.  The  NBR  also  stresses  that  a 
significant share of mortgage loans is exposed to 
interest-rate  risks.  These  risks  could  be  further 
aggravated  by  the  current  legislative  framework, 
which  is  not  conducive  to  loan  sales.  In  future, 
banks  also  anticipate  more  restrictive  lending 
conditions (118).  Together  with  the  NBR  tightening 
monetary  policy  in  response  to  high  inflation, 
these  stricter  lending  conditions  could  contribute 
to a cooling in lending activity. Amid deteriorating 
prospects  for  global  economic  growth  and  the 
significant imbalances in Romania’s  economy,  the 
National Committee for Macroprudential Oversight 
decided  to  raise  the  countercyclical  buffer  by  0.5 
percentage points to 1% as of October 2023. 

The  private  pension  market  has  grown 
strongly,  despite  episodes  of  volatility  over 
the  years.  Non-banking  financial-sector  assets 
represented 11.87% of GDP in Q3-2022, over half 
of  which  were  owned  by  private  pension  funds. 
Their total asset value reached RON 92 bn (about 

(116) NBR, Monthly Bulletin, October 2022. 

(117) NBR, Financial Stability Report, December 2022. 

than 

in  government  bonds 

EUR 18.8 bn) in Q3-2022, slightly lower in nominal 
terms  than  their  value  at  the  end  of  2021,  and 
also  less  relative  to  GDP  (in  Q3-2022,  pension 
assets were 6.78% of GDP vs 7.83% of GDP at the 
end  of  2021 (119)).  In  terms  of  structure,  63%  of 
the  investments  were  in  government  bonds  in 
September  2022,  3  percentage  points  more 
concentrated 
in 
December 2021, which could explain the declining 
rate  of  return.  All  pension  funds  in  Romania 
recorded lower annualised rates of return in 2022 
due  to  considerable  exposure  to  government 
bonds,  which lost  value  due  to  increased inflation 
and interest rates. More effective balancing of risk 
and  return  could  be  achieved  by  diversifying 
pension  portfolios,  but  such  a  strategy  is  not 
supported  by  the  limited  development  of  the 
domestic  securities  market.  In  addition,  current 
legislation  limits  pension  funds  from  holding 
certain  classes  of  assets.  These  limits  might 
prevent funds from taking excessive risk but at the 
same time they also limit the funds’ diversification 
options.  

is 

insurance  sector 

The 
facing  again 
increased  risks  following  the  recent  failure 
of  one  the  largest  non-life  insurer.  After  the 
failure of the main car insurance company in 2021 
and  the  deficiencies  noticed  in the second largest 

(118) NBR, Bank November Survey, September 2022. 

(119) Monthly Report, ASF Romania. 

70 

201720182019202020212022EUMedianTotal assets of the banking sector (% of GDP)53.050.649.856.558.454.6276.8207.9Share (total assets) of the five largest banks (%)59.561.662.662.462.5--68.7Share (total assets) of domestic credit institutions (%)122.725.126.429.431.831.9-60.2NFC credit growth (year-on-year % change)5.19.36.06.720.019.1-9.1HH credit growth (year-on-year % change)8.510.97.04.79.76.0-5.4Financial soundness indicators:1        - non-performing loans (% of total loans)6.65.04.33.93.42.91.81.8- capital adequacy ratio (%)19.419.721.023.522.220.518.619.8- return on equity (%)211.713.612.39.013.116.26.16.6Cost-to-income ratio (%)154.953.553.451.451.148.460.651.8Loan-to-deposit ratio (%)169.271.772.067.668.671.888.678.0Central bank liquidity as % of liabilities-0.00.00.11.20.0-2.9Private sector debt (% of GDP)51.347.146.548.047.9--120.7Long-term interest rate spread versus Bund (basis points)364.1429.0479.2440.3399.8634.0-93.3Market funding ratio (%)29.727.527.227.825.5-50.840.0Green bonds issued to all bonds (%)----0.40.53.92.31-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States. 
                                                 
                                                 
 
   
 
the  market  appeared 

insurer (120), 
to  have 
weathered the crisis. Although lower than in 2021, 
the  sector’s  eligible  own  funds  were  sufficient  to 
cover  the  solvency  capital  requirements  (SCR)  in 
Q2-2022, while gross written premiums increased 
by approximately 37% between Q2-2021 and Q2-
2022.  However,  the  market  continued  to  be 
characterised by a high degree of concentration  – 
both  in  terms  of  exposure  by  type  of  insurance 
and  in  terms  of  number  of  undertakings.  83%  of 
total  gross  written  premiums  in  June  2022  were 
recorded by non-life insurance (of which 65% was 
car  insurance).  In  September  2022  the  two  main 
providers  of  motor  third  party  liability  insurance 
had a combined market share of 51.66%, of which 
Euroins  Romania  had  31.04%.  Following  several 
the  Romanian 
inititated  by 
control  actions 
superivor,  it  was  concluded  that,  among  other 
irregularities,  the  insurer  failed  to  meet  the 
required  eligible  funds  to  cover  the  SCR  and  the 
minimum  capital  requirement  (MCR).  Therefore, 
the  Council  of  the  ASF  decided  to  withdraw  the 
operating authorization of Euroins Romania, and to 
open  the  bankruptcy  proceedings (121).  The  duties 
of  the  company's  management  were  suspended 
and,  until 
judicial 
the  appointment  of 
liquidator,  the  Insurance  Guarantee  Fund  (FGA) 
was  appointed  as  interim  administrator  of  the 
the 
company,  having 
administration  and  management  of  the  insurer's 
activity  and  the  adoption  of  the  necessary 
measures for the preservation of the patrimony.  

to  secure 

task 

the 

the 

(120) The first two insurers, City Insurance and Euroins Romania, 
accumulated approximately 75% of the MTPL insurance 
portfolio in Romania in 2020. 

(121) https://asfromania.ro/ro/a/2710/autoritatea-de-

supraveghere-financiara-retrage-autorizatia-de-functionare-
a--euroins-romania-si-constata-starea-de-insolventa-a-
societatii  

71 

 
                                                 
ANNEX 19: TAXATION  

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

information  on 

they 

though 

slightly 

increased 

Romania’s  tax  revenues  across  all  major 
revenue sources are relatively low in relation 
to its GDP. Table A19.1 shows that Romania’s tax 
revenues  as  a  percentage  of  GDP  were 
considerably  below  the  EU  aggregate  in  2021, 
even 
for 
consumption  and  capital  taxes  compared  with 
2020. The ratio of labour tax revenues to total tax 
revenues was significantly below the EU aggregate 
(see  Graph  A19.1).  All  major  tax  revenue  sources 
(expressed  as  %  of  GDP)  were  below  the  EU 
aggregate.  This  indicates  that  there  is  scope  to 
make  more  use  of  tax  bases  across  the  board. 
Revenues from property taxes and from recurrent 
property  taxes,  which  are  among  the  taxes  least 
detrimental  to  growth,  were  comparatively  low 
(expressed as % of GDP and % of total taxation). 
The  performance  of  the  tax  system  should  be 
viewed in the context of worsening public finances. 
This  suggests  that  there  may  be  scope  to  make 
greater use of underused tax types, such as labour 

and recurrent property taxes.  

the 

review  of 

includes  a 

Romania’s  Recovery  and  Resilience  Plan 
(RRP) 
tax 
framework.  The review of the tax system in the 
Plan  will  identify  distortions  and  areas  where 
relevant  tax  legislation  should  be  adjusted,  in 
particular  for  corporate  taxation,  personal  income 
tax  and  social  security  contributions  as  well  as 
property  taxation,  so  as  to  inform  decisions  for  a 
gradual  withdrawal  of  excessive  tax  incentives.  In 
addition, the Plan foresees a new taxation system 
to  support  road  decarbonisation  in  line  with  the 
polluter  pays  principle  and  other  principles  of 
environmental taxation. The reform of the tax code 
adopted in July 2022, introduced a higher taxation 
of  dividends,  increased  some  of  the  reduced  VAT 
rates  and  contributed  to  reduce  the  size  of  the 
fiscal  facility  provided  to  micro-enterprises  and 
firms in specific sectors. However, the reform also 
introduced  a  review  of  the  system  of  granting 
personal  deductions  for  taxpayers  who  earn 
income from wages, introducing other exemptions 
in  the  system.  Finally,  the  part  of  the  reform  on 
property taxation, which would have had a positive 
effect  on  government  revenue,  has  not  been 
adopted. 

Table A19.1: Taxation indicators 

(1) Forward-looking effective tax rate (OECD). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average 
For more data on tax revenues as well as the methodology applied, see European Commission, Directorate-General for Taxation 
and Customs Union, Taxation trends in the European Union: data for the EU Member States, Iceland, Norway and United Kingdom: 
2021 edition, Publications Office of the European Union, 2021, https://data.europa.eu/doi/10.2778/843047 and the Data on 
Taxation webpage, https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en. 
For more details on the VAT gap, see European Commission, Directorate-General for Taxation and Customs Union, VAT gap in the 
EU: report 2022, Publications Office of the European Union, 2022, https://data.europa.eu/doi/10.2778/109823.  
Source: European Commission, OECD. 

72 

2010201920202021202220102019202020212022Total taxes (including compulsory actual social contributions) (% of GDP)25.825.926.126.537.939.940.040.6Labour taxes (as % of GDP)10.812.012.812.120.020.721.320.9Consumption taxes (as % of GDP)11.110.19.910.410.811.110.711.2Capital taxes (as % of GDP)4.03.83.34.07.18.18.08.5Total property taxes (as % of GDP)0.80.60.60.61.92.22.22.2Recurrent taxes on immovable property (as % of GDP)0.70.50.50.51.11.21.21.1Environmental taxes as % of GDP2.12.11.92.02.42.42.22.2Tax wedge at 50% of average wage (Single person) (*)42.336.636.937.237.633.932.331.932.131.7Tax wedge at 100% of average wage (Single person) (*)44.638.338.338.338.341.040.139.939.739.7Corporate income tax - effective average tax rates (1) (*)14.414.414.419.519.419.1Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)6.36.86.96.48.67.78.17.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)41.248.031.640.7VAT Gap (% of VAT total tax liability, VTTL)35.535.711.09.1RomaniaEU-27Tax structureProgressivity & fairnessTax administration & compliance 
 
 
 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Graph A19.1: Tax revenues from different tax types as % of total taxation 

Source: European Commission 

Second earner tax wedge assumes first earner at 100% of 
the average wage and no children. 
Source: European Commission 

There  is  room  to  increase  compliance  and 
improve  the  performance  of  the  Romanian 
tax administration. In 2020, the VAT compliance 
gap  (the  gap  between  revenues  actually  collected 
and  the  theoretical  tax  liability)  increased  to  35.7 
%  of  the total  VAT  liability.  Romania  continues to 
have  the  highest  VAT  gap  in  the  EU.  In  order  to 
improve  tax  administration  and  tax  compliance, 
Romania’s  Recovery  and  Resilience  Plan  (RRP) 
includes measures to strengthen the capacity and 
effectiveness  of  tax  control  systems,  including  by 
tax 
digitalisation 
enhancing 
administration  (e.g.  introducing  digital  reporting 
and  VAT  online  cash  registers,  and  digitalising 
interaction  with  tax  administration  by  expanding 
virtual  private  space).  In  addition,  future  RRP 
initiatives  will  include  a  Big  Data  platform  to 
analyse  large  amounts  of  data  accurately  and 
timely  and  unification  of  different  databases  to 
feed the integrated tax risk management system. 

the 

its 

of 

Romania has a flat-rate tax system, which is 
barely  progressive,  unlike  the  EU  average. 
Romania  has  a  flat-rate  tax  system  with  one  of 
the lowest personal income tax rate in the EU (only 
10%).  Graph  A19.2  shows  that  the  labour  tax 
wedge  for  Romania  in  2021  was  higher  than  the 
EU  average  for  single  people  at  50%  of  the  level 
of  the  average  wage,  close  to  the  EU  average  at 
average wage levels and below the EU average for 
higher levels of income. Second earners at a wage 
level of 67% of the average wage, whose spouses 
earn  the  average  wage,  were  subject  to  a  tax 
wedge  that  was  close  to  the  EU  average.  A 
relatively  high  tax  wedge  for  low-wage  earners 
may 
low-skilled 
workers.  The  limited  progressivity  of  the  tax 
system  contributes  also  to  the  low  ability  of  the 
tax and benefit system to redistribute income. The 
tax  and  benefit  reduced  the  Gini-coefficient 
(measure  for  income  inequality)  in  2021  only  by 
6.4 pps, which is well below the EU average of 7.8 
pps (see Table A19.1).  

labour  demand  for 

reduce 

Graph A19.2: Tax wedge for single and second 
earners as a % of total labour costs, 2022 

73 

37.638.338.338.338.320253035404550100150Tax wedge, % of total labour costsEarnings in % of the average wageSingle earner - ROSingle earner - EU averageSecond earner -  ROSecond earner -  EU average51.4327.5421.0145.6339.1515.22Tax revenue shares in 2021, Romania (outer ring) and the EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital6.824.320.591.000.020.191.962.640.422.7502468Romania -environmentaltaxationEU -environmentaltaxationRomania -property taxationEU - propertytaxationEnvironmental and property taxation as % of total tax revenue, Romania and the EUEnergy taxesTransport taxesResource/pollution taxesRecurrent property taxesOther property taxes 
     
 
 
     
 
ANNEX 20: TABLE WITH ECONOMIC AND FINANCIAL INDICATORS 

Table A20.1: Key economic and financial indicators 

(1) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
(2) Net international investment position (NIIP) excluding direct investment and portfolio equity shares.  
Source: Eurostat and ECB as of 2 May 2023, where available; European Commission for forecast figures (Spring forecast 2023). 

74 

2004-072008-122013-1920202021202220232024Real GDP (y-o-y)7.61.14.0-3.75.84.73.23.5Potential growth (y-o-y)6.42.53.63.42.82.93.33.2Private consumption (y-o-y)12.80.65.0-3.98.15.53.83.2Public consumption (y-o-y)1.91.22.21.11.34.3-0.93.1Gross fixed capital formation (y-o-y)23.6-3.33.21.11.98.07.08.0Exports of goods and services (y-o-y)13.97.09.6-9.512.69.64.04.8Imports of goods and services (y-o-y) 27.91.310.2-5.214.99.95.15.5Contribution to GDP growth:Domestic demand (y-o-y)15.2-0.64.1-2.05.66.14.04.5Inventories (y-o-y)-1.4-0.10.3-0.21.7-0.60.0-0.5Net exports (y-o-y)-6.41.3-0.5-1.5-1.5-0.7-0.8-0.6Contribution to potential GDP growth:Total Labour (hours) (y-o-y)-0.8-1.1-0.10.10.00.00.3-0.1Capital accumulation (y-o-y)2.02.31.01.51.41.61.71.8Total factor productivity (y-o-y)5.11.32.71.81.31.31.31.4Output gap4.5-0.6-0.6-5.6-2.9-1.1-1.2-0.9Unemployment rate8.98.57.16.15.65.65.45.1GDP deflator (y-o-y)13.46.73.84.15.213.410.75.8Harmonised index of consumer prices (HICP, y-o-y)8.15.71.72.34.112.09.74.6HICP excluding energy and unprocessed food (y-o-y)7.45.81.73.33.18.810.96.2Nominal compensation per employee (y-o-y)15.87.89.54.01.911.19.66.7Labour productivity (real, hours worked, y-o-y)7.83.34.11.01.14.43.23.1Unit labour costs (ULC, whole economy, y-o-y)7.44.65.25.8-1.96.25.93.2Real unit labour costs (y-o-y)-5.3-1.91.41.6-6.8-6.3-4.3-2.5Real effective exchange rate (ULC, y-o-y)9.0-3.43.0-0.4-4.12.1-0.2-0.6Real effective exchange rate (HICP, y-o-y)8.8-2.60.20.80.02.2..Net savings rate of households (net saving as percentage of net disposable income)........Private credit flow, consolidated (% of GDP)14.03.00.41.33.8...Private sector debt, consolidated (% of GDP)43.769.055.348.047.9...of which household debt, consolidated (% of GDP)12.020.917.016.115.8...of which non-financial corporate debt, consolidated (% of GDP)31.848.138.232.032.1...Gross non-performing debt (% of total debt instruments and total loans and advances) (1)1.4.9.23.02.6...Corporations, net lending (+) or net borrowing (-) (% of GDP)-2.77.811.411.813.817.620.219.8Corporations, gross operating surplus (% of GDP)26.631.030.728.231.436.939.641.1Households, net lending (+) or net borrowing (-) (% of GDP)....-14.8-21.2-23.5-22.9Deflated house price index (y-o-y)..0.72.3-0.8-6.2..Residential investment (% of GDP)2.02.92.42.42.52.7..Current account balance (% of GDP), balance of payments-10.3-6.2-2.3-4.9-7.2-9.3-8.1-7.9Trade balance (% of GDP), balance of payments-11.4-7.3-1.9-4.3-5.7-6.9..Terms of trade of goods and services (y-o-y)7.50.91.03.40.0-1.43.70.4Capital account balance (% of GDP)0.50.61.91.92.22.5..Net international investment position (% of GDP)-37.4-60.2-51.4-47.6-47.1-41.0..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2)-5.0-21.6-9.7-7.0-6.5-4.2..IIP liabilities excluding non-defaultable instruments (% of GDP) (2)36.156.342.441.740.335.1..Export performance vs. advanced countries (% change over 5 years)82.169.224.320.515.7...Export market share, goods and services (y-o-y)13.92.35.61.90.55.51.31.0Net FDI flows (% of GDP).-2.8.-1.3-3.7-3.4..General government balance (% of GDP)-1.7-6.3-2.3-9.2-7.1-6.2-4.7-4.4Structural budget balance (% of GDP)..-2.0-7.4-6.2-5.8-4.3-4.1General government gross debt (% of GDP)14.826.236.846.948.647.345.646.1forecast 
 
 
 
     
 
 
 
ANNEX 21: DEBT SUSTAINABILITY ANALYSIS 

This  Annex  assesses  fiscal  sustainability 
risks  for  Romania  over  the  short,  medium 
and  long  term.  It  follows  the  same  multi-
dimensional 
European 
Commission’s  2022  Debt  Sustainability  Monitor, 
updated  based  on  the  Commission  2023  spring 
forecast. 

approach 

the 

as 

1  -  Short-term  risks  to  fiscal  sustainability 
are 
low  overall.  The  Commission’s  early-
detection  indicator  (S0)  does  not  signal  major 
short-term  fiscal  risks  (Table  A21.2). (122)  Gross 
financing  needs  are  expected  to  remain  manage-
able,  at  around  9%  of  GDP  in  the  short  term 
(2023-2024),  below  the  recent  peak  in  2020 
(Table  1  of  Table  A21.1).  Financial  markets’ 
perceptions  of  sovereign 
is  stable,  as 
confirmed by the ratings of the main agencies. 

risk 

2 - Medium-term risks to fiscal sustainability 
are medium overall.   

The baseline DSA for Romania shows that the 
government debt-to-GDP ratio is projected to 
increase continuously over the medium term, 
to  about  65%  in  2033  (Graph 1). (123) (124)  The 
assumed  structural  primary  balance  (a  deficit  of 

(122) The S0 is a composite indicator of short-term risk of fiscal 
stress. It is based on a wide range of macro-financial and 
fiscal variables that have proven to perform well in the past 
in detecting situations of upcoming fiscal stress.  

(123) The assumptions underlying the Commission’s ‘no-fiscal 
policy change’ baseline notably comprise: (i) a structural 
primary deficit, before ageing costs, of 2.4% of GDP as of 
2024; (ii) inflation converging linearly towards the 10-year 
forward inflation-linked swap rate 10 years ahead (which 
refers to the 10-year inflation expectations 10 years from 
now); (iii) the nominal short- and long-term interest rates on 
new and rolled over debt converging linearly from current 
values to market-based forward nominal rates by T+10 (as 
for all Member States); (iv) real GDP growth rates from the 
Commission 2023 spring forecast until 2024, followed by 
EPC/OGWG ‘T+10 methodology projections between T+3 and 
T+10, i.e. for 2025-2033 (on average 2.4%); (v) ageing costs 
in line with the 2021 Ageing Report (European Commission, 
Institutional Paper 148, May 2021). For information on the 
methodology, see the 2022 Debt Sustainability Monitor 
(European Commission, Institutional Paper 199, April 2023). 

2.4%  of  GDP)  contributes  to  these  developments. 
It  appears  low  compared  with  past  fiscal  per-
formance, indicating that the country has room for 
corrective  action.  In  addition,  the  baseline  projec-
tions  up  to  2029  benefit  from  a  favourable  (al-
though  declining)  snowball  effect,  with  real  GDP 
growth  averaging  2.4%  in  2025-2033.  Govern-
ment  gross  financing  needs  are  expected  to  rise 
over the projection period, to almost 15% of GDP 
in 2033, compared to 9% forecast for 2024. 

The  baseline  projections  are  stress  tested 
against  four  alternative  scenarios  to  assess 
the  impact  of  changes  in  key  assumptions 
(Graph A1). Reverting to historical fiscal trajecto-
ries under the ‘historical structural primary balance 
(SPB)’  scenario  would  increase  the  projected  debt 
ratio  in  2033  only  slightly  compared  with  the 
baseline  since  the  baseline  SPB  assumption  is 
close to the historical average of -2.7% of GDP. A 
permanent  worsening  of  the  macro-financial  con-
ditions,  as  reflected  under  the  ‘adverse  interest-
growth rate differential’ scenario (i.e. 1 pp. higher 
than  the  baseline)  would  result  in  a  5  pps.  higher 
government  debt-to-GDP  ratio  by  2033  as  com-
pared with the baseline. A temporary worsening of 
financial  conditions,  as  reflected  in  the  ‘financial 
stress’  scenario,  would  result  in  a  debt-to-GDP 
ratio  similar  to  the  baseline  projection.  The  ‘lower 
structural primary balance (SPB)’ scenario (i.e. SPB 
level  permanently 
the 
cumulative  forecast  change)  would  lead  to  a 
significantly  higher  debt-to-GDP  ratio  compared 
with the baseline (+12 pps.). 

reduced  by  half  of 

Additionally, stochastic debt projections indi-
cate  medium  risks  (Graph  2). (125)  These  sto-
chastic  simulations  point  to  a  57%  probability  of 
the debt ratio in 2027 being greater than in 2022, 
entailing  low  risk  given  the  initial  low  debt  level. 
However,  such  shocks  point 
to  substantial 
uncertainty  (i.e.  the  difference  between  the  10th 
and 90th debt distribution percentiles) surrounding 
the government debt baseline projections. 

(124) Table 1 shows the baseline debt projections and its 

(125) These projections show the impact on debt of 2000 different 

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.  

shocks affecting the government’s primary balance, 
economic growth, interest rates and exchange rates. The 
cone covers 80% of all simulated debt paths, therefore 
excluding tail events. 

75 

 
 
 
 
                                                 
 
 
                                                 
 
 
Finally,  several  additional  risk  factors  need 
to  be  considered  in  the  assessment.  On  the 
one hand, risk-increasing factors are related to the 
recent increase in interest rates, the share of debt 
held  by  non-residents,  the  currency  denomination 
of  debt,  and  the  country’s  negative  net  inter-
national  investment  position.  On  the  other  hand, 
risk-mitigating  factors  include  the  lengthening  of 
debt maturity in recent years and the low share of 
short-term debt. In addition, the structural reforms 
under  the  NGEU/RRF,  if  fully  implemented,  could 
have  a  further  positive  impact  on  GDP  growth  in 
the  coming  years,  and  therefore  help  to  mitigate 
debt sustainability risks. 

3  -  Long-term  risks  to  fiscal  sustainability 
are medium overall. (126)  

The  S2  sustainability  gap 
indicator  (at 
3.3 pps.  of  GDP)  points  to  medium  risks, 
suggesting  that  Romania  would  need  to 
significantly  improve  its  structural  primary 
balance to ensure debt stabilisation over the 
long  term.  This  results  mainly  from  the  unfa-
vourable initial budgetary position (3 pps. of GDP) 
and  the  projected  increase  in  health  care  costs 
(0.7  pps.)  and  long-term  care  spending  (0.3  pps.) 
(Table  2;  the  impact  of  pension  measures  taken 
since  2020 
the  ageing 
projections). A number of investments and reforms 
in  the  RRP  contribute  to  supporting  the  efficiency 
of the Romanian health care system, so it will be 
important 
their 
to 
implementation. 

carefully  monitor 

included 

is  not 

in 

Combined  with  debt  vulnerabilities,  as 
highlighted by the S1 indicator, overall long-
term  risks  are  assessed  as  medium.  Indeed, 
the  S1  sustainability  gap  indicator  signals  that  a 
significant consolidation effort of 3.9 pps. of GDP 
would be needed to bring debt to 60% of GDP by 
2070.  This  result  is  driven  by  the  unfavourable 
initial budgetary position (2.9 pps. of GDP) and the 
projected rise in ageing costs (1.2 pps.) (Table 2).  

(126) The S2 fiscal sustainability gap indicator measures the 

permanent fiscal effort (SPB adjustment) in 2024 that would 
be required to stabilise public debt over the long term. It is 
complemented by the S1 fiscal sustainability gap indicator, 
which measures the permanent fiscal effort required in 2024 
to bring the debt-to-GDP ratio to 60% in the long term (by 
2070). For both the S1 and S2 indicators, the risk 
assessment depends on the amount of fiscal consolidation 
needed: ‘high risk’ if the required effort exceeds 6 pps. of 
GDP, ‘medium risk’ if it lies between 2 pps. and 6 pps. of 
GDP, and ‘low risk’ if the effort is negative or below 2 pps. of 
GDP. The overall long-term risk classification brings together 
the risk categories derived from S1 and S2. S1 may notch up 
the risk category derived from S2 when it signals a higher 
risk than S2. See the 2022 Debt Sustainability Monitor for 
further details. 

76 

 
                                                 
 
 
Table A21.1: Debt sustainability analysis - Romania 

Source: Commission services. 

Table A21.2: Heat map of fiscal sustainability risks - Romania 

Source: Commission services. 

77 

Table 1. Baseline debt projections20202021202220232024202520262027202820292030203120322033Gross debt ratio (% of GDP)46.948.647.345.646.146.947.949.250.952.955.358.261.465.2Changes in the ratio11.71.8-1.4-1.60.40.81.01.31.72.02.42.83.33.8of whichPrimary deficit8.06.05.02.92.72.62.42.32.32.32.42.52.72.9Snowball effect1.1-3.6-6.5-4.1-2.3-1.7-1.3-1.0-0.6-0.30.00.30.60.9Stock-flow adjustments2.6-0.60.1-0.50.00.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)15.610.510.79.29.39.69.910.210.711.312.012.813.714.7S1S2Overall index  (pps. of GDP)3.93.3of which Initial budgetary position2.93.0Debt requirement-0.2Ageing costs1.20.3of which    Pensions0.5-0.7     Health care0.50.7     Long-term care0.20.3Others-0.1-0.1Table 2. Breakdown of the S1 and S2 sustainability gap indicators010203040506070809020202021202220232024202520262027202820292030203120322033Graph 1. Deterministic debt projections Historical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioBaseline% of GDPp10p20p40p60p80p902030405060708020202021202220232024202520262027% of GDPGraph 2. Stochastic debt projections 2023-2027MedianBaselineBaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallMEDIUMMEDIUMMEDIUMMEDIUMMEDIUMMEDIUMDebt level (2033), % GDP65.267.977.769.965.7Debt peak year20332033203320332033Fiscal consolidation space68%76%81%68%68%Probability of debt ratio exceeding in 2027 its 2022 level57%Difference between 90th and 10th percentiles (pps. GDP)35.0(1)Debtlevelin2033.Green:below60%ofGDP.Yellow:between60%and90%.Red:above90%.(2)Thedebtpeakyearindicateswhetherdebtisprojectedtoincreaseoveralloverthenextdecade.Green:debtpeaksearly.Yellow:peaktowardsthemiddleoftheprojectionperiod.Red:latepeak.(3)Fiscalconsolidationspacemeasurestheshareofpastfiscalpositionsinthecountrythatweremorestringentthantheoneassumedinthebaseline.Green:highvalue,i.e.theassumedfiscalpositionisplausiblebyhistoricalstandardsandleavesroomforcorrectivemeasuresifneeded.Yellow:intermediate.Red:low.(4)Probabilityofdebtratioexceedingin2027its2022level.Green:lowprobability.Yellow:intermediate.Red:high(alsoreflectingtheinitialdebtlevel).(5)Thedifference 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.Short termMedium term - Debt sustainability analysis (DSA)Long termOverall                               (S0)Overall Deterministic scenariosStochastic projectionsS2S1Overall(S1 + S2)LOWMEDIUMMEDIUMMEDIUMMEDIUM 
 
 
     
 
 
     
 
ANNEX 22: MACROECONOMIC IMBALANCE PROCEDURE ASSESSMENT MATRIX  

balance  is  projected  to  improve,  but  only  slightly, 
as  certain  issues  persist.  Domestic  demand  is 
projected to stay strong, fuelled by the latest wage 
and  pension  increases,  while  exports  growth  is 
projected  to  be  more  muted  on  the  back  of  the 
sluggish  growth  prospects  in  the  rest  of  the  EU. 
The savings-investment balance is still expected to 
remain  clearly  negative  given  the  high  propensity 
to  consume  of  the  Romanian  households  and  the 
still high fiscal deficit projected for 2023.  

macroeconomic 

Policies  and  reforms,  especially  geared 
towards  fiscal  sustainability  can  help  to 
reduce 
vulnerabilities. 
Monetary  policy  was  tightened  to  fight  off 
inflation,  in  2022  the  policy  rate  increasing  8 
times from 1.75% to 6.75%. Policy preference for 
exchange  rate  stability  however, 
lead  to  an 
overvalued domestic currency according to several 
metrics,  hampering  the  export  capacity  of  the 
economy.  Fiscal  consolidation  should  be  the  main 
tool to reduce external imbalances. Sticking to the 
EDP  targets  would  go  a  long  way  in  containing 
current  dynamics.  The  mix  of  reforms  and 
investments  under  the  RRP,  particularly  the  ones 
geared towards better fiscal standings, such as tax 
and pensions reforms, have the potential to allign 
demand  with  supply.  Furthermore,  other  RRP 
measures are conducive to higher productivity and  
exports,  and  to  improving  cost  and  non-cost 
competitiveness. In 2022, under the RRP, Romania 
implemented relevant reforms and investments in 
the  areas  of  sustainable  transport,  road  safety, 
digitalization, improving tax and tax administration 
processes, stepping up the fight against corruption, 
and  the  compulsory  education  system  to  prevent 
and reduce early school leaving. 

Based  on  this  assessment,  the  Commission 
considered  in  its  communication  European 
Semester – 2023 Spring Package (COM(2023) 
600  final)  that  Romania  continues  to 
experience imbalances.  

The  Macroeconomic 
Imbalance  Procedure 
matrix presents the main elements of the in-
depth  review  undertaken  for  Romania (127).  
Romania  was  selected  for  an  in-depth  review  in 
the  2023  Alert  Mechanism  Report.  This  in-depth 
review  on  the  prevention  and  correction  of 
macroeconomic  imbalances  presents  the  main 
findings  on  the  gravity  and  evolution  of  the 
challenges  identified,  as  well  as  policy  responses 
and potential policy needs. Findings cover all areas 
of vulnerability assessed in the in-depth review.  

Romania is facing vulnerabilities related to a 
widening  current  account  deficit  against  the 
background  of  high  fiscal  spending  and 
strong  domestic  demand.  The  current  account 
deficit  reached  9.3%  of  GDP  in  2022  (levels  not 
seen since the Great Financial Crisis), from 7.3% in 
2021  and  4.9%  in  2020,  as  both  trade  in  goods 
and  primary  income  balances  dipped  further  into 
negative  territory.  The  energy  shock  had  an 
impact,  but  smaller  compared  to  EU  peers.  The 
worsening  comes  on  the  back  of  strong  domestic 
demand, which grew considerably more than GDP 
and  is  linked  to  high  fiscal  spending,  which  in 
2022, despite a reduction in the deficit, increased 
by  more than  20%.  Households’  savings played  a 
key  role  as  well,  decreasing  considerably  since 
their peak during the pandemic, thus affecting the 
savings-investment  balance.  Financing  of  the 
external deficit seems stable, with about a third of 
the  external  deficit  financed  by  FDI  inflows  in 
2022.  Low  overall  debt  levels  and  a  robust 
banking  system  continue  to  reassure  investors. 
Furthermore,  sizeable  entries  of  EU  funds  are 
reducing the net borrowing needs of the economy 
(which  in  2022  stood  at  6.9%  of  GDP).  However, 
protracted large external deficits, especially during 
periods  of  high  uncertainty  and 
financial 
tightening,  are  a  significant  source  of  concern. 
Romania  should  address  the  external  imbalances, 
also  considering 
in  EU 
transfers at the end of the recovery and resilience 
plan (RRP) period.  

reduction 

large 

the 

Going  forward,  vulnerabilities  are  expected 
to improve only marginally. As the energy price 
shock  gradually  dissipates,  the  current  account 

(127)  European Commission (2023), In-Depth Review for Romania, 
Commission staff working document (COM(2023) 642 final),  
in accordance with Article 5 of Regulation (EU) No 
1176/2011 on the prevention and correction of 
macroeconomic imbalances.  

78 

 
 
                                                 
 
 
Table A22.1: Assessment of macroeconomic 

Source: European Commission 

79 

Gravity of the challengeEvolution and prospectsPolicy responseUnsustainable trends, vulnerabilities and associated risksExternal positionRomania's current account deficit widened in recent years, reaching 9.3% of GDP in 2022, up from 7.2% of GDP in 2021. It is below the current account implied by economic fundamentals, which is estimated at around zero, and below the level required to stabilise the net international investment position (NIIP), above or close to prudential NIIP benchmark, over the next 10 years. Romania's external deficits are unsustainable in the medium to long term. The NIIP remains negative at -41% of GDP in 2022 and is well below fundamental-based benchmarks. Romania's current account continues to reflect the significant government deficit, which reached 6.2% of GDP in 2022. The widening of the current account deficit was also driven by a strong increase in absorption  more generally. Terms of trade developments played a role as well, given significant increases in imported energy and food prices. The trade in goods and primary income balances worsened, which was only partially offset by positive balances in trade in services and current transfers. Over the next two years, the current account deficit is expected to improve only marginally to around 8% of GDP. The energy price shock is expected to slowly abate, but fast growth in domestic absorption should keep imports growth at an elevated level.  Financing has been stable for now, as Romania's strong fundamentals (low overall debt levels, robust banking system) continue to reassure investors but a volatile global context and tight financing conditions in developed economies pose risks to the outlook.Monetary policy tightened to counter inflation, but exchange rate is overvalued according to several metrics, and its lack of flexibility limits the shock absorption capacity. Continued large government deficits account for most of the external financing needs and tackling them would go a long way in reducing vulnerabilities related to the large external financing needs of the economy as a whole. Some marginal progress under recovery and resilience plan (RRP) on sustainable transport, road safety, digitalization, tax administration, fight against corruption, and the compulsory education system has been made in 2022 and the full implementation of the reforms and investments under the RRP have the potential to further boost productivity, exports, ensure the sustanability of public finances and improve external balances.CompetitivenessCost competitiveness developments persist, with nominal unit labour cost increasing by 6.2% in 2022 and by 10.1% since 2019, while real effective exchange rate (HICP deflated) appreciated by 2.2%. The Romania - EU inflation differential increased in 2022, with Romania's HICP inflation being 2.8 ppts higher vs. EU27 and 3.6 ppts vs. the euro area. Most of the widening in inflation differentials is explained by domestic  factors. Furthermore, long standing non-cost competitiveness issues persist.  In 2022, the average nominal wage increased by 13.4%, below the national CPI inflation of 16.4%, but above the average HICP (12%), with divergences between public and private sectors. Private sector wages largely kept up with price level increases and are expected to do so in 2023, as demand for labour is high. ULC registered a steep advance, of 6.2% on the back of high nominal wage increases. Inflation is projected to remain higher than in the rest of the EU, as domestic inflationary pressures have moved into core components and wage increases are projected to be high. Further policy progress may be needed in response to the identified competitiveness concerns. In January 2023 the government increased by 17.7% the gross minimum wage (33% in the construction sector) and by 10% the wages for several public sector categories. Such measures help households cope with inflation developments, but they also fuel demand and add to cost competitiveness issues. In 2022, progress made under RRP on sustainable transport, digitalization, fight against corruption, and education helped against some of the non-cost competitiveness issues, but more is to be done.