COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Romania Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Romania
Date: 2025-06-04
Institutions: European Commission, Reform and Investment Task Force
Subjects: Romania, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, labour market, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 4.6.2025  SWD(2025) 223 final  COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Romania Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Romania {COM(2025) 223}  
 
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

Subdued economic growth and 
large macroeconomic 
vulnerabilities  

Romania  is  converging  to  EU  income  and 
productivity levels, but to achieve further 
progress  it  needs  to  address  structural 
macroeconomic 
and 
weaknesses 
vulnerabilities. Since 
its  EU  accession, 
Romania  has  increased  its  GDP  per  capita 
from 44% of the EU average to close to 80% 
in  2024.  However,  recent  wage  increases, 
particularly in the public sector, while boosting 
household  incomes  and  domestic  demand, 
have  contributed  to  high  fiscal  and  current 
account  deficits.  These  weigh  on  investor 
sentiment, 
and 
productivity  growth.  In  addition,  outdated  and 
inadequate  infrastructure  relatively  low  R&D 
capacity  and  persistent  skills  shortages 
prevent  Romania’s  transition  to  higher-value-
added production. 

competitiveness 

cost 

towards 

investments 

Supporting  the  private  sector  and  the 
business environment is essential to help 
Romania  transition  to  a  new  growth 
model.  So  far,  the  country  has  largely  relied 
on  advantages  offered  by  lower  labour  costs, 
but it would benefit from gradually shifting its 
focus 
new 
technologies  and  innovation,  as  this  would 
strengthen  its  position  in  the  EU  value  chain. 
Romania  could  boost  private  investment  and 
its  competitiveness  by  using  EU  funds  to 
research, 
support 
innovation  and  digital  capacity,  develop 
workforce  skills  and  increase  labour  market 
participation, 
simultaneously 
while 
strengthening  administrative  efficiency  and 
making its policy framework more predictable. 

infrastructure, 

improve 

in 

robust 

Romania’s  economic  growth  decelerated 
to  0.8%  in  2024,  down  from  2.4%  in 
2023 (1).  Buoyant  private  consumption  and 
domestic  demand  supported  by  loose  fiscal 
policy  had  only  a  limited  positive  impact  on 
real GDP growth (adjusted for inflation), which 
was  dampened  by 
the  high  negative 
contribution of net exports (see Graph  1.1).  In 
addition, 
in 
public 
infrastructure  could  not  compensate  for  a 
slowdown  in  private  investment.  Inflation  fell 
from  close  to  10%  on  average  in  2023  to 
5.8%  in  2024,  but  high  inflationary  pressures 
subsist. Labour demand decreased slightly, but 
the  growth  in  wages  remained  high.  The 
current  account  deficit  widened  to  8.4%  of 
GDP  in  2024,  from  6.6%  of  GDP  in  2023, 
mainly  due  to  higher  government  spending 
and incomes. 

investment 

Graph 1.1: Inflation – Real GDP growth and 
contributions 

Source: European Commission 

(1)  The cut-off date for the data used to prepare the 27 

country reports was 15 May 2024. 

2 

-6-4-20246810121417181920212223242526InvestmentInventoriesPriv. consumptionGov. consumptionNet exportsReal GDP (y-o-y%)Inflationforecastpps.  
 
 
 
  
 
current  account  deficits  are  likely  to  remain 
very  high,  inflating  debt  stocks  and  leaving 
Romania  vulnerable  to  change  in  investor 
sentiment and external shocks. 

Graph 1.2: General government deficit - 
expenditure and revenues 

Growth is likely to pick up only modestly. 
Real  GDP  growth  is  projected  to  accelerate to 
around  1.4%  in  2025  and  2.2%  in  2026, 
supported by resilient private consumption and 
a  gradual  recovery  in  private  investment  and 
exports.  However,  political 
instability  and 
uncertainty over fiscal policy continue to affect 
investor  confidence,  the  pace  of  reforms  and 
the absorption of EU funds. Although Romania 
is among the EU countries less exposed to the 
US  economy,  growth  is  forecast  to  be  hit  by 
the  recent  US  tariffs  through  the  trade  and 
investment  channels.  Inflation  is  projected  to 
hover at around 5% in 2025 and 4% in 2026. 
The  current  account  deficit  is  set  to  decline 
in 
gradually,  supported  by  a  moderation 
domestic  demand,  while  remaining  high  at 
about 7% of GDP in 2026. 

Romania’s  vulnerabilities  have  increased 
as  the  twin  government  and  current 
account  deficits  widened,  and  cost 
competitiveness  deteriorated  further  in 
2024.  That  finding  was  highlighted  in  the  in-
depth 
the 
macroeconomic imbalance procedure Romania 
underwent  earlier  this  year.  The  review  also 
stressed  that  policy  progress  was  minimal, 
including  a  marked  deterioration  in  the  fiscal 
stance (2). 

that  was  part  of 

review 

public 

(see  Graph  1.2).  As  a 

Romania’s  high  government  deficit  is  a 
key  driver  of  high  external  borrowing 
needs  and  has  raised  concerns  among 
investors and rating agencies. In 2024, the 
public  deficit  rose  to  9.3%  of  GDP,  mainly  on 
account  of  generous  income  policies  and 
investment 
higher-than-planned 
result, 
spending 
government  debt  increased  rapidly,  reaching 
nearly  55%  of  GDP  by  the  end  of  2024, 
although it remains significantly below the EU 
average  of  81.6%.  The  fiscally  induced  surge 
in domestic demand also increased imports. In 
combination  with  weaker  external  demand, 
this caused the trade deficit to widen, pushing 
the  current  account  deficit  to  8.4%  of  GDP. 
Without  resolute  fiscal  consolidation  and 
the  government  and 
structural 

reforms, 

(2)  European Commission (2025), SWD (2025) 126 final. 

3 

(1) 2024 figures based on actual outturns; 2025 and 
2026 figures are based on MTP projections. 
Source: European Commission 

targets 

primarily 

expenditure 

fiscal-structural 

The  central  pillar  of  Romania’s  strategy 
to  reduce  the  government  deficit  is  the 
medium-term 
plan 
(MTP).  The  plan  caps  annual  net  expenditure 
growth at 5.1% in 2025 and gradually lowers 
it  to  4.3%  by  2028.  In  line  with  the  plan,  the 
Romanian government targets a budget deficit 
of 7% of GDP in 2025. Romania aims to meet 
net 
by 
restraining  spending  growth  across  most 
expenditure  categories.  As  a  first  step,  at  the 
end  of  2024 
the  government  adopted 
emergency  measures  to  save  2.0%  of GDP in 
2025  by  freezing  wages  and  pensions, 
removing 
tax  exemptions,  and 
reforming  the  microenterprise.  In  the  MTP, 
Romania  committed  to  implement  a  set  of 
reforms  and  investments  in  order  to  extend 
the  fiscal  adjustment  period  to  seven  years 
(2025-2031). A key commitment in the plan is 
the  implementation  of  a  tax  reform  in  2025. 
This  should  raise  at  least  1.7%  of  GDP  in 
recurrent  revenues,  alongside  other  reforms 
such  as  spending  reviews  and  improvements 
in tax administration. 

several 

MTP-10-5051001020304050151617181920212223242526Public Balance (% of GDP)Expenditures and Revenues (% of GDP)Public balance (rhs)Total revenuesTotal expenditure 
 
 
 
  
Net  expenditure  growth  is  projected  to 
exceed  the  recommended  maxima. 
In 
2024,  net  expenditure(3)  in  Romania  grew  by 
19.9%  (see  Annex  1).  This  increase  is  due  to 
high  growth  in  current  expenditure  (+18.7% 
relative  to  2023),  in  particular  on  the  public 
sector wage bill (+21.5% relative to 2023) and 
social  transfers  including  pensions  (+19.5% 
relative to 2023).  In 2025, net expenditure is 
forecast by the Commission to grow by 5.4%, 
which  is  above  the  maximum  growth  rate 
The 
recommended 
cumulative  growth  rate  of  net  expenditure  in 
2024 and 2025 taken together is projected at 
26.4%,  which  also  is  above  the  maximum 
recommended  by  the  Council.  Among  the 
reforms  and  investments  underpinning  an 
extension that were due by the 30 April, some 
were not implemented such as the key reform 
of the review of the tax system.   

Council(4). 

the 

by 

Employment improved, but labour 
force participation remains low 

Labour  market  activity  has  improved 
further 
in  2024,  although  significant 
challenges remain. In 2024, the employment 
rate for people aged 20-64 rose to 69.5% but 
remains  among  the  lowest  in  the  EU  (see 
Social Scoreboard in Annex 13). There are two 
reasons  for  this:  one  is  the  low  labour  force 
participation of women, young people, the low-
skilled,  people  with  disabilities  and  Roma 
people  in  the  workforce;  the  second  is  a  high 
number  of  people  engaged  in  subsistence 

expenditure, 

(3)  Net expenditure is defined in Article 2(2) of Regulation 
(EU)  2024/1263  as  government  expenditure  net  of  (i) 
interest 
revenue 
(ii) 
measures, (iii) expenditure on programmes of the Union 
fully  matched  by  revenue  from  Union  funds,  (iv) 
national  expenditure  on  co-financing  of  programmes 
funded  by 
(v)  cyclical  elements  of 
unemployment  benefit  expenditure,  and  (vi)  one-off 
and other temporary measures. 

discretionary 

the  Union, 

(4)  Council Recommendation with a view to bringing an end 
to the situation of an excessive deficit in Romania 
(C/2025/5038) and Council Recommendation of 21 
January 2025 endorsing the national medium-term 
fiscal-structural plan of Romania (OJ C, C/2025/647, 
10.2.2025, ELI: http://data.europa.eu/eli/C/2025/647/oj). 

4 

the 

In 
agriculture  or  working  across  borders. 
addition,  the  employment  rate  among  people 
with a low level of skills (ISCED 0-2) was only 
45.1% in 2024, far below the EU average and 
tertiary-educated 
rate  for 
just  half 
individuals  in  Romania  (see  Annex  10).  At  the 
end of 2024, the unemployment rate edged up 
by 0.2 pps to 5.7%. Youth unemployment also 
rose  in  2024  and  remains  among the  highest 
in the EU, together with the large proportion of 
young people not in education, employment or 
training. 

Graph 1.3: Breakdown of rate of change of 
unit labour costs 

Source: European Commission 

Wages  continued  to  grow  faster  than 
inflation and labour productivity. In 2024, 
nominal  wages  increased  by  about  15%,  on 
top of a similar increase in 2023, according to 
the National Statistical Institute. With inflation 
at  about  6%,  real  wages  rose  by  about  9% 
year-on-year,  well  above  productivity  growth. 
Public-sector  wages  increased  by  18.5%  in 
2024, while the statutory minimum wage was 
raised by more than a third cumulated in 2023 
and  2024.  The  minimum  wage 
is  now 
approaching  the  indicative  reference  value  of 
60% of the median wage suggested by the EU 
Adequate  Minimum  Wage  Directive. 
In 
contrast,  in-work poverty was 10.9% in 2024, 
one  of  the  highest  levels  in  the  EU.  These 
wage  increases  also  drove  up  unit  labour 
costs,  eroding  external  cost  competitiveness 
(see  Graph  1.3).  To  make  changes  in  the 
minimum  wage  more  predictable  and  less 
distortive,  Romania  adopted  a  reform  that 
aligns  increases  with  productivity  gains  and 

-10-50510152013141516171819202122232425*26*Contributions to ULC Y-o-Y change (pps.)Inflation (HICP)Real Compensation/hr.Productivity/hr. (neg. contrib.)ULCULC in EU27 
 
 
 
  
inflation, as outlined in the Romanian recovery 
and resilience plan. 

Convergence towards EU average 
productivity is still held back by 
obstacles to investment  

EU 

Romania’s  fast  convergence  towards 
productivity  masks 
average 
significant 
disparities. 
regional 
Productivity  measured  as  gross  value  added 
per  worker  rose  to  more  than  80%  of  the  EU 
regional 
in  2023.  Nevertheless, 
average 
disparities  remained  large  and  widened  in 
some instances, ranging from 154% of the EU 
average  in  the  Bucharest-Ilfov  capital  region 
to  47%  in  the  North-East  region  (see  Annex 
17).  These  productivity  differences  are  driven 
by  stark  variations 
in  both  skills  and 
educational  attainment,  and  in  investment  in 

Indicators  (5),  Romania  performs  worse  than 
its EU peers on government effectiveness and 
regulatory  quality.  Romania  continues  to  rank 
poorly in Transparency International’s indicator 
of  perceived  corruption  (6).  The  OECD’s  2024 
Economic  Survey  on  Romania  (7)  notes  that 
simplified  business  registration  and  licensing 
has  reduced  firms’  costs.  However,  weak 
management  and  oversight  of  state-owned 
enterprises hinder competition in some sectors 
and  the  creation  of  a  level  playing  field  for 
businesses.  The  business  environment 
is 
suboptimal  administrative 
hampered  by 
capacity 
services,  while 
public 
and 
overregulation  imposes  a  heavy  burden  on 
companies.  In  addition,  competition  in  public 
procurement  remains  insufficient  and  policy 
predictability  is still an issue, not least due to 
the  volatile 
(see  Annex  4). 
Investment and competitiveness are held back 
by other significant shortcomings, presented in 
more detail below. 

tax  burden 

Box 1: 

UN Sustainable Development Goals (SDGs) 

Romania  has  made  improvements  across  several  SDGs,  particularly  on  some  related  to 
environmental  sustainability  (SDGs  2,  6,  11,  12,  13,  14),  although  it  still  lags  behind  the  EU 
averages for most of them. On productivity-related goals, Romania is advancing on decent work 
and  economic  growth  (SDG  8)  and  industry,  innovation  and  infrastructure  (SDG  9),  though  it 
remains  significantly  below  the  EU  averages,  particularly  on  R&D  spending  and  innovation 
indicators. Quality education (SDG 4) is a major concern, with adult digital skills stagnating at a 
low  level  compared  to  the  EU  average.  Progress  on  gender  equality  (SDG  5)  has  been  limited, 
with  the  gender  employment  gap  remaining  considerably  above  the  EU  average  (18.1  pp 
compared to 10 pp in the EU in 2024). On the other hand, Romania has shown positive trends in 
macroeconomic  stability-related  goals  (SDGs  8,  16,  17),  notably  increasing  GDP  per  capita. 
Despite  this,  challenges  remain  regarding  institutional  trust  and  perceptions  of  corruption. 
Measures within Romania’s recovery and resilience plan and through cohesion policy target these 
shortcomings with investments in education, digitalisation, innovation and clean energy. 

capital.  Net  public 

investment 
physical 
supported by EU funds surged in recent years, 
acting as a catalyst for private investment and 
productivity growth across all regions. 

Removing 
limiting 
bottlenecks 
productivity  growth  and  competitiveness 
can  underpin  sustained  EU  convergence. 
the  Worldwide  Governance 
According 

to 

(5)  See Daniel Kaufmann and Aart Kraay (2024). 

Worldwide Governance Indicators, 2024 Home | 
Worldwide Governance Indicators (worldbank.org). 

(6)  See Transparency International. 2025. Corruption 

Perceptions Index 2024. 2024 Corruption Perceptions 
Index - Explore… - Transparency.org 

(7)  See OECD. 2024. ‘Romania’, in OECD Economic Surveys, 
March 2024. OECD Publishing, Paris. OECD Economic 
Surveys: Romania 2024 | OECD 

5 

 
 
 
 
 
Shortages of skilled and non-
skilled workers persist 

labour 

skilled 

Addressing 
shortages 
would boost investment, productivity and 
innovation  capacity.  Shortages  stem  from 
substantial  numbers  of  people  leaving  the 
country to work abroad, low tertiary education 
attainment  (22.5%,  half  the  EU  average;  see 
the  mismatch  between 
Annex  10),  and 
education and the needs of the labour market. 
Although  30%  of  higher  education  students 
pursue  science,  technology,  engineering  and 
mathematics  degrees,  slightly  above  the  EU 
average, 
remains 
the  absolute  number 
insufficient,  particularly  in  information  and 
communication  technology.  Romanian  firms, 
medium-sized 
especially 
enterprises,  continue  to  identify  inadequate 
skills as a key barrier to growth. Shortcomings 
in  the  education  and  training  system  are 
reflected  in  persistently  low  levels  of  basic 
skills.  Vocational  education  and  training  and 
higher  education  programmes  are  still  not 
sufficiently relevant to the needs of the labour 
market,  despite  EU  cohesion  policy  funds 
supporting  skills  development  (see  Annexes  3 
and 12). 

small 

and 

Challenges in accessing finance 

relatively 

Romania’s 
small  banking 
sector,  underdeveloped  capital  markets 
and  weak  capitalisation  make  access  to 
finance difficult for companies.  More than 
half  of  entrepreneurs  perceive  bank  credit  as 
expensive and consider the constrained access 
to finance as a major barrier to doing business 
(see  Annex  4).  As  a  result,  the  largest  source 
of 
is 
investment  finance  for  companies 
internal  funding (72% of total) (see Annex  5). 
Total  bank  assets  in  Romania  are  slightly 
above  50%  of  GDP,  much  lower  than  peer 
economies  in  the  region  and  the  EU  average. 
Although  small,  the  banking  sector  is  well 
capitalised  and  highly  profitable.  However,  it 
has  the  highest  share  of  claims  on  the 
government  among  EU  countries  (about  a 

remain 

markets 

quarter of total assets), which may crowd out 
private  credit  and  limit  access  to  finance.  The 
capital 
relatively 
underdeveloped, with listed shares and private 
bonds  accounting  for  only  11%  of  GDP  and 
0.3%  of  GDP  respectively.  To  address  these 
issues, 
a 
comprehensive  2023-2026  strategy  to  boost 
its  capital  markets,  which  is  being  gradually 
implemented. 

developed 

Romania 

has 

Accelerated investment in poor 
transport infrastructure 

remains 

Despite recent improvements, investment 
in  maintaining  and  improving  transport 
insufficient. 
infrastructure 
Romania’s  transport  network  is  among  the 
shortest  and  least  dense  in  the  EU,  due  to 
previously  inefficient  and  insufficient  public 
investment(8).  Romania 
is  among  the  EU 
countries  that  have  made  the  least  progress 
on  building  the  Trans-European  Transport 
Network  (TEN-T).  Key  motorway  corridors  are 
still underdeveloped, with only 997 km at end-
2023,  accounting  for  just  5.6%  of  the  total 
national road network(9). However, progress in 
building  motorways  is  expected,  with  over 
400 km to be delivered by 2026 from recovery 
and  resilience  plan  and  cohesion  funding. 
Romania’s 
is 
extensive  but  slow,  only  partially  electrified 
(~40%), and relies on ageing track and trains. 
This  causes  significant  delays,  making  trains 
less  attractive  (11)  than  buses  and  coaches. 
Substantial funds are available under cohesion 
funding  and  the  recovery  and  resilience  plan 
for 
progress 
projects, 
implementing  them  has  been  modest  so  far. 
Against  this  background,  it  remains  important 
to  continue  the  implementation  of  planned 
to 
priorities,  with 

infrastructure 

particular 

attention 

railway 

railway 

but 

(10) 

(8)  See World Bank 2023. Romania - Systematic Country 

Diagnostic Update 

(9)  Eurostat 2023 data 

(10)  OECD ECONOMIC SURVEYS: ROMANIA 2024 © OECD 

2024 

(11)  Eurostat 2022 data 

6 

 
 
 
 
raising  the  share  of  renewables  in  electricity 
generation  to  48%,  slightly  above  the  EU 
average  of  47%.  Energy  efficiency  improved, 
with  primary  and  final  energy  consumption 
decreasing by around 3% in 2023. Fossil fuels 
remain  significant  in  the  energy  mix,  with  oil 
and  natural  gas  accounting  for  over  60%  in 
2023, and less than one third from non-fossil 
sources  (20%  renewables,  including  biofuels 
and  9%  nuclear).  Despite  efforts  to  expand 
renewables, further integration is held back by 
regulatory  barriers,  permitting 
issues,  grid 
infrastructure 
and 
limitations, 
projects.  Concerns  over  security  of  energy 
supply 
in  Moldova  and  Ukraine  brought 
additional  challenges.  High  energy  prices 
remain  a  pressing  issue;  despite  a  significant 
decrease  in  the  first  part  of  the  year,  prices 
averaged  103 EUR/MWh 
(vs 
81 EUR/MWh in the EU). These high prices are 
driven  by  factors  affecting  both  consumption 
and  generation,  including reduced  hydropower 
reserves and lower wind output, which created 
a significant shortfall in supply. 

in  2024 

delayed 

investment  in  the  railway  network,  including 
deployment  of  the  European  Rail  Traffic 
Management, and sustainable urban transport, 
and  the  completion  of  TEN-T  networks,  both 
rail  and  road.  Addressing  these  shortcomings 
could  help  reduce  commuting  times:  Romania 
ranks  fourth-to-last(12)  among  EU  countries, 
with  around  43%  of 
the  working-age 
population  spending  more  than  30  minutes 
commuting each day. 

Improving the low levels of 
digitalisation and IT skills 

Additional  digitalisation  would  speed  up 
Romania’s  advance  in  innovation  and 
productivity  growth.  At  only  27.7%,  the 
share  of  population  aged  16-74  with  basic 
digital  skills  is  almost  half  the  EU  average. 
Business  digitalisation  has  improved,  with  the 
proportion of businesses using at least a basic 
level of digital technology rising from 52.5% in 
2022  to  69.1%  in  2024,  just  below  the  EU 
average.  The  adoption  of  advanced  digital 
technologies  is  also  growing.  The  AI  adoption 
rate  more  than  doubled  in  2024  but  remains 
the  lowest  in  the  EU  at  just  over  3%  of 
businesses  (EU  average:  13.5%),  while  cloud 
services  usage  reached  15.5%  in  2023  (vs 
38.9% in the EU). Further progress will depend 
above  all  on  the  availability  of  a  digitally 
skilled  workforce,  particularly  in  the  high-tech 
communication 
and 
technology fields. 

information 

and 

Protracted decarbonisation amid 
energy affordability issues 

Romania  has  made  progress  in  its  green 
transition, but decarbonisation  continues 
efforts  and 
sustained 
require 
to 
investment. 
installed 
1.7 GW  of  solar  energy  and  increased  its 
renewable  energy  installed  capacity  by  14%, 

In  2024,  Romania 

(12)  Eurostat 2022 data 

7 

 
 
 
 
 
Box 2: 

Barriers to private and public investment 

Romania’s  overall  investment  activity  stagnated  in  2024,  reflecting  a  challenging  economic 
environment. According to the National Institute of Statistics, net investment fell by about 5% year-on-year in 
2024. This was due to low investment in construction and equipment and came despite robust public investment, 
particularly in infrastructure projects. 

Private  investors’  confidence  was  dampened  by  weak  external  demand  for  Romania’s  industrial 
exports,  combined  with  high  energy  prices and  uncertainty over  fiscal  policy  in  the  current  political 
climate.  Firms  postponed  or  scaled  down  projects  amid  concerns  about  cost  pressures  and  volatile  market 
conditions.  These  factors  compounded  longer-standing  challenges,  including  shortages  of  skilled  and  unskilled 
labour,  difficulties  accessing  finance,  inadequate  transport  infrastructure  and  lagging  digitalisation.  Romania’s 
financial system also limits investment potential: domestic savings remain comparatively low, capital markets are 
underdeveloped,  and  companies  are  heavily  reliant  on  internal  financing  and  bank  loans.  Although  the  banking 
sector  is  generally  stable  and  plays  an  important  role  in  financing  the  economy,  it  remains  relatively  small 
compared  to  other  EU  countries.  Taken  together,  these  factors  have  curbed  Romania’s  competitiveness, 
discouraging businesses from committing to large-scale capital expenditure. 

Efficient  use  of  EU  funds  could  further  support  Romania’s  development,  although  current  delays 
indicate a need to strengthen investment management. Romania has access to more than EUR 90 billion in 
EU funding across multiple instruments, including approximately EUR 44 billion from structural and cohesion funds 
and  around  EUR 20  billion  from  the  common  agricultural  policy  under  the  2021-2027  multiannual  financial 
framework.  This  complements  EUR 12.1  billion  in  grants  (plus  an  extra  EUR 1.4  billion  from  REPowerEU),  and 
EUR 14.9  billion  in  loans  under  the  recovery  and  resilience  facility.  However,  the  implementation  of  EU-funded 
action is delayed, particularly for infrastructure projects. 

The implementation of Romania’s RRP is significantly delayed. At present, Romania has fulfilled 14 % of 
the  milestones  and  targets  in  its  RRP.  In  addition  to  the  challenges  above,  the  main  bottlenecks  to  EU  funds 
implementation  are  delays  in  procurement,  political  instability,  ineffective  governance  and  insufficient 
administrative capacity. 

These inefficiencies heighten the risk of funding shortfalls. These could force the government to rely more 
heavily  on  the  national  budget,  complicating  fiscal  consolidation  and  increasing  broader  macro-financial  risks. 
Resource allocation fiscal management and could benefit from better external scrutiny of assumptions and cost 
estimates,  particularly  for  large-scale  transport  infrastructure  projects,  alongside  a  more  efficient  capital 
budgeting process. 

While Romania has leveraged the Strategic Technologies for Europe Platform to reallocate some Cohesion Policy 
resources towards this priority, it still has the opportunity to further support the development or manufacturing of 
critical  technologies  in  the  areas  of  digital  and  deep  tech,  clean  and  resource  efficient  technologies,  and 
biotechnologies through other instruments, including the Recovery and Resilience Facility. 

The mid-term review of cohesion policy programmes in 2025 presents an important opportunity to better address 
the  strategic  priorities  of  the  EU  relating  to  competitiveness,  defence,  housing,  water  resilience  and  energy 
transition.  Romania  is  facing  challenges  in  these  areas,  particularly  in  relation  to  education,  employment  and 
social  inclusion,  as  well  as  boosting  regional  competitiveness  through  research  and  innovation,  including  by 
developing or manufacturing critical technologies, increasing water resilience, especially in the east and south of 
the  country  and  the  affordability  of  housing.    Therefore,  Romania  could  benefit  from  reallocation  of  cohesion 
policy funding towards these strategic priority areas, within the mid-term review. 

8 

 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

Romania has made steady progress in its 
economic  development  over  the  past 
decades,  but  there  are  still opportunities 
for further growth and improvement.  Key 
that  could  unlock  higher 
improvements 
productivity,  competitiveness  and  economic 
expansion 
the 
research  and  development  environment;  (ii) 
fostering  a  more dynamic  startup  culture  and 
expanding  alternative  financing  sources;  (iii) 
streamlining 
for 
businesses;  and 
(iv)  accelerating  digital 
transformation. 

(i)  strengthening 

regulatory 

processes 

include: 

Boosting R&D performance 

Romania  has  made 
little  progress 
towards  the  EU  average  in  research  and 
innovation.  The  country  is  classified  as  an 
‘emerging  innovator’  and  has  the  weakest 
innovation  performance,  at  34%  of  the  EU 
average,  as  reported  in  the  2024  European 
Innovation  Scoreboard (13).  This  gap 
is 
influenced  by  several  structural 
factors, 
including  investment  levels,  talent  retention 
and governance frameworks. 

So  far,  Romania’s  economic  model  has 
been  driven  by  relatively  low  labour 
costs,  which  have  attracted  investment  and 
supported  economic  growth.  However,  as 
income levels rise, this model is becoming less 
sustainable,  necessitating  a  shift  towards  a 
more  innovation-driven  economy.  To  remain 
competitive, 
to  consider 
adopting  existing  technologies,  investing  in 
workforce  skills,  and  strengthening  R&D 
capabilities to move up the value chain. 

important 

is 

it 

One  key  challenge  is  underinvestment  in 
research  and  development. 
In  2023, 
Romania recorded the lowest R&D intensity in 
the EU as a share of GDP, with both public and 
private  contributions  falling  short  of  the  EU 
average  (see  Annex  3).  Increasing  support  for 
small  and  medium-sized  enterprises  (which 
currently contribute minimally to national R&D 
efforts)  while  strengthening  public-private 
partnerships  and  establishing  a  dedicated 
national innovation agency could play a pivotal 
role 
investment  and 
in 
innovation 
fostering 
ecosystem.  Romania’s  recovery  and  resilience 
plan  and measures  under the  cohesion policy, 
including  significant  investments  under  the 
Strategic  Technologies  for  Europe  Platform, 
have  already  initiated  steps  in  this  direction, 
and  further  policy  measures  could  build  on 
these efforts.  

increasing  R&D 

a  more 

dynamic 

as 

to  a 

career 

limited 

Talent  availability 
is  another  crucial 
factor  influencing  innovation  capacity. 
The  number  of  researchers  employed  in  the 
public  sector  (1.6  per  1 000  inhabitants)  has 
been  stagnating  since  2022  and  is  less  than 
half the EU average (See Annex 3). Challenges 
development 
such 
opportunities  and  working  conditions  have 
contributed 
talent  drain.  However, 
measures  under  the  recovery  and  resilience 
plan,  particularly  those  aimed  at  attracting 
international  researchers,  are  already  yielding 
positive results. Expanding such initiatives and 
improving the governance of the research and 
innovation  system  could  increase  Romania’s 
ability  to  retain  and  develop  high-skilled 
professionals.  Additionally, 
the 
percentage  of  25-34-year-olds  with  tertiary 
education  –  currently  the  lowest  in  the  EU  – 
would  broaden  the  talent  pool  and  further 
strengthen innovation capacity. 

increasing 

(13)  European Innovation Scoreboard, 2024. 

9 

 
 
 
Romania  has  many  companies  with  the 
potential for business innovation (14), but 
their involvement in innovation activities 
remains  low.  Between  2020  and  2022,  only 
8.8%  of  Romanian  firms  introduced  product 
and  process  innovations  (EU  average:  51.4%) 
(15).  Addressing  barriers  such  as  access  to 
funding,  regulatory  complexity  and  digital 
greater 
unlock 
could 
transformation 
innovation-led  growth.  By 
participation 
in 
creating  an  environment 
supports 
that 
business-driven innovation, Romania can make 
more  of  its  existing  industrial  strengths  and 
accelerate its economic competitiveness within 
the EU. 

Expanding firms’ access to finance 

In  Romania,  companies  predominantly 
rely  on  internal  financing  to  support  their 
investments  and  operations.  Internal  sources 
accounted for the largest share of investment 
finance 
financing 
(73%),  with  external 
representing  26%,  and  the  remaining  1% 
coming  from  intra-group  funding,  namely, 
funding from sister or parent companies based 
in other countries(16). 

The  heavy  reliance  on  internal  funds 
constrains  business  growth,  particularly 
for  small  and  medium-sized  enterprises. 
Where  external  financing  is  available,  it  is 
primarily  in  the  form  of  trade  credit,  which 
make up nearly all external debt financing for 
Romanian  companies  (see  Annex  5).  Despite 
the 
importance  of  external  financing  for 
business expansion and innovation, Romania’s 
capital  markets 
remain  underdeveloped. 
Market-based  finance,  including  equity  and 
bond markets, has significant room for growth, 

(14)  According  to  the  European 

Innovation  Scoreboard, 
2024, in Romania 27% of firms are non-innovators with 
a potential to innovate, compared to the EU average of 
17.8%.  This  means  that  these  enterprises  did  not 
introduce  any  innovation,  and  had  no  ongoing  or 
abandoned  innovation  activities  but  did  consider  to 
innovate. 

(15)  Community Innovation Survey 2022. 

(16)  EIB Investment Survey 2024 

as  the  amount  of  listed  shares  and  corporate 
bonds  remains  well  below  the  EU  average. 
Companies  that  seek  alternative  financing 
often face challenges in accessing capital due 
to  limited  investor  participation  and  a  lack  of 
financial  instruments  tailored  to  their  needs. 
Additionally,  firms  are  often  hesitant  to 
explore  non-traditional 
financing  options, 
which further limits their growth potential. 

has 

introduced 

Romania 
several 
measures  to  foster  a  more  dynamic 
investment  environment.  The  2023-2026 
national  strategy  for  the  development  of 
capital  markets  outlines  steps  to  improve  the 
institutional,  legal  and  regulatory  framework 
to  encourage  capital  markets  development. 
Certain  key  measures  in  this  strategy  have 
been  adopted  but  not  all  have  fully  matured 
yet.  The  recovery  and  resilience  plan  also 
includes measures to support company listings 
on  the  stock  market,  although  demand  has 
been relatively low so far. 

the 

numerous 

Additionally, 
financial 
instruments  under  cohesion  policy  and 
initiatives  under 
recovery  and 
resilience  plan  and  InvestEU  are  focused 
on  improving  small  and  medium-sized 
enterprises’  access  to  finance.  The  debt 
guarantee  scheme  for  the  competitiveness  of 
small and medium-sized enterprises has been 
widely  adopted,  allowing  firms  that  would 
otherwise struggle to secure bank financing to 
access  much-needed 
capital.  However, 
progress in equity-based financial instruments 
has  been  slower,  primarily  due 
the 
underdeveloped  venture  capital  market  and 
startup  ecosystem.  A  newly  established 
National  Development  Bank  aims  to  fill  this 
gap  by  providing  financing  to  high-risk,  high-
potential  businesses  that  lack  private-sector 
funding opportunities. 

to 

Encouraging  greater  participation  from 
institutional  investors,  including  pension 
funds,  in  private  equity  and  venture  capital 
would  also  help  bridge  the  financing  gap  for 
innovative companies. One way to achieve this 
could  be  by  raising  the  regulatory  investment 
limits for pension funds in certain assets. 

10 

 
 
hinder 

expansion 

capital  markets. 

investment  fund  shares 

Low retail investment and weak financial 
of 
literacy 
the 
Romania’s 
Retail 
investment  remains  modest  compared  to 
other EU countries, as many Romanians prefer 
traditional  savings  methods  such  as  bank 
deposits.  In  2023,  18.9%  of  total  household 
financial  assets  in  Romania  were  allocated  to 
(EU 
equity  and 
average: 42.2%). Meanwhile, the proportion of 
assets held in currency and bank deposits was 
significantly  higher  than  the  EU  average,  at 
30.4%  versus  13.4%  (17).  Improving  financial 
literacy  and  introducing  policies  that  attract 
new  savers  and  investors  will  be  essential  to 
broadening  access  to  finance  and  fostering  a 
more  robust  capital  market.  By  addressing 
these structural barriers, Romania could create 
a  more  supportive  financing  environment  for 
businesses,  including  start-ups  and  scale-ups, 
enabling  them  to  invest  in  innovation,  expand 
operations and become more competitive. 

Boosting the adoption of digital 
technologies 

the 

targets 

roadmap 

Digital  technology  adoption  is  improving, 
although  achieving 
for 
digitalisation  of  business  by  2030  and 
the  national  strategic 
implementing 
digital  decade 
remain  a 
challenge.  The  share  of  businesses  with  at 
least  a  basic  level  of  digital  intensity(18)  has 
grown significantly in Romania in recent years, 
though  it  still  slightly  lags  behind  the  EU 
average.  While  progress  has  also  been  made 
in  adopting  advanced  digital  technologies, 
such as AI and cloud services, uptake remains 
well  below  the  EU  average  (see  Annex  3  for 
business 
statistics 
comprehensive 
digitalisation).  Maintaining  and  improving  this 
positive  momentum 
important  because 
is 
digitalisation boosts productivity by facilitating 

on 

communication,  automating  repetitive  tasks 
and  enabling  businesses  to  reach  and  serve 
customers worldwide. 

the 

investment  under 

Several measures are in place to support 
business digitalisation. Examples include: (i) 
an 
recovery  and 
resilience plan to support the take-up of digital 
technologies  by  small  and  medium-sized 
enterprises  (implementation  is  ongoing);  (ii) 
financial  instruments  and  grants  schemes 
under cohesion policy funds; and (iii) the ‘start-
‘entrepreneur  woman’ 
nation’ 
up 
programmes, 
stimulating 
entrepreneurship, innovation and digitalisation. 
Further  strengthening  such  support  measures 
for  firms  to  adopt  digital  technologies  would 
be useful. 

aimed 

and 

at 

Romania’s digital services have gradually 
improved  (19),  although  use  by  the  public 
and businesses is still limited (see Annex 6 
for  comprehensive  statistics  on  digital  public 
services). Digital public services make it easier 
for the public to access government resources 
and information, speed up service delivery and 
enable  governments  to  store  data  more 
securely using cloud technology.  

is 

Romania 
its  efforts, 
continuing 
including via cohesion policy and recovery 
and resilience plan measures, to increase 
digital  skills  (both  in  public  and  private 
environment),  further  digitalise  key  national 
and 
regional  services,  and  set  up  a 
governmental  cloud  and  an  interoperability 
portal  and  framework.  Out  of  three  regional 
data  clouds  programmed  under  Cohesion 
Policy, two are being developed, while sectorial 
clouds are planned for key institutions such as 
the  Ministry  of  Health  and  the  Ministry  of 
Finance.  Additionally,  a  growing  number  of 
local  public  services  are  being  digitalised 
across  municipalities  and  counties,  aiming  to 
improve  accessibility  and  administrative 
efficiency at the local level.   

(17)  European Commission calculations, based on Eurostat. 

(18)  The digital intensity index (DII) is a composite indicator, 
which measures the use of different technologies by 
enterprise, with the aim to assess to which extent EU 
enterprises are digitalised. 

(19)  eGovernment Benchmark 2024 Factsheets. See Annex 
4 for comprehensive statistics on digital public services. 

11 

 
 
 
Reducing the regulatory burden 
and improving predictability would 
help boost innovation and 
productivity 

experience 
companies 
Romanian 
constraints  due  to  regulatory  burden. 
Nearly  a  quarter  of  them  allocate  more  than 
10% of their staff to regulatory  requirements 
–  a  much  higher  share  than  in  higher  income 
EU  countries  like  Finland  and  even  regional 
peers  such  as  Bulgaria  and  Hungary (20)  (see 
also Annex 4). 

Companies  cite  fiscal  and 
legislative 
uncertainty  as  a  barrier  to  investment. 
Romania  competes  globally  for  foreign  direct 
investment,  yet  90%  of  Romanian  firms  cite 
uncertainty as the biggest barrier to long-term 
investment (21). Business associations regularly 
point  out  that  public  consultation  in  the 
legislative  process  is  merely  a  perfunctory 
formality.  For  example,  consultation  periods 
run  for  less  than  24  hours,  preparation  lead 
times  (which  should  last  six  months)  are 
lacking,  government  finances  lack  a  medium-
to-long-term  dimension,  and  dialogue  and 
consultation structures between industries and 
these 
government 
conditions, 
putting 
investments on hold (22). Ensuring the stability 
and 
investment 
of 
framework  by  avoiding  rapid  policy  changes, 
and  consistently  applying  existing  rules,  are 
key 
to  fostering  firms’  productivity  and 
competitiveness. 

are 
companies 

absent.  Under 

predictability 

report 

the 

is 

A  fair,  efficient,  simple  and  transparent 
tax  system 
important  to  ensure 
predictability.  Small  and  medium-sized 
enterprises’  annual  tax  contribution  to  the 
budget  remains 
low,  as  qualifying  small 
businesses  are taxed  at  a  preferential  rate  of 
either  1%  or  3%  of  their  turnover,  depending 

(20)  EIB Investment Survey 2024. 

(21)  EIB Investment Survey 2024. 

on  specific  criteria.  However,  this  system  has 
recently  undergone  reform.  New  legislation 
has  been  introduced  to  reduce  the  scope  of 
the  special  tax  regime  for  micro-enterprises, 
bringing  clarity  to  the  system  and  reducing 
distortions, 
facilitating 
compliance (23). 

while 

also 

is  an 
Access  to  the  single  market 
small  and 
opportunity 
that  many 
medium-sized  enterprises 
in  Romania 
could exploit. Over the last 20 years, trade in 
goods  has  significantly  increased,  although 
Romania’s  trade  integration  in  the  single 
market is below the EU average (28% of GDP 
vs 42% of GDP in 2024(24) – see Annex 4). The 
country’s  accession  to  the  Schengen  Area,  as 
of  1 January  2025,  is  expected  to  facilitate 
foreign  investment  and  improve  trade  flows 
with other EU countries. 

for 

restrictions 

Addressing 
regulated 
restrictively 
professions  could  boost  productivity. 
in  a  number  of 
Regulatory 
professions  remain  stricter  in  Romania  than 
the  EU  average.  This  creates  additional  costs, 
especially 
small  and  medium-sized 
enterprises,  while  also  lowering  productivity 
and restricting labour mobility within the EU by 
making 
for  qualified 
professionals from other EU countries to work 
in  Romania.  This  applies  in  particular  to  civil 
engineers,  architects,  accountants, 
tourist 
guides and notaries. 

it  more  difficult 

The  effects  of  measures  to  improve 
public procurement performance have yet 
to  be  observed.  The  Romanian  public 
face 
procurement 
challenges  over  transparency,  efficiency  and 
compliance  with  EU  standards.  Romania  is 
continuing  with  reforms  (supported  by  the 
Recovery and Resilience Facility) to streamline 
institutional 
procedures 

strengthen 

continues 

system 

and 

to 

(23)  Government Emergency Ordinance No 156/2024 
reduced the eligibility threshold for the special tax 
regime for micro-enterprises from EUR 500 000 to 
EUR 250 000 as of 1 January 2025, and further to 
EUR 100 000 as of 1 January 2026. 

(22)  Foreign Investors Council Romania website (fic.ro); 
Concordia Employers’ Confederation (concordia.ro. 

(24)  ‘Trade integration’ is defined as the average of intra-EU 

imports and intra-EU exports.. 

12 

 
 
 
capacity  by  providing  specialised  training 
programmes to civil servants involved in public 
procurement.  Further  improvements  would  be 
beneficial,  as  those  stated 
in  the  Public 
Procurement  National  Strategy  2023-2027, 
(i)  professionalisation  and 
particularly  on: 
staffing 
(ii) 
predictability  of  calls,  giving  clear  and  stable 
guidance  to  companies,  sufficient  time  to 
submit  quality  offers,  and  proportionality 
between  the  level  of  requirements  and  the 
size  of  funding;  and  (iii)  better  alignment  of 
calls with the financing priorities of small and 
medium-sized enterprises. 

contracting  authorities; 

for 

13 

 
 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

 Affordable energy for industry 
and households 

EUR 103.5 

approximately 

High  energy  prices  pose  a  significant 
challenge  to  Romania’s  competitiveness. 
In 2024, Romania’s wholesale electricity prices 
averaged 
per 
megawatt-hour  (MWh).  This  puts  the  country 
among those with the highest electricity prices 
in the EU, surpassed only by Ireland and Italy. 
Romania  generates  electricity  from  a  mix  of 
natural  gas,  coal,  hydropower,  nuclear  power 
and  renewable  sources.  It  has  committed  to 
phasing  out  coal,  although  the  Ministry  of 
Energy  is  currently  seeking  an  extension  of 
some  planned  decommissioning  steps.  These 
challenges 
by 
further 
congestion  in  cross-zonal  electricity  trading 
capacities  in  the  Central  Eastern  Europe  and 
by  increased  electricity  flows  to  Ukraine  and 
Moldova,  which  are  partly  supplied  from 
South-East Europe.  

intensified 

are 

for 

suppliers 

Price  caps  to  lower  the  cost  of  energy 
bills  need  to  be  better  targeted.  Since 
November  2021,  Romania  has 
capped 
electricity  and  gas  bills  for  households,  small 
businesses,  hospitals,  schools  and  public 
to 
institutions,  covering  consumption  up 
limits.  The  government 
specified  monthly 
compensates  energy 
the 
difference. This scheme was set to end at the 
end  of  March  2025,  but  has  recently  been 
extended 
(until  end  of  June  2025  for 
electricity and until March 2026 for gas). Such 
measures should be better targeted to protect 
the  vulnerable  consumers,  while  providing 
through 
incentives 
buildings 
have 
repeatedly  raised  concerns  about  delays  in 
government  payments,  and  analysts  have 
warned that market distortions created by this 
scheme will be challenging to address. 

for  energy 
renovation. 

savings 
Suppliers 

Flexible  systems  are  key  for  preventing 
and  limiting  spikes  in  electricity  price. 
Both  Romania  and  the  broader  south-east 
Europe region have faced prolonged periods of 
high  electricity  prices,  especially  during  peak 
summer  hours 
in  2024.  Heatwaves  and 
drought  have  reduced  output  from  domestic 
hydroelectric  and  nuclear  plants, 
further 
driving  up  prices.  These  problems  have  been 
compounded  by 
import  capacities, 
limited 
constraints  on  flexible  energy  sources,  and 
electricity  exports  to  Ukraine  and  Moldova. 
While  there  often  was  an  oversupply  of  solar 
energy  during  the  day,  evening  demand  often 
exceeded  the  available  supply,  leading  to 
expensive generation. Addressing these issues 
requires  solutions  that  increase  flexibility  and 
enable  better  use  of  country’s  renewable 
energy  potential.  Short-term  management 
response 
improving  demand-side 
involves 
measures, deploying storage systems (such as 
cross-border 
batteries) 
existing 
electricity 
long-term 
interconnections. 
flexibility 
in 
infrastructure  and  a  larger  role  for  clean 
energy 
to  ensure 
the  energy  mix 
affordability, reliability and sustainability. 

investments 

improving 

Achieving 

requires 

through 

trade 

and 

in 

to 

Taxation  could  be  used 
reduce 
Romania’s relative high electricity prices, 
by shifting the burden from electricity to 
fossil  fuels.  Taxes  and  levies  on  electricity 
account for nearly 26% of the total electricity 
price  for  households  and  around  10%  for 
energy-intensive industries. For gas, taxes and 
levies  account  for  16%  for  households  and 
around  zero  for  energy-intensive  industries. 
These  heavier  taxes  on  electricity  hinder  the 
shift to electricity-based heating and industrial 
processes,  making  it  more  costly.  Shifting  the 
burden  from  electricity  to  fossil  fuels  could 
lead to lower energy prices for consumers and 
increased competitiveness for industries. 

14 

 
 
Energy mix, decarbonisation and 
diversification of generation 
sources 

is 

in 

Romania  has  a  significant 
level  of 
macroeconomically  relevant  fossil  fuel 
subsidies  without  a  planned  phase-out 
before  2030.  These  represent  0.47%  of 
Romania’s  GDP,  similar  to  the  EU  weighted 
average  of  0.49%.  Scaling  down  and  phasing 
out  these  subsidies 
line  with  EU 
commitments  and  can  give  the  government 
more  flexibility  over  its  spending  choices. 
Fossil  fuel  subsidies  that  do  not  address 
energy poverty in a targeted way, that do not 
respond  to  genuine  energy  security  concerns, 
hinder  electrification  and  are  not  crucial  for 
industrial competitiveness could be considered 
for  priority  phase-out.  These  include  decisions 
to  cover  the  losses  incurred  by  fossil  fuel 
companies,  and  support  for  heating  for 
households. 

Romania  has  advanced 
in  the  green 
transition, also given its commitments in the 
recovery  and  resilience  plan  and  cohesion 
policy  programmes.  Romania’s  overall  energy 
mix  is  still  heavily  reliant  on  fossil  fuels, 
despite  the  large  potential  from  renewable 
energy sources. Romania’s energy mix includes 
36%  oil  and  25%  natural  gas,  while 
renewables  (including  biofuels)  accounted  for 
20%.  Decarbonisation  efforts  are  continuing, 
and  Romania  is  making  efforts  to  accelerate 
the  deployment  of  renewable  energy  sources. 
Their  installed  capacity  increased  by  14%  in 
2024), but progress is slower than anticipated, 
with  significant  delays  on  deployment  and 
connection to the grid, on the development of 
storage  solutions,  and  on  increased  demand-
side  flexibility.  Combined  with  security  of 
supply  concerns,  these  delays  risk  slowing 
down  the  phasing-out  of  coal  and  lignite 
generation  plants.  At  the  same  time,  the 
potential  for deployment of  renewable energy 
sources  is  still  being  slowed  down  by  the 
permitting  framework.  However,  simplifying 
the  licensing  and  permitting  procedures  for 
renewables  investments  is  planned  in  2025 
through  a  reform  in  the  Romanian  recovery 
and resilience plan. 

15 

Electricity  generation  from  renewable 
sources  represented  slightly  below  half 
of all generation in 2024, slightly above the 
EU’s overall share. There has been progress in 
increased  installed  capacity  for  solar,  wind, 
hydropower, and decreased for non-renewable 
energy.  Based  on  its  updated  national  energy 
and climate plan, Romania aims to ensure that 
38.3% of renewable energy forms part of the 
gross final consumption of energy by 2030 (up 
from the current 20%). 

and 

and 

plan 

energy 

low-cost 

Further  decarbonising  the  energy  sector 
would  provide  households  and  industry 
with 
boost 
Romania’s  competitiveness.  The  Romanian 
recovery 
contains 
resilience 
measures  to  decommission  coal  and  lignite-
fired  power  plants by  the end  of  2025,  along 
the 
with  other  measures 
to  accelerate 
deployment  of 
renewable  energy.  These 
measures  are  to  be  implemented  through 
reforms to decarbonise the energy system and 
facilitate the use of state land for investments 
in  renewable  energy.  They  are  combined  with 
investments supporting the installation of new 
renewable  power  production  capacity,  and 
storage.  The 
in  electricity 
investments 
measures  are  complemented  by  significant 
investments  included  in  the  Just  Transition 
Fund programme under EU cohesion policy. 

on 

in  the  region. 

decarbonisation 

Advancing 
can 
complement  security  of  supply.  Romania 
plays  a  key  role  in  ensuring  the  security  of 
It  recently 
energy  supply 
supported neighbouring countries Moldova and 
Ukraine,  exporting 
increased  quantities  of 
energy  to  them.  It  is  therefore  pivotal  that 
Romania  maximises  the  use  of  existing 
infrastructure and further develop it. It is also 
important that Romania strengthens its energy 
systems and increases its flexibility, to ensure 
better security of supply and make better use 
of  its  significant  renewable  energy  potential. 
The  recovery  and  resilience  plan  contains 
large-scale  investments  in  electricity  storage 
facilities, which will enable greater flexibility in 
the  Romanian  electricity  system  and  further 
integration of renewable energy. However, the 
challenges  to  energy  system  integration  are 
significant,  with 
times  for 
connecting  renewable  energy  sources  to  the 

long  waiting 

 
grid.  Romania’s  regulatory  framework  still 
presents  barriers  to  the  development  of 
flexible  resources,  hindering  the  participation 
of demand-side response and other distributed 
energy resources. 

to  participate 

Progress  has  been  made  on  the  legal 
framework  for  granting  permits  for 
projects  on  renewables.  Measures  were 
introduced  to  make  it  easier  for  individuals 
and  communities 
in  such 
projects.  This 
involved  a  simplified  grid 
connection  procedure  for  renewable  energy 
sources  for  self-consumers,  as  well  as  digital 
and  transparent  grid  connection  processes. 
However, the permitting process for renewable 
energy  projects  is  not  centralised,  resulting  in 
parallel  procedures  and  duplication  of 
documentation requirements. 

Transition towards a clean 
industry and water resilience 

Romania  has  scope  to  support  the 
its  manufacturing 
decarbonisation  of 
production.  While  production  has  become 
more  energy  efficient,  it  is  not  yet  based  on 
cleaner energy sources. The decarbonisation of 
industrial sectors – in particular manufacturing 
and  energy-intensive  firms  –  is  hampered  by 
high  energy  costs.  This  is  because  electricity 
prices are still largely influenced by fossil fuel 
generation capacities, while replacement fuels 
(e.g.  renewable  hydrogen)  are  not  yet  fully 
developed. The current plans for decarbonising 
the  industry  are  based  on  increasing  the  use 
of renewables, gas and nuclear capacities. The 
recovery  and  resilience  plan  contains  reforms 
that will introduce power purchase agreements 
and  ‘contract  for  difference’  mechanisms  on 
the  energy  market.  This  will  enable  further 
development of renewable energy sources and 
their  uptake  by  industrial  users,  ultimately 
lowering  their  electricity  costs.  Green  public 
support 
procurement,  which 
industry  decarbonisation  on  the  demand  side, 
is not yet commonly used (Annex 8). 

could  also 

Romania  could  speed  up  its  transition  to 
a  circular  economy.  Romania’s  industrial 

16 

transition towards circularity is only at an early 
stage and current investment is inadequate for 
eco-design and packaging waste management 
initiatives  and  for  digital  tools.  Under  its 
recovery and resilience plan, Romania adopted 
its  first  circular  economy strategy,  but  efforts 
are needed to implement the actions included 
in the plan. Romania’s circular use of materials 
has  been  slowly  declining  since  2012  and 
stood at 1.3% in 2023, considerably below the 
EU average of 11.8%. With EUR 0.34 per kg of 
generated  material  consumed 
in  2023, 
Romania’s  resource  productivity  remains  well 
below  the  EU  average  of  EUR 2.23  per  kg. 
Further  measures  to  boost  the  transition  to  a 
circular  economy  and  to  increase  recycling 
rates,  including  for  critical  raw  materials, 
would 
resource  efficiency  while 
reducing  waste.  This  has  clear  potential  to 
increase  competitiveness.  More  efforts  are 
also needed to move away from landfilling of 
waste,  which  remains  significant  (Annex  7). 
Romania  is  at  risk  of  missing  both  the 
municipal  waste  and  the  packaging  waste 
targets  for  2025,  as  well  as  the  2035  target 
for landfilled municipal waste. 

improve 

is 

EU 

industrial 

zero,  but 

industrial  base 

industry-rich 
the 

transitioning 
The 
towards  net 
significant 
challenges  remain.  Romania  maintains  a 
strong  industrial  profile,  with  industry  and 
construction  contributing  around  30%  to  its 
gross  value  added,  positioning  it  among  the 
counties. 
most 
Notwithstanding 
policy 
objectives  in  Romania’s  2023-2027  industrial 
strategy, the country’s manufacturing capacity 
in  net-zero  technologies  remains  modest  and 
fragmented,  due  to  lack  of  a  supporting 
innovation  ecosystem  and  skills.  There  has, 
however, been some growth in the battery and 
storage  sectors.  The  regulatory  environment 
poses  substantial  challenges,  with  lengthy 
licensing processes and insufficient regulatory 
stability  hampering  clean-tech  investments. 
While  Romania  has  allocated  EUR 199  million 
in  grants  through  its  recovery  and  resilience 
plan for battery and photovoltaic cell projects, 
the  country  continues  to  face  structural 
including 
impediments 
scale, 
limited 
local  supply  chains  and 
underdeveloped 
persistent  skills  shortages  that  hinder  the 
expansion  of 
its  net-zero  manufacturing 
capabilities  (Annex  8).  Romania  has  already 

 
allocated  around  EUR 1.4  billion  more  under 
the  cohesion  policy  to  Strategic  Technologies 
for  Europe  Platform-type  investments  (micro-
electronics, 
critical 
technologies in biotech, robotics in healthcare). 

hydrogen, 

green 

risk 

due 

freshwater 

particularly 

prevention  measures 

Romania faces increasing climate-related 
vulnerabilities, 
to 
extreme  weather  events  such  as  floods, 
droughts  and  heatwaves.  Despite  having 
abundant 
resources,  Romania 
faces  serious  challenges  related  to  water 
resilience,  water  pollution,  water  stress  and 
inefficient  water  management.  These  are 
exacerbated  by  climate  change,  ageing 
infrastructure,  delayed 
implementation  of 
and 
flood 
deforestation.  The  economic  losses  due  to 
weather  and  climate-related  extreme  events 
are  estimated  at  EUR 19.6  billion  for  the 
period  1980-2023,  of  which  EUR 7.3  billion 
can  be  attributed  to  extreme  flood  events.  At 
the same time, droughts are placing immense 
pressure  on  availability  of  water  resources, 
threatening  different  economic  sectors  and 
affecting  energy  production  and  security. 
Sustainable  water  management 
is  further 
hampered  by  persistent  underinvestment  in 
critical  infrastructure,  increased  pollution,  low 
wastewater treatment compliance and limited 
water  reuse  policies.  Moreover,  disparities  in 
access  to  drinking  water  and  sanitation, 
particularly  between  urban  and  rural  areas, 
reinforce  regional 
inequalities  and  hinder 
growth that benefits all of society. 

to 

resilience 

supporting 

is 
Strengthening  water 
essential 
sustainable 
growth in Romania. This will require changes 
in the legal  framework, improving governance 
frameworks, scaling up  existing solutions, and 
investing  in  key  areas  such  as  drinking  water 
supply,  wastewater  collection  and  treatment, 
water  reuse  and  the  modernisation  of  water 
infrastructure. 
substantial 
investment needs and low compliance with EU 
water  legislation,  Romania  will  need  to  make 
full  use  of  available  EU  funding,  speed  up 
implementation of existing projects and ensure 
a  more  resilient  and  sustainable  water  sector 
aligned  with  EU  long-term  environmental  and 
economic goals. 

address 

To 

significant 

investment  needs 

Substantial  investment  is  required  to 
support  the  green  transition.  Romania 
faces 
to 
successfully  navigate  its  green  transition  and 
meet  EU  environmental  targets.  The  country 
requires  additional 
the 
transition  to  a  circular  economy  and  for 
pollution  prevention  and  control,  primarily  for 
clean air and noise mitigation measures. Given 
Romania’s high fiscal deficit, these investment 
needs  require  efficient  use  of  EU  funds 
alongside  domestic  resources  to  support  the 
country’s sustainable development objectives. 

investment 

for 

17 

 
 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

Labour market challenges persist 

motherhood.  Improving  coverage  and  quality 
of  early  childhood  education  and  care, 
particularly  in  rural  areas,  could  help  in  this 
regard. 

from 

target 

labour  market 

Despite  an  increasing  employment  rate, 
Romania’s 
faces 
significant  disparities  across  population 
groups  and  regions.  The  employment  rate 
has  been  improving,  at  69.5%  in  2024  vs 
75.5%  in  the  EU,  but  remains  among  the 
in  the  EU  and  below  the  2030 
lowest 
employment 
of  74.7%.  Higher 
employment  is  constrained  by  the  limited 
participation  on the  labour  market  by  women, 
young  people,  the  low-skilled,  people  with 
disabilities  and  people 
the  Roma 
community  (see  Annex  10).  Romania  has 
among  the  highest  rates of  young  people  not 
in  education,  employment  or  training  (NEETs). 
People  with  a  lower  level  of  education  are 
considerably less present on the labour market 
than 
tertiary  education.  The 
employment  of  people  with  disabilities  has 
been  improving  but  remains  a  challenge.  The 
rate  of  Roma  people  in  paid  employment 
continues  to  be  very  low.  Participation  in  the 
jobs market  also varies markedly  from  region 
to  region:  the  Bucharest-Ilfov  region  has  the 
highest employment rate, 18.1 pps higher than 
the South-East, the region with the lowest rate 
(see Annex 17). 

those  with 

in  the 
over 

Getting  women  into  the  labour  market 
remains  key  to  achieving  higher  overall 
employment. Despite a slight improvement in 
2024,  the  Romanian  gender  employment  gap 
is  one  of  the  highest  in  the  EU.  Women’s 
labour  market  faces 
participation 
challenges 
activation 
measures, (particularly for the low-skilled) and 
insufficient 
childhood 
education and care, especially in rural areas. In 
2024,  only  11.4%  of  children  aged  0-3  were 
enrolled in formal childcare, well below the EU 
average  of  39.2%.  Women  continue  to  bear 
the bulk of caring responsibilities in addition to 

inadequate 

access 

early 

to 

skilled 

identify 

there  are 

highlighting 
(European 

labour, 
for 
Higher  demand 
combined  with  a  shrinking  population, 
risks  increasing  labour  shortages  and 
mismatches. While job vacancy rates remain 
low,  Romania  is  among  the  Member  States 
with  the  highest  number  of  occupations  with 
staff  shortages.  At  the  same  time,  for  other 
too  many 
occupational  areas 
labour  market 
workers, 
Labour  Authority, 
imbalances 
2024).  Employers 
lack  of 
appropriate  skills  within  the  workforce  as  one 
of  their  main  business  constraints  and  SMEs 
are 
particularly  affected.  As  Romania 
continues  its  transition  to  a  services-based, 
digital and green economy, high-skilled labour 
demand is predicted to increase up to 30% in 
the next 10 years (CEDEFOP, 2024). Moreover, 
given  the  projected  decline 
in  Romania’s 
working-age  population,  driven  by  an  ageing 
society  and 
these 
shortages  may  get  worse  without  reinforced 
active  labour  market,  upskilling  and  talent 
retention policies. 

outward  migration, 

the 

poorly 

targeted 

labour  market 

and 
Underfunded, 
ineffective 
policies 
coupled  with  low  capacity  of  the  public 
are 
services 
employment 
limiting 
potential 
opportunities. 
employment 
Romania  has  one  of  the  lowest  levels  of 
expenditure in the EU dedicated  for activation 
measures  (0.09%  of  GDP  in  2023,  see  Annex 
10).  Moreover,  spending 
is  predominantly 
focused  on  employment  subsidies  and  only  a 
fraction  goes  to  reskilling  and  upskilling, 
although  this  has  proven  more  efficient. 
Participation 
training  programmes  by 
population  groups  least present  on the  labour 
market  is  low,  indicating  a  need  for  more 
tailored measures. While  employment  support 

in 

18 

 
 
can  contribute  to  employment  outcomes  of 
low-skilled jobseekers, it has a minimal effect 
on  qualified  workers  and  falls  short  of 
addressing  the  country’s  skills  shortages. 
Effectiveness of activation measures is further 
hindered  by  the  low  capacity  of  the  public 
employment  services  to  provide  individualised 
support  pathways  and  effectively  work  with 
employers.  In  the  2021-2027  period,  the 
European  Social  Fund  Plus 
investing 
EUR 153  million  in  boosting  the  capacity  of 
Romania’s public employment services through 
training and additional staff, and by improving 
the  relevance,  quality  and  visibility  of  its 
services. 

is 

Performing education and training 
systems are key for improving 
competitiveness 

figures 

Although  reforms  are  underway,  the 
education and training system is still not 
delivering  the  skills  that  the  country 
needs to improve its competitiveness. The 
2022  PISA  test  shows  that  Romania  has  one 
of the highest rates of 15-year-olds in the EU 
that  lack  a  basic  level  of  proficiency  in 
mathematics  (48.6%  vs  EU:  29.5%),  reading 
(41.7% vs EU: 26.2%) and science (44% vs EU: 
24.2%).  These 
reflect  structural 
challenges,  linked  to  issues  such  as  teaching 
quality  and  the  teaching  profession,  school 
curriculum  and  its  implementation,  and  the 
considerable impact of socio-economic factors 
on  educational  outcomes  (see  Annex  12).  The 
lack of basic skills is especially problematic in 
Romania’s  shrinking  demographic  context, 
hampering the potential of the population and 
the  effectiveness  of 
later  upskilling  and 
reskilling.  Moreover,  74%  of  Romanian  14-
year-olds  lack  the  computer  and  information 
literacy  skills  needed  to  navigate  today’s 
digital  world (EU in 2023: average: 43%). The 
education  laws  adopted  in  2023  and  the 
recovery  and  resilience  plan  seek  to  address 
some of the challenges, but impact is yet to be 
seen,  with  significant  delays  at  times  in 
implementing  its  investments  and  reforms. 
Effective  implementation  of  the  education 
laws  could  improve  teachers’  education,  and 

19 

lead to improving competence-based teaching 
and higher skills levels. 

is  a 

schools, 

segregated 

inequalities. 

in  education  are 

low 
significant  gap 

Inequalities 
large, 
particularly  between  rural  and  urban 
areas. Low and declining participation in early 
childhood  education  and  care  limits  early 
inequalities,  with 
learning  and  worsens 
in  rural 
participation  rates  especially 
areas.  There 
in 
performance  between  schools  in  urban  areas 
and  those  in  rural  areas  (see  Annex  12),  but 
also  between  the  capital  region  and  less 
developed regions, while half of Roma children 
attend 
widening 
educational 
Implementing  the 
national  methodology  to  identify  and  combat 
school  segregation  may  help  address  the 
challenge.  Fragmentation  of 
the  school 
network,  primarily 
in  rural  areas,  affects 
access  to  and  quality  of  education,  including 
the  efficiency  of  spending.  Small  schools  in 
rural  areas  often  run  multi-grade  classes  due 
to the low number of students enrolled, while 
teachers in these schools often cover subjects 
for  which  they  are  not  qualified.  Early  school 
leaving  is  also  particularly  high  in  rural  areas 
(26.5% vs 16.8% at national level in 2024, the 
highest  rate  in  the  EU)  and  for  the  Roma. 
Developing  a  national  strategy  to  reorganise 
school and early childhood education and care 
networks  in  line  with  demographic trends  and 
to  improve  participation  in  the  early  years 
could help increase access to quality education 
and improve spending efficiency. 

training 

education  and 

Romania  is  modernising  its  vocational 
education  and 
training  system,  but 
challenges  persist  in  meeting  the  needs 
labour  market  and  fostering 
of  the 
Dual 
sustainable 
competitiveness. 
vocational 
(i.e. 
vocational  courses  combined  with  work-based 
experience)  has  recently  been  introduced  in 
higher education and the government plans to 
transition 
vocational 
programmes  to  the  dual  system  by  2029-
2030.  With  support  from  the  Recovery  and 
Resilience Facility, vocational schools are being 
equipped  with  practice  workshops,  including 
digital  equipment  and  IT  labs,  which  should 
help improve the attractiveness and quality of 
training. However,  as  of  2024,  only  a  fraction 

secondary 

all 

 
of recent graduates had benefited from work-
based learning (7.2% vs 65.3% in the EU), and 
their  employment  rate  is  lower  than  the  EU 
average  (66.7%  vs  80%  in  the  EU).  To  make 
vocational training more relevant to the labour 
market,  it  is  important  to:  (i)  get  local  firms 
more 
training  provided, 
the 
including  by  offering  financial  incentives  or 
support to SMEs and (ii) better translate skills 
intelligence  –  now  available  through  the 
ReCONECT  platform  –  into  evidence-based 
policymaking and adapted curricula. 

involved 

in 

technology, 

engineering 

Labour  market  trends  call  for  increasing 
the  number  of  STEM  professionals, 
improving the quality of higher education 
and making it more relevant to the needs 
of employers. While Romania has one of the 
highest shares  of  university  students  in  STEM 
and 
(science, 
mathematics)  (30.1%,  vs  EU  27.1%  in  2023), 
the  low  participation  rate  in  higher  education 
(23.2% among people aged 25-34, EU: 44.2% 
in  2024)  means  that  the  absolute  number  of 
professionals  trained  in  STEM  is  insufficient 
(including  in  information  and  communication 
technology).  Increasing  the  number  of  STEM 
(crucial  for  competitiveness) 
professionals 
requires  improving  the  level  of  basic  skills 
(including  the  percentages  of  top-performing 
students),  while 
improving  curricula  and 
training  methods  to  focus  more  on  practical 
knowledge,  skills  and  application.  This  in  turn 
will 
tertiary  attainment,  which 
continues to be held back by low participation 
in  university  programmes.  Reasons  for  low 
participation  include  access  challenges  for 
students  from  disadvantaged  backgrounds, 
high  early  school 
leaving  and  a  still 
considerable number of final year students not 
sitting  the  baccalaureate  exam.  Furthermore, 
drop-out  from  university  programmes 
is 
widespread.  Two 
large-scale  programmes 
funded  by  the  European  Social  Fund  Plus  are 
under  way 
for 
disadvantaged students and increase retention 
rates. 

improve 

improve 

access 

to 

Improving  lifelong  learning  is  vital  not 
only  to  create  better  job  opportunities 
and  boost  competitiveness,  but  also  to 
prevent  inequalities  from  getting  worse. 
Participation in lifelong learning has improved 

20 

the 

back 

17.4%, 

despite 

remains 

affected 

economy’s 

insufficient 

disproportionately 

However, 
it 

considerably (up from 5.8% in 2016 to 19.1% 
in 2022), surpassing the 2030 national target 
recent 
of 
improvements 
to 
address  fast-changing  skills  needs,  and  over 
72%  of  adults  lack  basic  digital  skills,  which 
holds 
digital 
transformation.  Moreover,  people  with  low 
levels  of  education  or  living  in  rural  areas 
(already 
by 
poverty  and  fewer  employment  opportunities) 
show  much  lower  engagement  in  upskilling 
their  disadvantage. 
reinforcing 
activities, 
Addressing  barriers  with  flexible 
training 
options  and  financial  support  can  help  bridge 
the  skills  gap  and  promote  more  inclusive 
access  to  lifelong  learning  opportunities.  As 
Romania  progresses  on  implementing  new 
national  strategies  in  adult  learning  (largely 
supported by the European Social Fund Plus), it 
could  place  more  focus  on  strengthening 
cross-governmental coordination and  boosting 
the private sector’s role in upskilling. This could 
involve  stricter  and  better  enforced  training 
requirements,  as  well  as  targeted  financial 
support for companies 

Strong social protection and 
access to essential services are 
crucial for social fairness 

inequality 

Tackling  widespread  poverty, 
social 
remains  a 
exclusion  and 
critical  challenge.  Despite  recent  progress, 
Romania continues to have one of the highest 
rates for adults and children at risk of poverty 
or social exclusion in the EU (27.9%, vs an EU 
average  of  21.0%,  see  Annex  11).  Significant 
disparities  exist  between  the  capital  and  the 
regions,  with  a  high  prevalence  of  the 
phenomenon  in  rural  areas  (see  Annex  17). 
increased  risks  for  vulnerable 
There  are 
groups, 
including  people  with  disabilities, 
Roma,  the  low-educated,  part-time  workers, 
and  partially 
In-work 
poverty is nearly double the EU average. With 
high depth of poverty and inequality levels, as 
well  as  low  adequacy  and  coverage  of  the 
social  protection  system,  Romania  needs 
focused  efforts  to  progress  in  reducing  the 

the  self-employed. 

 
local  authorities,  adopting 
capacity  of 
secondary 
legislation  and  conducting  a 
comprehensive  assessment  of  staffing  needs 
to address the increasing demand for qualified 
care  workers  and  the  development  of  home 
and community-based care services. 

to 

of 

poor 

costs 

reduce 

housing 

percentage 

Housing 
housing 
and 
conditions  continue  to  be  problematic.  A 
significant 
Romanians, 
especially  those  at  risk  of  poverty,  spend  a 
large  portion  of  their  income  on  housing  (see 
Annex  11).  Housing  costs  are  a  heavy  burden 
for  almost  two  out  five  households.  Romania 
has  one  of  the  highest  severe  housing 
deprivation  and  overcrowding  rates  in  the  EU, 
especially  in  rural  areas.  Confronting  these 
challenges  requires  strategic  investments  in 
housing  infrastructure  and  policies  to  boost 
affordability and availability, especially for the 
most vulnerable. The national housing strategy 
aims 
deprivation, 
overcrowding  and  the  proportion  of  people, 
especially  marginalised  communities,  living  in 
informal 
its 
implementation  is  essential,  along  with  the 
2022-2027 strategy for the social inclusion of 
the  homeless.  Cohesion  policy  funds  support 
the  construction  and  renovation  of  energy-
efficient  and  social  housing  and  help  local 
authorities 
informal  settlements. 
territorial  planning  and  housing 
Stronger 
regulations,  particularly  adopting 
inclusive 
zoning  (requiring  a  minimum  percentage  of 
affordable  and/or  social  housing  units  in  new 
developments),  can  help  alleviate  housing 
challenges. 
in 
affordable  and  decent  housing  could  be 
considered, on top of those in the recovery and 
resilience  plan  (investments  in  housing  for 
young  people,  teachers/health  workers)  and 
funded from cohesion policy funds. 

settlements. 

Accelerating 

investments 

Additional 

regulate 

boost 

Addressing  these  challenges  will  help 
Romania 
social 
convergence.  The  second-stage  analysis  in 
line  with  the  Social  Convergence  Framework 
points  to  challenges  for  Romania  that  may 
affect  social  convergence  in  relation  to  its 

upward 

number  of  people  at  risk  of  poverty  or  social 
exclusion by 2030. Improving the efficiency of 
the  social  protection  system  and  ensuring 
stable  funding,  effective  monitoring  and 
impact  evaluation  would  limit  poverty  and 
social  exclusion,  especially  in  smaller  rural 
communities.  EU-funded  programmes  provide 
considerable  support,  including  through  the 
establishment of 2 000 integrated community 
services  in  rural  areas  and  the  strengthening 
of health, educational and social services. 

Ensuring  effective  access  to  quality 
health  remains  a  challenge,  particularly 
in  rural  areas  and  for  vulnerable  groups. 
Romania  has  high  levels  of  unmet  medical 
needs,  primarily  due  to  high  out-of-pocket 
costs(25)  for  households,  with  significant 
disparities between income groups and urban-
rural  populations.  Staffing  shortages,  mainly 
due to the emigration of health professionals, 
further  restrict  care  availability,  which 
is 
focused  on  hospitals.  The  limited  involvement 
of  primary  care  in  disease  prevention,  early 
diagnosis,  and  treatment  leads  to  a  high 
number  of  avoidable  hospitalisations.  As  a 
result,  premature  mortality  is  among  the 
highest in the EU. Addressing these challenges 
requires  sufficient  financing  and  optimised 
allocation,  shifting  the  focus  towards  primary 
care  and  community-based  services.  Digital 
tools  would  further  improve  the  efficiency  of 
the system. 

Romania’s  long-term  care  services  are 
underfunded,  with  public  expenditure  far 
below  the  EU  average.  Only  a  small 
percentage  of  people  over  65  receive  home 
care. Rural and remote areas face scarce, low-
quality  services.  A  shortage  of  qualified  staff 
exacerbates  the  problem,  with  most  high-
intensity  care  provided  by  informal  carers. 
Affordable,  quality  community-based  care  is 
crucial  to  support  deinstitutionalisation  and 
independent  living  for  people  with  disabilities. 
Romania’s  2024  reform  of  social  assistance 
services aims to improve financing and service 
quality. 
contingent  on 
appropriate  governance  and  implementation 
structures.  These  involve  strengthening  the 

success 

Its 

is 

(25)  On-the-spot payments to healthcare providers.  

21 

 
 
social  situation  and  labour  market  and  to 
education and skills(26). 

(26)  European Commission, SWD(2025)95. The analysis 

relies on all the available quantitative and qualitative 
evidence and the policy response undertaken and 
planned. 

22 

 
 
 
 
KEY FINDINGS 

To  boost  competitiveness,  sustainability  and 
social fairness, Romania would benefit from: 

•  urgently 

chapter; 

accelerating 

the 
implementation  of  the  recovery 
and  resilience  plan,  including  the 
REPowerEU 
swiftly 
implementing cohesion policy, taking 
advantage  of  the  opportunities  under 
the  mid-term  review  and  making 
optimal  use  of  EU 
instruments, 
including 
InvestEU  and  STEP,  to 
improve competitiveness  

•  pursuing 

a 

resolute 

fiscal 
consolidation path  by implementing 
fiscal-
the  national  medium-term 
structural  plan  and  further  supporting 
it  with  additional  corrective  measures 
to  rein  in  the  high  fiscal  and  current 
account deficits; 

•  strengthening  the  research  and 
by 
development 
private 
public 
increasing 
investment, 
talent 
focusing 
retention  and  supporting  business-
driven innovation;  

environment, 
and 

on 

•  expanding 

access 

to 
firms’ 
external  financing  sources,  by 
improving  access  to  capital  markets, 
encouraging  greater  participation  by 
institutional  investors,  and  increasing 
financial literacy; 

•  accelerating 

the 

digital 
transformation,  by  speeding  up 
digital infrastructure, supporting firms’ 
digitalisation,  improving  digital  public 
services  for  citizens  and  businesses, 
and  working  towards  meeting  the 
digital decade targets;  

•  streamlining  regulatory  processes 
ensuring 

businesses, 

for 

by 

predictability 
deregulating 

and 
legislative 
certain 
transparency, 
professions 
the 
capacity  of  contracting  authorities 
dealing with public procurement;  

improving 

and 

•  making 

further 

on 
progress 
decarbonising 
the  energy  and 
manufacturing sectors, with a focus 
on  removing  regulatory  barriers  to 
renewable  energy  deployment  and 
integration; 

•  shifting  the  currently  high  fiscal 
burden  away  from  electricity  and 
incentivise 
onto  fossil  fuels 
the 
electrification  and  encourage 
deployment  of  cleaner  electricity-
based  solutions 
for  heating  and 
industrial processes;  

to 

•  ensuring  energy  affordability  for 
industry  and  households  without 
distorting  energy  prices  formation,  by 
through 
reducing  energy  demand 
energy  renovation  of  (residential  and 
non-residential) 
by 
supporting  clean  diversified  supply 
(through renewables and grids) and by 
providing  targeted  support  to  increase 
competitiveness  and  shield  vulnerable 
consumers;  

buildings, 

• 

taking concrete steps to phase out 
fossil fuel subsidies;  

•  supporting  the  transition  towards 
a  circular  economy  and  net-zero 
manufacturing 
facilitating 
investments  in  these  sectors  to 
increase 
resource  efficiency  and 
competitiveness; 

by 

• 

support 
to 
convergence, 

upward 
increasing 

social 
the 

23 

 
 
effectiveness  and  targeting  of 
active labour market policies  to  tackle 
persistent  gaps  in  the  labour-market 
participation  of  women,  young  people, 
people with disabilities, the low-skilled 
and Roma.  

•  ensuring  equal  access  to  quality 
education  and  improving  the  level 
of  basic  skills,  including  digital 
skills, across different segments of the 
population and geographical areas; 

•  making  vocational  education  and 
training more attractive and more 
relevant  to  the  needs  of  the 
labour  market  and  promoting 
engagement  in  adult  learning  to 
tackle 
by 
private-sector 
strengthening 
involvement  and  cross-governmental 
coordination; 

shortages, 

skills 

•  strengthening  efforts  to  reduce 
high 
levels  of  poverty  and 
material  deprivation  by  improving 
the  efficiency  of  the  social  protection 
system  and  access  to  social  services 
and  affordable  housing,  especially  for 
vulnerable  population  groups  such  as 
the Roma; 

•  ensuring  effective  access 

to 
quality  health  and  long-term  care 
services,  particularly  in  rural  areas 
and  for  vulnerable  groups,  by  further 
strengthening  primary  and  preventive 
healthcare.  

24 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Fiscal 

A1.  Fiscal surveillance and debt sustainability 

A2.  Taxation 

Productivity 

A3. 

Innovation to business 

A4.  Making business easier 

A5.  Capital markets, financial stability and access to finance 

A6.  Effective institutional framework 

Sustainability 

A7.  Clean industry and climate mitigation 

A8.  Affordable energy transition 

A9.  Climate adaptation, preparedness and environment 

Fairness 

A10.  Labour market 

A11.  Social policies 

A12.  Education and skills 

A13.  Social Scoreboard 

A14.  Health and health systems 

Horizontal 

A15.  Sustainable development goals 

A16.  CSR progress and EU funds implementation 

A17.  Competitive regions 

LIST OF TABLES 

General government balance and debt 
Net expenditure growth 
Net expenditure (outturn and forecasts), annual and cumulated deviations vis-à-vis the recommendation 
Defence expenditure 

A1.1. 
A1.2. 
A1.3. 
A1.4. 
A1.5.  Macroeconomic developments and forecasts 
A1.6. 
A1.7. 
A1.8. 
A1.9. 

General government budgetary position 
Debt developments 
Implementation of reforms and investment underpinning the extension 
Projected change in age-related expenditure in 2024-2040 and 2024-2070 

27 

30 

30 

40 

42 

42 

47 

52 

60 

65 

65 

71 

78 

84 

84 

89 

94 

98 

99 

102 

102 

104 

111 

31 
31 
32 
32 
32 
33 
33 
35 
38 

 
 
 
Financial indicators 
Romania. Selected indicators on administrative burden reduction and simplification 
Digital Decade targets monitored through the Digital Economy and Society Index 
Key clean industry and climate mitigation indicators: Romania 
Key Energy Indicators 
Key indicators tracking progress on climate adaptation, resilience and environment 

A1.10.  Fiscal Governance Database Indicators 
A3.1. 
Key innovation indicators 
A4.1.  Making Business Easier: indicators. 
A5.1. 
A6.1. 
A6.2. 
A7.1. 
A8.1. 
A9.1. 
A13.1.  Social Scoreboard for Romania 
A14.1.  Key health indicators 
A16.1.  Selected EU funds with adopted allocations - summary data (million EUR) 
A16.2.  Summary table on 2019-2024 CSRs 
A17.1.  Selection of indicators at regional level in Romania 

LIST OF GRAPHS 

Tax revenue shares in 2023 
Tax wedge for single and second earners, % of total labour costs, 2024 
R&D intensity (GERD as a percentage of GDP) 
Proportion of high-growth enterprises 
Share of enterprises with innovation activities 

A2.1. 
A2.2. 
A3.1. 
A3.2. 
A3.3. 
A4.1.  Making Business Easier: selected indicators. 
A5.1. 
Net savings-investment balance 
A5.2. 
International investment position 
A5.3. 
Capital markets and financial intermediaries 
A5.4. 
Composition of NFC funding as a % of GDP 
A5.5. 
Composition of HH financial assets per capita and as a % of GDP 
A6.1. 
Trust in justice, regional / local authorities and in government 
A6.2. 
Indicators of Regulatory Policy and Governance (iREG) 
A6.3. 
Participation rate of 25-64 year olds in adult learning (%) by occupation 
A7.1. 
GHG emission intensity of manufacturing and energy-intensive sectors, 2022 
A7.2.  Manufacturing industry production: total and selected sectors, index (2021 = 100), 2017-2023 
A7.3. 
A8.1. 
A8.2.  Monthly average day-ahead wholesale electricity prices and European benchmark natural gas prices (Dutch TTF) 
A8.3. 
A9.1. 
A9.2. 
A10.1.  Key labour market indicators 
A10.2.  Employment rate by educational attainment, ALMP expenditure and skills mismatch 
A11.1.  Percentage of people at risk of poverty or social exclusion (AROPE) and its components 
A11.2.  Housing cost overburden and overcrowding rate (%) 
A12.1.  Early leavers from education and training by degree of urbanisation 
A14.1.  Life expectancy at birth, years 
A14.2.  Treatable mortality 
A15.1.  Progress towards the SDGs in Romania 
A16.1.  Distribution of RRF funding in Romania by policy field 
A16.2.  Distribution of cohesion policy funding across policy objectives in Romania 
A17.1.  Labour productivity per hour 

Romania's installed renewable capacity (left) and electricity generation mix (right) 
Direct dependency(1) on ecosystem services(2) of the gross value added generated by economic sector in 2022 
Investment needs and gaps in EUR million, at 2022 constant prices 

Greenhouse gas emissions in the effort sharing sectors, 2005 and 2023 
Retail energy price components for household and non-household consumers, 2024 

LIST OF MAPS 

A17.1.  Regional Competitiveness Index 2.0, 2022 edition 
A17.2.  House prices relative to income, 2019 
A17.3.  Climate change impact on GDP 

28 

39 
46 
51 
59 
60 
62 
70 
77 
83 
98 
100 
107 
108 
112 

40 
40 
42 
43 
43 
47 
52 
53 
53 
55 
56 
60 
60 
63 
66 
67 
68 
71 
71 
74 
80 
81 
84 
87 
89 
93 
94 
99 
99 
102 
104 
105 
112 

111 
113 
115 

 
 
 
FISCAL 
ANNEX 1: FISCAL SURVEILLANCE AND DEBT SUSTAINABILITY 

This  Annex  contains  a  series  of  tables  relevant  for  the  assessment  of  the  fiscal  situation  in  Romania, 
including how  Romania is responding  to Council  recommendations issued  under  the  reformed  Economic 
Governance Framework. 

The  reformed  framework,  which  entered  into  force  on  30  April  2024(27),  aims  to  strengthen  debt 
sustainability  and  promote  sustainable  and  inclusive  growth  through  growth-enhancing  reforms  and 
priority investments. The medium-term fiscal-structural plans (hereinafter, MTPs or plans) constitute the 
cornerstone  of  the  framework,  setting  the  budgetary  commitment  of  Member  States  over  the  medium 
term. The latter is defined in terms of net expenditure growth, which is the single operational indicator for 
fiscal surveillance.  

Romania submitted its plan on 25 October 2024. The plan covers the period until 2031, and presents an 
extended fiscal adjustment over seven years, which is underpinned by a set of reforms and investments 
to which Romania committed with the aim of improving potential growth and fiscal sustainability. On 21 
January  2025,  the  Council  adopted  the  Recommendation  endorsing  Romania’s  plan(28).  On  21  January 
2025, the Council also adopted the Recommendation to correct the excessive deficit in Romania  (29). The 
corrective  net  expenditure  path  recommended  by  the  Council  under  the  excessive  deficit  procedure  is 
consistent with the path set out in the plan.  

Romania  did  not  yet  submit  an  Annual  Progress  Report.  The  assessment  of  the  implementation  of  the 
Council Recommendations to correct the excessive deficit and endorsing Romania’s plan is carried out on 
the  basis  of  outturn  data  from  Eurostat,  the  Commission  Spring  2025  Forecast  and  other  information 
available to the Commission. 

The Annex is organised as follows. First, developments in government deficit and debt are presented 
based  on  the  figures  reported  in  table  A1.1.  Then,  the  assessment  of  the  implementation  of  the 
Council Recommendation to correct the excessive deficit and of the Council Recommendation 
endorsing  the  plan  follows,  based  on  the  relevant  figures  presented  in  Tables  A1.2  to  A1.7,  including 
data  on  defence  expenditure.  Further  on,  the  progress  made  in  the  implementation  of  the  set  of 
reforms  and  investments  underpinning  the  extension  of  the  fiscal  adjustment  period(30)  is  assessed 
taking into account the information presented in Table A1.8. 

The Annex also provides information on the cost of ageing and the national fiscal framework. Fiscal 
sustainability risks are discussed in the Debt Sustainability Monitor 2024.(31) 

(27)  Regulation (EU) 2024/1263 of the European Parliament and of the Council (EU) on the effective coordination of economic policies 
and on multilateral budgetary surveillance, together with the amended Regulation (EC) No 1467/97 on the implementation of the 
excessive deficit procedure, and the amended Council Directive 2011/85/EU on the budgetary frameworks of Member States are the 
core elements of the reformed EU economic governance framework. 

(28)  OJ C, C/2025/647,. 10.2.2025, ELI: http://data.europa.eu/eli/C/2025/647/oj 

(29)  Council Recommendation with a view to bringing an end to the situation of an excessive deficit in Romania, C/2025/5038. 

(30)  According to the Regulation., the required fiscal adjustment (in particular to put or keep the government debt ratio on a plausible 
downward path by the end of the adjustment period or keep it at prudent levels below 60% of GDP; and to bring or maintain the 
deficit below 3% of GDP over the medium term) should be completed in four years but may be extended over a period to up seven 
years  if  the  Member  State  commits  to  a  relevant  set  of  reforms  and  investments.  The  adjustment  period  of  Romaniahas  been 
extended to seven years based on the set of reforms and investments laid out in detail in Annex II of the Council recommendation 
endorsing the plan of Romania 

(31)  European Commission (2025) ‘Debt Sustainability Monitor 2024,’ European Economy-Institutional Papers 306. 

29 

 
 
 
 
 
 
Developments in government deficit and debt  

Table A1.1:  General government balance and debt 

Source: Commission Spring 2025 Forecast (COM) 

Romania’s  government  deficit  amounted  to  9.3%  of  GDP  in  2024.  Based  on  the  Commission’s  Spring 
2025  Forecast,  it  is  projected  to  decrease  to  8.6%  of  GDP  in  2025.  The  government  debt-to-GDP  ratio 
amounted  to  54.8%  of  GDP  at  the  end  of  2024  and,  according  to  the  Commission,  it  is  projected  to 
increase  to  59.4%  of  GDP  end-2025.  Although  Romania’s  public  debt  remains  relatively  moderate 
compared  to  the  EU  average,  it  has  seen  in  recent  years  a  very  steep  increase,  due  to  persistent  large 
deficits  driven  by  discretionary  spending,  including  high  wage  and  pension  hikes  in  2023  and  2024, 
elevated domestically financed public investment, and higher financing costs. The debt ratio is projected 
to increase further in 2025.  

Developments in net expenditure 

The  net  expenditure(32)  growth  of  Romania  in  2025  is  forecast  by  the  Commission(33)  to  be  above  the 
recommended  maximum,  corresponding  to  a  deviation  of  0.1%  of  GDP.  Considering  2024  and  2025 
together, the cumulative growth rate of net expenditure is also projected to be above the recommended 
maximum cumulative growth rate, corresponding to a deviation of 1.7% of GDP. This high net expenditure 
growth  is  due  to  high  growth  in  government  current  expenditure  in  2024  (+18.7%  relative  to  2023),  in 
particular on the public sector wage bill (+21.5% relative to 2023) and social transfers including pensions 
(+19.5%  relative  to  2023).  The  cumulative  deviation  in  2024  and  2025  is  above  the  0.6%  of  GDP 
threshold. 

Table A1.2:  Net expenditure growth 

Source: Council Recommendation to correct the excessive deficit in Romania, Commission's calculation based on Commission 
Spring 2025 Forecast (COM) 

(32)  Net expenditure is defined in Article 2(2) of Regulation (EU) 2024/1263 as government expenditure net of (i) interest expenditure, 
(ii) discretionary revenue measures, (iii) expenditure on programmes of the Union fully matched by revenue from Union funds,  (iv) 
national  expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of  unemployment  benefit 
expenditure, and (vi) one-off and other temporary measures.  

(33)  European Commission Spring 2025 Forecast, European Economy-Institutional paper 318, May 2025. 

30 

2024OutturnAPRCOMAPRCOM1General government balance% GDP-9.3n.a.-8.6n.a.-8.42General government gross debt% GDP54.8n.a.59.4n.a.63.3Variables20252026RECAPRCOMRECAPRCOM2024n.a.n.a.19.9%n.a.n.a.n.a.20255.1%n.a.5.4%20.2%n.a.26.4%20264.9%n.a.8.1%26.0%n.a.36.6%AnnualCumulative*Growth rates 
 
  
 
 
  
 
 
General government defence expenditure amounted to 1.9% of GDP in 2021, 1.8% of GDP in 2022 and 
1.7%  of  GDP  in  2023.  According  to  the  Commission  2025  Spring  Forecast,  expenditure  on  defence  is 
projected to amount to 1.7% of GDP in 2024 and remain at the same level in 2025. 

Table A1.3:  Net expenditure (outturn and forecasts), annual and cumulated deviations vis-à-vis the 
recommendation 

* The growth rate for 2024 is not a recommendation but serves to anchor the base, as the latest year with outturn data when 
setting the net expenditure path is year 2023.  
Source: Commission Spring 2025 Forecast and Commission's calculation 

Table A1.4:  Defence expenditure 

Source: Eurostat (COFOG), Commission Spring 2025 Forecast and Commission's calculation 

31 

2023202420252026OutturnOutturnCOMCOM1Total expenditurebn NAC652.0764.8819.9881.42Interest expenditurebn NAC30.641.148.557.23Cyclical unemployment expenditurebn NAC0.00.00.00.04Expenditure funded by transfers from the EUbn NAC54.428.931.033.25National co-financing of EU programmesbn NAC8.18.86.26.26One-off expenditure (levels, excl. EU funded)bn NAC0.00.00.00.07=1-2-3-4-5-6Net nationally financed primary expenditure (before discretionary revenue measures, DRM)bn NAC558.8686.0734.3784.98Change in net nationally financed primary expenditure (before DRM)bn NAC127.248.350.69DRM (excl. one-off revenue, incremental impact)bn NAC16.111.3-9.010=8-9Change in net nationally financed primary expenditure (after DRM) bn NAC111.137.059.611Outturn / forecast net expenditure growth% change19.88%5.4%8.1%12Recommended net expenditure growth*% change14.3%5.1%4.9%13=(11-12) x 7Annual deviationbn NAC31.22.023.614 (cumulated from 13)Cumulated deviationbn NAC31.233.256.815=13/17Annual balance% GDP1.80.11.116=14/17Cumulated balance% GDP1.81.72.817p.m. Nominal GDP  bn NAC1604.61760.11900.02054.7Variables2021202220232024202520261Total defence expenditure% GDP1.91.81.71.71.71.72of which: gross fixed capital formation% GDP0.40.40.30.30.30.3 
 
  
 
 
 
             
 
 
Table A1.5:  Macroeconomic developments and forecasts 

Source: Commission Spring 2025 Forecast (COM) 

Table A1.6:  General government budgetary position 

Source: Commission Spring 2025 Forecast (COM) 

32 

2024OutturnAPRCOMAPRCOM1=7+8+9Real GDP% change0.8n.a.1.4n.a.2.22Private consumption% change6.0n.a.2.0n.a.2.33Government consumption expenditure% change0.7n.a.0.6n.a.1.04Gross fixed capital formation% change-3.3n.a.2.3n.a.3.65Exports of goods and services% change-3.1n.a.1.8n.a.2.86Imports of goods and services% change3.8n.a.2.9n.a.3.2Contributions to real GDP growth 7- Final domestic demandpps2.9n.a.2.0n.a.2.68- Change in inventoriespps0.8n.a.0.0n.a.0.09- Net exportspps-2.9n.a.-0.6n.a.-0.310Output gap% pot GDP-1.7n.a.-2.0n.a.-1.511Employment % change1.8n.a.0.6n.a.0.712Unemployment rate%5.4n.a.5.3n.a.5.213Labour productivity% change-1.0n.a.0.8n.a.1.514HICP % change5.8n.a.5.1n.a.3.915GDP deflator% change8.8n.a.6.5n.a.5.816Compensation of employees per head% change16.6n.a.8.9n.a.6.917Net lending/borrowing vis-à-vis the rest of the world% GDP-7.2n.a.-6.5n.a.-5.520252026Variables2024OutturnAPRCOMAPRCOM1=2+3+4+5Revenue34.1n.a.34.6n.a.34.5of which:2- Taxes on production and imports11.0n.a.11.1n.a.11.03- Current taxes on income, wealth, etc.6.0n.a.6.1n.a.6.24- Social contributions11.8n.a.12.0n.a.12.05- Other (residual)5.4n.a.5.4n.a.5.28=9+16Expenditure 43.5n.a.43.2n.a.42.9of which:9- Primary expenditure41.1n.a.40.6n.a.40.1of which:10- Compensation of employees 11.2n.a.10.8n.a.10.511- Intermediate consumption6.2n.a.6.1n.a.6.012- Social payments13.6n.a.13.5n.a.13.113- Subsidies0.8n.a.0.8n.a.0.814- Gross fixed capital formation5.7n.a.6.1n.a.6.515- Other3.5n.a.3.4n.a.3.316- Interest expenditure2.3n.a.2.6n.a.2.818=1-8General government balance-9.3n.a.-8.6n.a.-8.419=1-9Primary balance-7.0n.a.-6.0n.a.-5.620Cyclically adjusted balance-8.8n.a.-7.9n.a.-7.921One-offs0.0n.a.0.0n.a.0.022=20-21Structural balance-8.8n.a.-7.9n.a.-7.923=22+16Structural primary balance-6.4n.a.-5.4n.a.-5.1Variables (% GDP)20252026 
 
  
 
 
 
  
 
 
Table A1.7:  Debt developments 

* End of period. 
** The 'snow-ball' effect captures the impact of interest expenditure on accumulated general government debt, as well as the 
impact of real GDP growth and inflation on the general government debt-to-GDP ratio (through the denominator). The stock-flow 
adjustment includes differences in cash and accrual accounting (including leads and lags in Recovery and Resilience Facility grant 
disbursements), accumulation of financial assets, and valuation and other residual effects. 
Source: Commission Spring 2025 Forecast and Commission's calculation (COM) 

Implementation of the set of reforms and investments underpinning the 
extension of the adjustment period  

Table  A1.8  includes  information  on  progress  towards  implementation  of  the  set  of  reforms  and 
investments underpinning the extension of the adjustment period that Romania committed to deliver in its 
medium-term fiscal-structural plan as endorsed by the Council. 

Among the reforms and investments underpinning an extension that were due by the 30 April 2025, some 
were  not  implemented  such  as  the  key  reform  of  the  review  of  the  tax  system.  (for  details,  see  Table 
A1.8).  

The  set  of  reforms  and  investments  underpinning  the  extension  of  the  adjustment  period  is  composed 
primarily  of  commitments  from  the  RRP,  supplemented  by  a  few  new  measures.  The  special  pension 
reform, anchored in RRP milestone 215, aims to realign special pensions with the contributory principle by 
tightening  eligibility,  recalculating  benefits  based  on  contributions  and  seniority  and  taxing  the  non-
contributory portion of large pensions. The tax framework review builds on RRP commitments to overhaul 
corporate  income  tax,  personal  income  tax,  social  contributions,  value  added  tax,  excise  duties  and 
property taxation with the objective of delivering at least 1.3% of GDP in additional revenue in 2025 and 
a  permanent  impact  of  1.7%  of  GDP  once  fully  in  force  by  the  end  Q1  2025.  The  microenterprise  tax 
reform, aligned with NRRP milestone 206, gradually reduces the turnover threshold for microenterprises 
from EUR 500 000 at end-2024 to EUR 250 000 and then to EUR 100 000 from 1 January 2026. The tax 
administration reform is designed to raise 0.5% of GDP by 2026 through rollout of an early warning tool 
to detect VAT fraud in intra-community, transit and domestic transactions and strengthened oversight of 
tax planning mechanisms for large taxpayers. 

While the RRP milestone on the special pension reform was initially deemed as satisfactorily fulfilled after 
an October 2023 reform (which entered into force on 1 January 2024), the Romanian Constitutional Court 
struck down a key provision on progressive taxation of high special pensions on 19 December 2024. As a 
result, Milestone 215 remains unfulfilled. The authorities did not submit the preparatory report on the tax 
reform and this reform is delayed relative to the timeline included in the MTFSP. Likewise, Romania has 
not reported on two measures linked to the tax administration reform that were due in Q1 2025, namely 
an  early‐warning  tool  to  detect  VAT  fraud  in  intra-community,  transit  and  domestic  transactions,  and 
strengthen  oversight  of  the  tax  planning  mechanism  for  large  taxpayers.  The  amendment  to  the 

33 

2024OutturnAPRCOMAPRCOM1Gross debt ratio* (% of GDP)54.8n.a.59.4n.a.63.32=3+4+8Change in the ratio (pps. of GDP)5.9n.a.4.6n.a.3.9Contributions**3Primary balance7.0n.a.6.0n.a.5.64≈5+6+7'Snow-ball' effect-2.0n.a.-1.5n.a.-1.7of which:5- Interest expenditure2.3n.a.2.6n.a.2.86- Real growth effect-0.4n.a.-0.7n.a.-1.27- Inflation effect-4.0n.a.-3.3n.a.-3.28'Stock-flow' adjustment0.9n.a.0.1n.a.0.020252026Variables 
 
  
 
 
 
 
 
 
  
 
microenterprise  tax  regime  did  enter  into  force  at  end-December  2024,  lowering  the  annual  turnover 
threshold from EUR 500 000 to EUR 250 000 and paving the way for a further cut to EUR 100 000 from 
1 January 2026. 

34 

 
 
 
 
 
Table A1.8:  Implementation of reforms and investment underpinning the extension 

(Continued on the next page) 

35 

Pension reform (Existing RRP measure: C8.R,0.M214)The normative act reforming the general pension system entered into force on 1 st September 2024.Q3 2024Completed* Specialpensionreform(ExistingRRP measure: C8.R6,0.M215)Entry into force of a  normative act revising specialpensions to align them with thecontributory principleQ3 2024Not completed1Minimum wage reform (Adding to RRP milestone C13.R5,0.M392)Entry into force of the act regulating the new minimum wage setting system.Q1 2025Completed**Step 1: Adoption and entry into force of the new legal framework for the remuneration of public officials, ensuring the public wage bill remains, as a share of GDP, in line or below that included in the projections of the medium-term fiscal plan.Step 2: Rigorous adherence to the projections of the MTFSP regarding the public wage bill as a share of GDP, for all the years covered by the plan.Microenterprisetaxreform(AddingtoRRPmilestoneandtargetC8.R4,0.M206)Preparation and entry into force by the end of Q1-2025 of a law amending the taxation regime of microenterprises, to bring it in line with milestone 206 of the RRP.Q1 2025Completed* Step 1: Preparation of a Report, building on the World Bank report on taxation (prepared under RRP milestone 205) establishing two scenarios for the tax reform, with fully specified measures. Measures should cover all areas of taxation and social contributions.Q1 2025Not completedStep 2: Government adoption of memorandum including specific tax measures based on the above-mentioned report. Measures should be in line with milestones 207, 208, and 237 of the RRP, and objective 1 of the tax reform.Q1 2025Not completedStep 3: Government organises a public debate on the amendments to the Fiscal Code.Q1 2025Not completedStep 4: Implementation and entry into force of the measures on 1 April 2025 at the latest.Q1 2025Not completedStep 5: As referenced in milestone 237 of the RRP, developing an IT system to implement the automated property assessment model for real estate taxation, supporting the new market value-based approach, and operationalising a specialized department with respon sibilities in the field of property taxation.Q4 2025Step 1: Implementation of an early detection mechanism for VAT fraud associated with intra-community purchases, transits, and domestic transactions.*Q1 2025Step 2: Implementation of anti-fraud modules for analysing and identifying transactions suspected of carousel fraud (CARUSEL, INDFISC, TRANSPRISC, COMRISC, and RORISC).Q2 2025Step 3: Completion of 7 digitalisation projects, including e-Invoice, SAF-T, e-AMEF, e-DU, e-VAT, DAC-7, and CESOP.Q2 2025Step 4: Strengthen oversight of the tax planning mechanism for large taxpayers and the extension of this mechanism to medium-sized taxpayers after the implementation of APIC.Q1 2025StatusMeasureKey stepsRecommended implementation dateReview of the tax framework (Adding to RRP milestones and targets C8.R4,0.M207, C8.R4,0.M208, C8.I7,0.M237)Tax administration reform [Adding to RRP milestones and targets C8.I2,0.M225 C8.I2,0.M226, C8.I2,0.M226aC8.I3,0.M227]Public sector wage reform (Adding to RRP milestone C14.R4,0.M420)When the government deficit is below 5 % of GDP: 
 
 
  
 
Table (continued) 

The progress of each backward-looking key step (i.e., those scheduled for completion by 30 April 2025) is classified as either 
‘completed’ or ‘not completed’. The status of forward-looking key steps not yet completed remains blank, as these will be 
assessed by the Commission in future APRs. 
* These measures are included in Romania’s RRP and have been assessed as fulfilled as part of a payment request under the RRF. 
** This measure corresponds to milestone 392 of Romania’s RRP, whose assessment is still pending in the context of the fourth 
payment request under the RRF and the table does not prejudge its assessment. 
(1) This measure corresponds to milestone 215 of Romania’s RRP, which was initially deemed as satisfactorily fulfilled, but 
subsequently reversed.  
Source:  Council Recommendation endorsing the plan of Romania and Commission’s assessment. 

36 

Step 5: Integrating and consolidating internal data bases; developing a new system based on the 360-degree profiling concept of taxpayers; ensuring interoperability with the information systems of state institutions.Q4 2025Step 6: Implementation of a modern collection mechanism that provides taxpayers with the option to choose recurring payment of declared tax liabilities.Q4 2026Step 7: Establishment and operationalisation of a specialised structure comprised of experts in IT, econometrics, and financial analysis to quantification risks and tax gaps.Q4 2025Step 1: Create a database and establish a control mechanism for increases exceeding 20 % compared to the average costs of public institutions.Q4 2025Step 2: Conduct yearly thematic expenditure reviews and apply conclusions and recommendations in the budget planning process, in line with the established annual scheduleYearlyStep 3: Expand the categories of goods and services that will be procured centrally, focusing on priority sectors with high expenditure levels. Increase the share of procurement procedures awarded by ONAC, relative to all procurement procedures awarded by all con tracting authorities in Romania, by an average of 0,25 % per year over the next seven years.Gradually from Q4 2024 to Q2 2030Step 4: Operationalise the specialised structure within the Ministry of Finance to monitor public expenditure systems using performance indicators and participate in specialised training courses organised with the support of the World Bank Q4 2025Step 5: Establish a legal framework for implementing performance indicators at the level of central and local public authorities. Q4 2025Business Financing ReformReform of the Institutional Framework for Allocating Funds to Support the Business Environment-Private Equity Investment Fund for SME Support.Q2 2026Step 1:  Conducting a diagnostic analysis of the operational expenditure system, the revenue system, and the mechanisms for updating fees, as well as the subsidy system for economic operators.Q3 2025Step 2: Establishing the regulatory framework to enhance the operational expenditure system, improve the management of public assets, introduce expendi ture rules, and reduce dependence on the general government budget by Q4 2025.Q4 2025Tax administration reform [Adding to RRP milestones and targets C8.I2,0.M225 C8.I2,0.M226, C8.I2,0.M226aC8.I3,0.M227]Restructuring the Public Spending System/ Spending Reviews (Adding to RRP milestones C8.R3.M202, C8.I5,0.M234, C13. R5,0.M392, and C14.R1,0.T403Reform of the Expenditure System for State-Owned Enterprises 
 
  
 
Cost of ageing  

Total age-related spending in Romania is projected to rise from about 17% of GDP in 2024 to 
around  18%  in  2040  and  to  decline  to  16%  in  2070  (see  Table  A1.9).  Age-related  expenditure 
would be  the second lowest in the EU in 2070, at nearly 10 pps below the average spending level. The 
small overall decline by 2070 is due to changes in pension expenditure, with spending on healthcare and 
long-term care expected to rise.  

Public  pension  spending  is  projected  to  be  broadly  stable  after  an  initial  increase  and  to 
eventually  decline  as  of  the  2060s.  Because  of  an  expected  increase  in  future  years,  pension 
expenditure would be 1 pp of GDP higher in 2040 compared to 2024. In the longer term, spending would 
start declining, though, decreasing by 1.6 pps of GDP by 2070 as compared with the 2024 level. 

Public healthcare expenditure is projected at 4.5% of GDP in 2024 (below the EU average of 
6.6%)  and is  expected to  increase by 0.5 pps by  2040  and  by a further  0.2 pps  by  2070 (34). 
Public expenditure on long-term care is projected at 0.4% of GDP in 2024 (well below the EU average of 
1.7%) and is expected to increase by 0.2 pps of GDP by 2040 and by a further 0.2 pps of GDP by 2070. 
The projected increase is due to an ageing population but is relatively low due to underdeveloped long-
term care services (35).  

Table A1.9:  Projected change in age-related expenditure in 2024-2040 and 2024-2070 

Source: 2024 Ageing Report (EC/EPC). 

National fiscal framework 

The  Romanian  Fiscal  Council  (RFC)  is  a  medium-sized  independent  fiscal  institution  with  a 
fairly broad mandate but reports difficulties in recruiting staff. Its members have long mandates 
of  9  years  with  no  staggering,  increasing  the  demands  on  a  non-partisan  nomination  procedure.  At  the 
Secretariat,  less  than  half  of  the  20  available  positions  have  been  filled,  indicating  severe  recruitment 
problems, possibly linked to relatively low pay level. Its autonomy is further restricted by the requirement 
that  staff must  be  Romanian  citizens  and  that  payments  have to  be  approved  by  another institution. It 
reports  high  visibility  in  media,  despite  having  given  no  press  conferences  or  having  participated  in  no 
parliamentary hearings in 2022. The policy dialogue with the government could also be further developed. 

Despite ongoing efforts, including through the recovery and resilience plan, the management 
of  public  investment  in  Romania  remains  weak  across  the  entire  investment  cycle.  Long-term 
investment planning is carried out mainly by line ministries with limited coordination across sectors and 

(34)  Key performance characteristics, recent reforms and investments of the Romanian healthcare system are discussed in Annex 14 

‘Health and health systems’.     

(35)  The adequacy and quality of the Romanian long-term care system are covered in Annex 11 ‘Social policies’.    

37 

RO16.61.00.50.20.01.718.3ROEU24.30.50.30.4-0.30.925.2EURO16.6-1.60.70.40.0-0.516.0ROEU24.30.20.60.8-0.41.325.6EUage-related expenditure 2024 (% GDP)change in 2024-2040 (pps GDP) due to:age-related expenditure 2040 (%GDP)pensionshealthcarelong-term careeducationtotalage-related expenditure 2024 (% GDP)change in 2024-2070 (pps GDP) due to:age-related expenditure 2070 (%GDP)pensionshealthcarelong-term careeducationtotal 
 
          
 
 
limited involvement by the Ministry of Finance. A long-term development strategy (‘Romania 2030’) was 
produced in 2018. Although it identifies key objectives at the national level, it is insufficiently aligned with 
sectoral  strategies and EU-financed priorities which represent a significant portion of public investment. 
Yet, in 2022, a new management tool for developing, monitoring and reporting budget programs across 
line ministries was introduced, as well as improvements to the prioritisation of large investment projects 
(36). At the same time, mechanisms to support funding availability beyond the annual budget year, such as 
a  mechanism  for  appropriations  beyond  the  budget  year  and  restrictions  in  diverting  funds  to  other 
purposes, are missing. Ex-post reviews on the effectiveness and efficiency of investment projects are rare 
and not systematically integrated into future planning.  

The  Romanian  Ministry  of  Finance  has  integrated  an  analysis  of  the  potential  macro-fiscal 
impacts of a set of future natural catastrophes in its 2022-2024 Fiscal Budgetary Strategy. 
This analysis presents findings from model-based simulations of the potential economic and fiscal impact 
of these future events, including possible effects on the budget deficit and public debt. This assessment 
constitutes a positive step towards incorporating climate risks into fiscal planning. 

Table A1.10:Fiscal Governance Database Indicators 

The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level based 
on i) the legal base, ii) how binding the rule is, iii) monitoring bodies, iv) correction mechanisms, and v) resilience to shocks. The 
Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
Source: Fiscal Governance Database 

(36)  In the Recovery and Resilience Plan, measures R.3 [200]: Government Decision no. 467 as published in the Official Journal no. 368 
of April 14 2022 and, respectively, measure R.3 [199]: the Emergency Government Decision no. 187/2022 as published in the 
Official Journal no. 1271/29.12.2022. 

38 

2023RomaniaEU AverageCountry Fiscal Rule Strength Index (C-FRSI)19.0114.52Medium-Term Budgetary Framework Index (MTBFI)0.800.73 
 
          
 
 
 
 
 
 
ANNEX 2: TAXATION 

This  annex  provides  an 
indicator-based 
overview of Romania’s tax system. It includes 
information on: (i) the tax mix; (ii) competitiveness 
and  fairness  aspects  of  the  tax  system;  and  (iii) 
tax collection and compliance. 

Romania collects relatively low tax revenues 
as  a  percentage  of  GDP  across  the  board. 
Romania’s  total  tax  revenue  as  a  percentage  of 
GDP  (26.2%)  was  significantly  below  the  EU 
average  (39%),  continuing  a  trend  from  previous 
years.  This  is  particularly  true  for  labour  and 
capital  taxes,  while  the  figure  for  consumption 
taxes is  closer  to the  EU average.  Romania  has  a 
high  fiscal  deficit  (6.6%  of  GDP  in  2023),  which 
for  a  combination  of 
highlights 
the  need 
increases  that 
expenditure  cuts  and  revenue 
support growth.  Recurrent property tax revenue as 
a  percentage  of  GDP  (0.4%)  is  more  than  50% 
below  the  EU  average  (0.9%).  Therefore,  there  is 
scope to increase revenue from recurrent property 
taxation,  which  is  one  of  the  least  detrimental  to 
economic  growth.  Revenue  from  personal  income 
taxes as a percentage of GDP is only 27% of the 
EU  average  and  presents  an  opportunity  for 
greater  use,  given  the  fiscal  and  budgetary 
situation. Environmental tax revenues were slightly 
above  the  EU  average,  at  2.2%  of  GDP  in  2023, 
compared  with  2.0%.  This  figure  relies  heavily  on 
energy  taxation.,  while  resource  and  pollution 
taxes are underused, and transport taxes are well 
below  the  EU  average.  Romania  applies  emission 
charges  (mainly  on  air  and  water  quality),  user 
charges  (on  hunting  and  fishing  and  mineral 
extraction)  and  a  volumetric  charge  on  water 
abstraction and disposal.  

Graph A2.1: Tax revenue shares in 2023 

Source: Taxation Trends Data, DG TAXUD 

Romania  has 
low  taxation  of  corporate 
income  and  offers  special  tax  arrangements 
and 
incentives  for  businesses.  Corporate 
income tax is taxed at a flat rate of 16%, which is 
lower  than the  EU  average,  with the  effective  tax 
rate  consistently  remaining  at  16.3%  from  2021 
to 2023. In addition, Romania offers a special tax 
scheme  for  microenterprises,  which  has  recently 
been  reformed  to  reduce  its  scope  in  2025  and 
2026 in line  with the  recovery and resilience plan 
(RRP)).  Tax  exemptions  for  corporations  are 
available  in  six  trade  zones  to  help  attract 
investment. Romania also offers tax incentives for 
R&D  activities  such  as  deductions  of  additional 
qualifying 
income, 
accelerated  depreciation,  tax  credits  (up  to  20%) 
and  exemptions  (for  up  to  10  years)  from 
corporate 
income  tax  on  profits  from  R&D 
activities  like  patents.  There  are  also  green  tax 
incentives  for  investment  in  renewable  energy 
sources. Despite these incentives, Romania had the 
lowest R&D intensity in the EU in 2023 (0.52% of 
GDP). 

expenses 

taxable 

from 

Graph A2.2: Tax wedge for single and second 
earners, % of total labour costs, 2024 

The tax wedge for second earners assumes a first earner at 
100% of the average wage and no children. For the full 
methodology, see OECD, 2016, Taxing Wages 2014-2015. 
Source: European Commission 

 In 2024, the labour tax wedge in Romania is 
higher  than  the  EU  average  for  low-income 
workers,  and  lower  than  the  EU  average  for 
high-income  workers.  This  high  tax  wedge  for 
low-income  earners  provides  fewer  incentives  for 
lower-skilled  workers  to  participate  in  the  labour 
force (37). The Gini-coefficient reduction after taxes 

(37)  The  tax  wedge  is  defined  as  the  sum  of  personal  income 
taxes  and  employee  and  employer 
social-security 
contributions  net  of  family  allowances,  expressed  as  a 

39 

51.226.921.944.437.318.3Tax revenue shares in 2023, Romania (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital37.438.338.338.338.32025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - ROSingle earner - EU averageSecond earner -  ROSecond earner -  EU average 
 
     
 
     
 
 
 
in  which 

resolution and its compliance with standards 
for the exchange of information between tax 
administrations.  One  way 
tax 
administrations resolve disputes is by participating 
in  mutual  agreement  procedures  (MAPs).  The 
number  of  MAPs  conducted  in  a  Member  State  is 
linked to the size and structure of its economy, but 
it may also serve as indicator of the efficiency of 
its tax system. Romania had no open MAP cases at 
the  end  of  2023  but  reported  rejecting  25  cases 
during  the  year,  which  is  an  unusually  high 
number.  What 
the  context  of 
information  exchanges  between  tax  authorities, 
Romania 
significant 
recommendations  from  the  OECD  peer  review 
process  on  the  effectiveness  of  its  Directive  on 
Administrative  Cooperation  2/Common  Reporting 
Standard 
account 
information, 
including  ensuring  compliance  by 
reporting  financial  institutions.  The  review  also 
called  on  Romania  to  ensure  better/sufficient 
compliance  with  data  security  standards 
in 
taxation. 

exchanges 

is  more, 

financial 

received 

has 

of 

in 

through  digitalisation 

The reform of the National Agency for Fiscal 
Administration 
is 
essential  for  improving  the  fiscal  situation. 
Several key RRP milestones remain to be achieved 
in  2025.  The 
launch  of  a  fully  operational 
electronic risk register and e-invoicing system and 
the  improvement  of  the  information  exchange 
platform  should  contribute  to  better  performance 
of the tax administration. 

and  social  transfers  in  Romania  in  2023  was  6.3 
(7.7  points), 
the  EU  average 
points,  below 
indicating  that  the  flat  rate  system  is  relatively 
ineffective  in  terms  of  its  redistributive  capacity 
and  reducing  income  inequality.  (38)  The  relatively 
lower  tax  wedge  on  higher  incomes  favoured  a 
rapid  convergence  of  GDP  growth  rates,  resulting 
from  higher  labour  force  participation  and  better 
incentives  to  improve  levels  of  education  in  the 
middle  class.  (39)  There  are  no  gift,  inheritance 
(except  in  very  specific  circumstances)  or  wealth 
taxes  levied  in  Romania.  However,  in  a  positive 
step  towards  reducing  Romania’s  fiscal  deficit, 
sectoral personal income tax exemptions in the IT, 
construction,  agriculture  and  food  sectors  have 
also  been  removed  with  effect  from  January 
2025.  EUROMOD  simulations  (40)  estimate  that 
this  will  raise  EUR 5  billion  in  revenue.  It  is 
estimated  that  these  reforms  will  have  negligible 
effects on progressivity.  

in 

This 

2023. 

highlights 

The  VAT  gap  in  Romania  has  consistently 
been  the  highest  in  the  EU,  standing  at 
33.7% 
the 
in  addressing 
ineffectiveness 
administration’s 
compliance  issues  and  the  informal  economy. 
However, through digitalisation measures outlined 
in  the  RRP,  Romania  aims  to  reduce  the  VAT  gap 
by 5% by 2026. There is still an opportunity to use 
EU  funding  to  invest  in  real-time  VAT  reporting 
tools to further reduce the VAT gap. It is clear that 
the measures  implemented  as  part  of  the  reform 
of  the  tax  administration  through  digitalisation 
have  already  contributed  to  a  reduction 
in 
outstanding tax arrears from 2021 to 2022 (6.1%)  

Another indicator of the effectiveness of the 
tax  administration  is  how  it  handles  dispute 

percentage of total labour costs (the sum of the gross wage 
and social-security contributions paid by the employer). 

(38)  EUROMOD  simulations  suggests 

that 

increasing 

the 
progressivity of the PIT system by introducing three tax rates 
(6%  up  for  incomes  up  to  33%  of  the  average  taxable 
income, 12% for incomes up to the average taxable income 
and 18% for incomes above) would generate almost EUR 12 
billion  of  additional  tax  revenue.  From  a  distributional  point 
of view such a reform is progressive, with richer households 
mostly paying for this reform.  

(39)  Sistemul fiscal din România: prosperitate, convergență și 
sustenabilitate fiscal-bugetară” at Studiul „Sistemul fiscal 
din România: prosperitate, convergență și sustenabilitate 
fiscal-bugetară” - Confederația Patronală Concordia 

(40)  Estimations were performed by the European Commission, 
Joint Research Centre, with the EUROMOD tax-benefit 
microsimulation model. 

40 

 
 
 
 
 
PRODUCTIVITY 
ANNEX 3: INNOVATION TO BUSINESS  

and 

research 

shortages 

Romania’s 
innovation 
performance remains weak, and the gap with 
the  EU 
is  widening  due  to  significant 
and 
skills 
underinvestment, 
governance  deficiencies.  Romania  is  classified 
as  an  ‘emerging  innovator’  and  has  the  weakest 
innovation performance in the European Union, at 
34%  of  the  EU  average  according  to  the  2024 
European Innovation Scoreboard (41). Its innovation 
rate  is  also  below  the  average  for  emerging 
innovators.  In  2023,  Romania’s  R&D  intensity 
stood  at  just  0.52%  of  GDP  compared  to  the  EU 
average  of  2.24%,  the  lowest  in  the  EU  and  far 
behind  Romania’s  own  target  of  reaching  2%  of 
GDP  by  2027 (42).  Poor  overall  R&I  performance 
exacerbates  existing  regional  disparities  (see  also 
Annex  17:  Competitive  regions),  and  the  system 
suffers  from  governance  deficiencies  with  no 
the  overall 
single  agency 
management  or  coordination  of  innovation  policy. 
Romania’s  digitalisation  of  businesses  has 
improved  considerably  over  the  past  year  but 
indicators,  below  the  EU 
remains,  on  most 
average.  Its  contribution  to  the  Digital  Decade 
targets can be further improved. 

responsible 

for 

Science and innovative ecosystems 

Despite some improvement, Romania’s public 
research  base  remains  underdeveloped  due 
to  underinvestment  and  a  fragmented 
funding  system.  Public  R&D  expenditure  has 
been  declining,  with  2023  figures  showing  it  at 
only  0.2%  of  GDP,  merely  a  quarter  of  the  EU 
average of 0.72%. This situation, exacerbated by a 
fragmented  public  research  system,  has  resulted 
in  a  weak  foundation  for  public  science (43). 
Notwithstanding  these  challenges,  Romania  has 

(41)  2024 European Innovation Scoreboard, country profile: 

Romania https://ec.europa.eu/assets/rtd/eis/2024/ec_rtd_eis-
country-profile-ro.pdf. eThe scoreboard 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). 

(42)  Government of Romania (2022), Strategia Națională de 

Cercetare, Inovare și Specializare Inteligentă 2022-2027. 

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

Romanian Research and Innovation System. 

41 

increase 

made  some  progress  towards  enhancing  the 
quality  of  its  research  system,  as  evidenced  by  a 
strong  33.8 percentage  point 
in  the 
number  of  scientific  publications  among  the  top 
10%  most  cited  since  2017,  yet  the  country 
remains at the bottom of the EU classification (44). 
Substantial  underfunding,  coupled  with  a  lack  of 
inadequately 
multiannual  budgeting  and  an 
developed system for performance-based funding, 
has  created  challenging  conditions  for  research 
and innovation. 

Graph A3.1: R&D intensity (GERD as a percentage 
of GDP) 

Source: Eurostat, 2024 

renewed  commitment 

The  government’s 
to 
increase public R&D expenditure to 1% of GDP by 
2027(45) 
is  a  positive  development  towards 
remedying the situation, as are plans to introduce 
a  biannual  funding  mechanism  that 
includes 
regular  evaluation.  The  implementation  of  these 
measures will require close monitoring. 

Business innovation 

Innovation  performance  is  weak  due  to  low 
private investment, inefficient public support 
policies  and  limited  collaboration  between 
science and business. It is crucial to address 
these  weaknesses  to  sustain  current  strong 
economic  growth,  driven  mainly  by  foreign 
investments (46).  Business  enterprise 
direct 

(44)  Science, Research and Innovation Performance of the EU, 

2024. 

(45)  National strategy for research, innovation and intelligent 
specialisation 2022-2027 and National RDI plan 2022-
2027- PNCDI IV. 

(46)  ROINNOVATE: Building Blocks for an Innovation Agency in 

Romania, World Bank, 2024. 

01232010201520172019202020222023% of GDPEURO 
 
 
 
             
 
 
expenditure  on  R&D  (BERD)  has  stagnated  in 
recent  years;  in  2023  it  stood  at  only  0.32%  of 
GDP, approximately one fifth of the EU average of 
1.49%.  The  situation  is  particularly  critical  for 
SMEs,  which  invest  very  little  on  R&D  (0.05%  in 
2021  vs  the  EU  average  of  0.38%).  At  the  same 
time,  foreign-controlled  enterprises  contribute 
significantly  to  value  added  (20.5%  vs  13.3%  for 
the  EU),  and  net  foreign  direct  investment  flows 
into Romania largely exceed the EU average (3.1% 
compared  to  1.9%).  As  a  result  of  low  private 
investment  and  inefficient  public  support  policies, 
Romanian  enterprises  innovate  less  and  grow 
more  slowly  than  their  competitors  in  other  EU 
countries,  and 
the  number  of  high-growth 
enterprises is low and decreasing (47). 

Graph A3.2: Proportion of high-growth enterprises 

Source: Community Innovation Survey, 2022 

Romania has by far the lowest share of innovative 
enterprises  in  the  EU.  From  2020  to  2022,  only 
8.8%  of  Romanian  firms  submitted  product  and 
process  innovations  compared  to  the  EU  average 
of  51.4% (48).  Romania  has  a  large  pool  of 
companies capable of innovation but not currently 
engaging in it, as evidenced by a high percentage 
of  non-innovators  with  a  potential  to  innovate,  at 
27% compared to the EU average of 17.8% (49). 

low 

lack  of 

investment 

level  of  private 

is 
A 
exacerbated  by 
robust 
the 
government  support.  Business  expenditure  on 
R&D  (BERD)  financed  by  the  public  sector  as  a 
percentage  of  GDP  has  stagnated  and  is  one  of 
the lowest in the EU. In its 2014-2020 policy mix, 
Romania  had  only  four  instruments  specifically 

in 

firm 

innovation, 
amounting 
total (50).  To  address 

targeting 
to 
this, 
EUR 74 million 
Romania plans to spend around EUR 476.3 million 
annually  on  private-sector  innovation  and  public-
private  collaboration  from  2023  to  2028 (51).  In 
addition,  Romania  recently  amended  its  R&D  tax 
allowance  scheme  to  make  it  more  effective, 
although  the  use  of  tax 
incentives  remains 
negligible  (0.008%  of  GDP  compared  to  0.102  in 
the EU in 2020) (52). 

Low  business  R&D  translates  into  a  low 
innovation output level, exacerbated by weak 
collaboration  between  science  and  industry 
ineffective  technology  transfer  and 
and 
commercialisation  programmes. 
Patenting 
activity  remains  very  low and  has  stagnated  over 
the  years  (53). 
In  2021,  Romania  submitted 
2.79 patent  applications  to  the  European  Patent 
Office (EPO) per million inhabitants – the lowest in 
the EU. The EU average was 147. 

Graph A3.3: Share of enterprises with innovation 
activities 

Source: Community Innovation Survey, 2022 

public-private 

While 
a 
percentage  of  total  publications  have  risen  over 
the  past  decade,  they  remain  at  the  lower  end  in 
the  EU  and  below  the  EU  average,  at  6.2% 

co-publications 

as 

(50)  Increasing Competitive Funding at the System Level and 

Predictability of Funding Streams at the Institutional Level, 
Functional Analysis with Research Support Instruments, and 
Methodology for Assessing the Policy Mix and Functional 
Analysis, World Bank, 2023. 

(47)  Eurostat, 2024, High-growth enterprises and related 

employment by NACE Rev. 2 activity, Statistics | Eurostat. 

(51)  ROINNOVATE: Building Blocks for an Innovation Agency in 

Romania, World Bank, 2024. 

(48)  Community Innovation Survey 2022, 

https://ec.europa.eu/eurostat/statistics-
explained/index.php?title=Community_Innovation_Survey_20
22_-_key_indicators.  

(49)  European Innovation Scoreboard, 2024. 

(52)  R&D tax incentives in Romania, OECD 2024, 

https://stip.oecd.org/innotax/countries/Romania.  

(53)  Patent applications filed under the PCT per billion GDP (in 

PPS €) stood at 0.17 in 2020 (EU average 2.8), compared to 
0.2 in 2012. 

42 

02468101214BulgariaCroatiaHungaryPolandRomaniaSlovakiaEU27%201820192020-101030507090%SmallMediumLarge 
             
 
             
 
to 

in 
be 

7.7% 
can 

2023. 
attributed 

compared 
This 
to 
underperformance 
deficiencies in the public science system, a lack of 
incentives  for  public  research 
institutions  to 
engage  with  industry,  and  limited  capacity  within 
the  business  sector  to  exploit  the  knowledge 
generated  by  scientific  research.  Few  or  no 
national  statistics  are  collected  on 
licensing 
activities  and  the  creation  of  spin-offs  from 
Romanian  universities  and  research  institutes. 
Data  from  the  Community  Innovation  Survey 
indicate  that  very  few  Romanian  enterprises  are 
licensing  in  or  purchasing  intellectual  property 
rights,  and  Romania  ranks  last  amongst  the 
surveyed  countries.  The main  reasons  for  this  are 
underdeveloped  support  for  technology  transfer 
offices  and  bureaucratic  and  regulatory  obstacles 
complicating  the  transfer  of  intellectual  property 
researchers  and  entrepreneurs (54). 
rights  for 
Although the recovery and resilience plan includes 
measures to improve the regulatory framework for 
incentivising  collaboration,  Romania  must  further 
encourage  universities  and  research  institutes  to 
engage  in  entrepreneurial  initiatives  and  foster 
technology  and  knowledge  transfer  activities.  By 
joining  the  unitary  patent  system  in  September 
2024,  Romania  took  a  significant  step  towards 
increased  patenting  activity,  allowing  innovative 
companies  to  more  easily  protect  their  inventions 
and innovations across Europe. 

innovation opportunities and challenges prioritised 
at  the  regional  level  (56).  This  disconnect  is  a 
further  barrier  to  achieving  effective  strategic 
coordination  of  innovation  support.  To  address 
these challenges and promote a more coordinated 
and  effective  approach  to  innovation  support, 
Romania  is  preparing  to  establish  a  national 
innovation  agency.  The  agency’s  effectiveness  in 
driving 
new 
and 
stakeholders  into  the  Romanian  research  and 
innovation system will be a key area of focus for 
evaluation and assessment in the future. 

integrating 

innovation 

digital 

uptake 

technology 

Basic 
is 
progressing  but  remains  below  the  EU 
average,  meaning  further  efforts  will  be 
needed.  The  percentage  of  enterprises  with  at 
least a basic level of digital intensity has increased 
considerably  in  Romania,  jumping  from  52.5%  in 
2022  to  69.1%  in  2024,  not  far  below  the  EU 
average of 72.9%. The uptake of advanced digital 
technologies  also  increased  significantly.  The  AI 
adoption  rate  more  than  doubled  from  2023  to 
2024  to  just  over  3%,  which  is  still  the  lowest  in 
the  EU  and  far  below  the  EU  average  of  13.5%. 
The adoption of cloud services has also increased 
recently, reaching 15.5% in 2023, but remains well 
below  the  EU  average  of  38.9%.  Other  indicators 
confirm the need to sustain and intensify efforts in 
this area, despite the positive trend. 

Romania  stands  out  as  one  of  the  few  EU 
countries  that  have  yet  to  establish  an 
innovation  agency  to  facilitate  innovation, 
support  business  creation  and  growth  and 
stimulate private R&D. Efforts to bridge the gap 
between 
research  and  business  have  been 
hindered  by  a  lack  of  innovation  instruments, 
underscoring  the  need  for  targeted  measures  to 
foster innovative firm growth (55). In addition, there 
are  still  significant  regional  and  sub-regional 
innovation  performance  disparities  in  Romania 
(see also Annex 17: Competitive regions). Regional 
development  agencies  responsible  for  regional 
innovation  policies  and 
the 
necessary  skills  and  report  a  disconnect  between 
national-level  innovation  priorities  and  specific 

investment 

lack 

(54)  Strategic evaluation of the technology transfer and IPR 

protection systems of Bulgaria, Croatia and Romania and 
recommendations for their enhancement, Kaymaktchiyski, S., 
Battiston, A. and Jiménez, V.M. editor(s), Publications Office 
of the European Union, 2024. 

(55)  Idem. 

Romania  has  put  in  place  several  measures 
to  support  the  digitalisation  of  enterprises. 
Examples  of  ongoing  measures 
include  a 
EUR 347.5 million  investment  under  the  recovery 
and  resilience  plan  to  support  the  take-up  of 
digital  technologies  by  SMEs  by  developing  two 
operational  public  platforms  on 
legislative 
transparency, de-bureaucratisation and procedural 
simplification  for  business;  financial  instruments 
and  grants  schemes  under  cohesion  policy  funds; 
‘entrepreneur 
and 
‘start-up  nation’  and 
woman’ 
stimulate 
to 
innovation  and  digitalisation. 
entrepreneurship, 
Moreover, seven European Digital Innovation Hubs 
are  now  operational  and  are  actively  supporting 
SMEs 
in  different  regions,  with  the  aim  of 
strengthening,  coordinating  and  optimising  digital 
transformation efforts. 

programmes 

the 

(56)  Enhancing Strategic Planning and Innovation Services: 
Supporting Romanian Regional Development Agencies, 
OECD, 2023. 

43 

 
 
 
Financing innovation 

Romania’s  local  venture  and  growth  capital 
market  remains  underdeveloped,  and  funds 
are  not  sufficient  to  meet  the  overall 
financing  needs  of  innovative  companies. 
Currently,  private  equity  stands  at  just  0.04%  of 
GDP  and  venture  capital  at  0.01%  of  GDP,  well 
below  the  EU  average.  This  gap  implies  limited 
availability  of  investment  for  start-ups  and  high-
growth  companies.  Overall,  Romania  has  an 
insufficiently developed venture capital ecosystem. 
This  is  partly  due  to  the  relatively  small  size  of 
institutional 
investment 
allocation (see also annex 5 on access to finance). 

investors  and 

their 

the  appeal  of 

Romania’s  recovery  and  resilience  plan  outlines 
various reform and investment measures aimed at 
improving  the  governance  of  the  R&I  system, 
enhancing 
research  careers, 
attracting  international  talent  to  the  sector  and 
creating  centres  of  excellence.  A  new  law  on  the 
status  of  staff  working  in  the  areas  of  research, 
development and innovation was adopted in 2024, 
aiming  to  create  a  better environment  for  human 
resources  in  the  public  research  system  and  to 
increase the attractiveness of research careers (58). 
While  entrepreneurship  education  is  an  emerging 
field in Romania, the strategic planning is missing, 
and  there  is  room  for  improved  access  in  higher 
education  and  better  opportunities  for  practical 
learning. 

clusters, 

accelerators, 

Further  development  and  optimisation  of 
business  support  infrastructures,  including 
and 
incubators, 
technological and industrial parks, remains a 
necessity.  The  availability  and  efficient  use  of 
these  resources  are  important  for  supporting  the 
growth  and  resilience  of  startups,  and  creating  a 
competitive 
is 
sustainable in the long term.  

environment 

business 

that 

Innovative talent 

The  shortage  of  skilled  workers  negatively 
affects  Romania’s  innovation  and  research 
capacity. The number of researchers employed in 
the  public  sector  in  Romania  (measured  in  full-
time  equivalents)  has  remained  stagnant  at  1.6 
per  1 000  population  since  2022,  considerably 
below  the  EU  average  of  4.2  and  the  poorest 
result  of  all  EU  Member  States.  Additionally, 
Romania has seen a 23.2 percentage point decline 
in  new  doctorate  graduates  since  2017,  and  the 
in  science  and 
number  of  new  graduates 
engineering  has  stagnated,  negatively  impacting 
the  nation’s 
is 
compounded by the lowest percentage in the EU of 
population  aged  25-34  who  have  completed 
tertiary  education.  Furthermore,  researchers  in 
Romania  are  hindered  by  subpar  working 
conditions  and 
limited  career  advancement 
opportunities  that  contribute  to  a  brain  drain (57). 

innovation  potential.  This 

(57)  See also Annex 12: Education and skills. 

(58)  https://legislatie.just.ro/Public/DetaliiDocument/283972.  

44 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A3.1:  Key innovation indicators 

(1) EU average for the last available year or the year with the largest number of country data. 
Source:  Eurostat, DG JRC, OECD, Science-Metrix (Scopus database), Invest Europe, European Innovation Scoreboard 

45 

20232024R&D intensity (gross domestic expenditure on R&D as % of GDP)0.460.510.470.470.460.52:2.243.45Public expenditure on R&D as % of GDP0.280.220.190.180.170.2:0.720.64Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 3.44.35.96.2:::9.612.3Researchers (FTE) employed by public sector (Gov+HEI) per thousand active population1.61.61.61.51.6::4.1:International co-publications as % of total number of publications29.533.538.137.540.641.3:55.939.3Business enterprise expenditure on R&D (BERD) as % of GDP0.180.290.270.290.290.32:1.492.7Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0.110.060.030.050.04::0.40.3Researchers employed by business per thousand active population0.60.60.60.80.70.9:5.7:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)0.220.20.170.140.13::2.8:Employment share of high-growth enterprises measured in employment (%)6.097.655.21::::12.51:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::52.49:69.172.91:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%):::::21.87:33.17:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%):::11.33:15.52:38.86:Artificial intelligence adoption% enterprises (EU Digital Decade target by 2030: 75%):::1.38:1.513.0713.48:Public-private scientific co-publications as % of total number of publications4.05.66.16.16.46.2:7.78.9Public expenditure on R&D financed by business enterprise (national) as % of GDP0.040.0250.0240.0260.020::0.050.02Total public sector support for BERD as % of GDP0.0490.0310.029::::0.2040.251R&D tax incentives: foregone revenues as % of GDP::0.008::::0.1020.141BERD financed by the public sector (national and abroad) as % of GDP0.0490.0310.0210.0250.030::0.1000.110Venture capital (market statistics) as % of GDP, total (calculated as a 3-year moving average)0.0030.0010.0050.0070.0080.008:0.078:Seed stage funding share (% of total venture capital):7.49.320.136.837.2:7.29:Start-up stage funding share (% of  total venture capital)32.954.378.168.251.650.2:44.02:Later stage funding share (% of total venture capital)67.138.312.611.711.612.7:48.69:New graduates in science and engineering per thousand population aged 25-3417.611.212.012.612.3::17.6:Graduates in the field of computing per thousand population aged 25-340.62.63.63.63.9::3.6:Financing innovationInnovative talentEU average (1)USA20222021Romania201220172020Headline indicatorScience and innovative ecosystemsR&D investment & researchers employed in businessesPublic support for business innovationInnovation outputsDigitalisation of businessesAcademia-business collaboration 
 
       
 
ANNEX 4: MAKING BUSINESS EASIER 

improvement 

The 
in  Romania's  business 
environment  stagnated  for  a  few  years  and 
has recently deteriorated. Key rules changed 
frequently,  without  proper  planning  and 
consultation. Over-regulation imposes significant 
burdens on companies, including for the accession 
of EU funds. Top political decision makers change 
frequently,  together  with  strategic  planning  and 
priorities.  Price  controls  are  increasingly  publicly 
proposed as a panacea to quell inflation. 

Economic framework conditions 

The solid performance of the economy in the 
last  20  years  wiped  out  part  of  the 
performance  gap  with  the  EU.  Real  GDP  per 
capita  in  PPP  is  now  almost  80%  of  the  EU 
average,  up  from  30%  in  2004.  The  size  of  the 
middle class has seen one of the fastest increases 
of any of the 27 Member States (59).  Net average 
wages have doubled in the last 10 years to reach 
EUR 1000. 

The  improvement  in  business  environment 
has  stagnated.  Romania  ranks  50th  out  of  67 
economies  in  the  2024  edition  of  the  World 
Competitiveness Index, the same place it occupied 
in  2020.  The  low  cost  of  living  (21st  place), 
attractive  tax  policy  (36th  overall,  but  9th  for 
corporate tax and seventh for social security taxes 
for  employers)  and  skilled  workforce  have  been 
the  strong points  of the business  environment.  At 
the same time, the country ranks very low in terms 
of  employment  (60th), 
labour  market  (61st), 
access  to  finance  (61st). Taxation  remains  one  of 
the  key  pillars  of  the  business  environment’s 
appeal  and  fast  capital  formation.  Other  studies 
highlight  low  taxation,  large  market  size,  and 
skilled labour force as key strengths (60). 

Foreign direct investment (FDI) is falling. The 
net  flow  of  FDI  in  2023  and  2024  indicate  a 
hesitant  foreign  investment  appetite.  FDI  reached 
EUR  6.75  billion  in  2023,  more  than  one  third 

(59)  Alpha  Bank,  Inegalitatea  de  venituri  (Income  Inequality), 

2024. 

(60)  Economist 

Intelligence  Unit,  Business  Environment  – 

Romania, 2024. 

. 

lower than in 2022. Foreign investment continued 
its downward trend in 2024, with a 15% decrease 
compared to 2023 (61). 

Graph A4.1: Making Business Easier: selected 
indicators. 

Share of (1) enterprises, (2) average intra-EU exports and 
imports in GDP, (3) firms, (4) SMEs. 
Sources: (1) EIB IS, (2) Eurostat, (3) ECFIN BCS, (4) SAFE 
survey. 

Regulatory and administrative 
barriers 

Firms  signal  the  lack  of  predictability  as  a 
key  weakness  of  the  business  environment, 
affecting investment. Investment is a long-term 
business and needs, as a key ingredient, fiscal and 
legislative predictability.  The  country is  competing 
on  a  global  level  for  FDI  but  90%  of  Romanian 
companies  rank  uncertainty  as  the  top  barrier  to 
long-term investment (11 percentage points more 
than the EU average) (62). The new fiscal code has 
been  changed  554  times  in  83  months  since  its 

(61)  National Bank of Romania (NBR). 

(62)  EIB Investment Survey 2024. 

46 

44.929.83.628.03147.916.61041.624.50102030405060from private entitiesfrom public entitiesMaterial shortages as afactor limiting productionEU Trade IntegrationRegulation as a majorobstacle to investment(4) Late payments(3) Shortages(2) SingleMarket(1) RegulatoryburdenShare (%)EU27RO 
 
 
 
     
 
 
in  2015 (63).  Business  associations 
adoption 
regularly  point  out  that  public  consultation  in  the 
legislative  process 
is  merely  a  perfunctory 
formality (e.g. consultation periods of less than 24 
hours);  preparation  lead  times  (six  months)  are 
removed;  fiscal  policies  lack  a  medium-long  term 
dimension;  dialogue  and  consultation  structures 
between  industries  and  government  are  only 
formally  used  while  their  opinions  and  outcomes 
do  not  properly  feed  into  the  decision-making 
process (64). Companies report putting investments 
on hold. The attractiveness of projects in Romania 
compared to similar locations has decreased (44% 
in October, compared to 53% in March 2024). This 
is  also  true  about  FDI  (as  mentioned  above).  The 
leading  causes  for  this  deterioration  in  investors’ 
perceptions remain the legislative ambiguities and 
uncertainties (80%) and taxation (70%) (65). 

to 

regulatory 

The  business  environment  seems  over-
regulated.  The  share  of  firms  with  a  relatively 
large  proportion  of  their  employees  working  on 
regulatory  assessment  and  compliance  is  high  in 
Romania with 23% of firms dedicating more than 
requirements, 
10%  of  staff 
compared  to  just  4%  in  Finland.  Peers  such  as 
Bulgaria  (8%)  and  Hungary  (10%)  also  score 
better  than  Romania (66).  Accessing  EU  funding, 
which is a very valuable resource for two thirds of 
Romania’s 
burdensome. 
Excessive  bureaucracy,  instability  of  regulations 
and  documentation  are  the  major  obstacles 
reported (67).  Key  interest  areas  for  SMEs  are 
missing  from  the  EU  financing  priorities  (e.g. 
energy  efficiency  of  production  technologies), 
while other, outdated priorities (e.g. job creation in 
a country of labour shortages) are still in place. 

entrepreneurs, 

is 

Fiscal  imbalances  are  the  origin  of  many, 
unexpected  changes.  The  fiscal  consolidation 

(63)  The Tax Institute, Modificările noului cod fiscal, 2023. 

(64)  Foreign  Investors  Council  (FIC)  Romania  website  (fic.ro); 

Concordia Employers’ Confederation (concordia.ro). 

(65)  FIC,  Business  Sentiment  Index,  Fall  2024.  Only  36%  of 
respondents (6% less than in the March 2024 edition), have 
planned  investment  increases  for  the  next  12  months 
(lowest  level  recorded  since  2020).  The  December  2024 
fiscal package has clearly not improved the situation on that 
count. 

(66)  EIB Investment Survey 2024. 

measures adopted at the end of 2023 and end of 
2024 had a significant impact on businesses large 
and  small  but 
lacked  proper  planning  and 
consultation.  The  legal  obligation  to  leave  six 
months  of  preparation  before  a  tax  measure 
enters  into  force  was  disregarded.  In  December 
2024,  there  were  only  three  days  between  the 
proposal's  launch  and  its  entry  into  force.  The 
complexity and frequency of tax law amendments 
make  it  difficult  for  taxpayers  to  keep  up  and 
comply 
business 
A 
environment  study  shows  uncertainty  and  poor 
administration  of  taxation  as  the  key  problematic 
area for Romania (68); indeed,  taxation  is the area 
with  the  lowest  overall  score  for  the  country.  Tax 
clarity  and  transparency  come  out  as  particularly 
problematic  (11  points  out  of  40),  with  red  areas 
in public consultation and preparing and publishing 
future tax plans (both with 0 out of 10 points). 

effectively. 

detailed 

government 
Beginning  with  COVID-19, 
spending rose from around 36% of GDP, as it 
had  been  during  the  previous  decade,  to  a 
post-communist  record  of  43%  in  2024 
(election  year).  From  a  business  environment 
perspective,  if  the  higher  tax  route  to  fiscal 
consolidation is preferred, an important ingredient 
of  economic  success  and  business  dynamism  will 
be  affected.  Performance  will  then  depend  on 
improvements  in  areas  where  Romania  has  not 
excelled  until  now.  The  self-financing  of  small 
companies,  for  example,  will  not  be  available  at 
the  same  high  level.  More  government  spending 
has not yet been enough to provide better quality 
across  large  areas  of  under-performing  public 
services (education, health, etc.). 

Many rules are not applied.  The administration 
tends  to  ignore  many  existing  rules.  This  is  the 
case  with  the  SME  test,  on  the  books  since  2017 
and recently reinforced as part of the national RRP. 
The  once-only  principle,  the  fiscal  compact,  the 
appointment  of  managers 
state-owned 
enterprises,  the  six-month  preparation  time  for 
fiscal  measures,  are  other  examples.  For  permits, 
including for green investments, the application of 
rules at local level is unequal (69). 

in 

(67)  IMM  România  (SME  United  –  Romania),  Carta  albă  a  IMM-
urilor (White Book of SMEs), 2024. Over 70% of companies 
reported  excessive  bureaucracy  as  a  barrier.  The  restrictive 
eligibility criteria come second, with 60%. 

(68)  World Bank, Business Ready – Romania, 2024. 

(69)  Relevant  studies  by  the  Competition  Council  can  be 
consulted on their website, http://www.consiliulconcurentei.ro. 
World Bank, Subnational Business Ready 2024-Romania. 

47 

 
 
 
Frequent  change  is  the  norm  at  the  political 
level.  This  comes  with  changes  in  strategic 
planning  and  priorities.  Ministers  and  prime 
ministers  change  frequently  in  Romania.  The 
situation  improved  somewhat  with  the  ‘grand 
coalition’  of  the  last  three  years,  but  risks  persist 
with  the  significant  challenges  ahead,  a  more 
diverse  governing  coalition  and  presidential 
elections. 

Price  controls  are  regularly  floated  in  the 
public sphere. Price controls (in energy, retail) are 
a  recent  temptation  that  should  be  avoided,  as 
Romania,  more  than  any  EU  country,  remembers 
the  bitter  experience  it  had  with  such  populist 
measures  before  1990.  In  October  2024,  the 
government  announced  it  will  introduce  price 
controls  at  the  retail 
level  on  products  of 
Romanian origin. Intense public pressure led to the 
plan  being  discarded.  A  similar  measure  adopted 
is  under  an 
by  another  EU  Member  State 
infringement procedure. The  recent fiscal package 
was  accompanied  by  a  statement  made  by  the 
prime minister advising companies to freeze prices 
as  a  ‘solidarity  measure’.  In  addition,  Romanian 
authorities  imposed  a  ban  on  nutri-score-labelled 
products – which affects the functioning of the EU 
supply chains – as well as other restrictive rules on 
the displays and product ranges in shops. 

High inflation, minimum wage increases, high 
social  contributions  and  difficult  access  to 
finance  are  other  factors  making  the 
business  environment  challenging.  Romania 
had  the  highest  inflation  rate  in  the  EU  in  2024. 
The  minimum  wage  grew  rapidly  in  recent  years, 
far  above  productivity  growth.  Those  facts  were 
reported as the top concerns of entrepreneurs (70). 
The significant increase in the minimum wage has 
industries  unprofitable:  textiles, 
made  several 
shoes,  cables,  food (71).  Self-financing  and  trade 
credit  are  very  popular.  Trade  credit  is  16  times 
larger than short-term loans from banks. Romania 
is  top  of  the  charts  in  the  EU  for  this  metric (72). 

(70)  SME  Romania.  Inflation  is  the  top  concern  for  businesses 
(53%  of  business  owners)  while  the  wage  increases  come 
third (40%). The second is unfair competition. 

(71)  See  the  analysis  by  the  business  association  Concordia 
(https://concordia.ro/resurse/documente-de-pozitie/studiul-
politica-salariului-minim-in-romania/). World Bank’s Business 
Ready  -  Romania  shows  that  no  process  for  updating  the 
minimum wage and no social consultation exist. 

More  than  half  of  entrepreneurs  perceive  bank 
loans  as  expensive  and  the  main  barrier  to 
access (73). The labour tax wedge for Romania was 
the  second  highest  in  the  EU  for  low-income 
earners. 

infrastructure  gaps 

Romania’s  transport  and  5G  infrastructure 
are  lagging  far  behind.  Despite  more  than  15 
years of EU membership and rising income levels, 
transport 
remain  wide, 
constraining private investment and productivity in 
key  sectors.  The  biggest  gap  behind  the  EU 
average  is  very  clearly  perceived  as  being  in 
transport 
percentage 
points) (74).  Romania  continues  to  rank  among  EU 
leaders in terms of fixed connectivity. 5G coverage 
is improving, but still severely lagging behind (33% 
of populated areas vs 89.3% in the EU). 

infrastructure 

(+20 

Public procurement 

The  effects  of  measures  to  improve  public 
procurement  performance  have  yet  to  be 
observed. The 2023 data set shows high levels of 
single  bids  (45%,  EU  average  38%);  negotiated 
procedures  without  prior  publication  of  an  award 
notice (23%, the second highest level in the EU, EU 
average 6%); unsuccessful bids (48%, the highest 
rate in EU); and price-only award criteria (83%, EU 
average  56%)(75).  The  key areas  for  improvement 
are: 
uneven 
implementation 
legislative 
instability. 

professionalisation; 

legislation; 

staffing; 

of 

public 

procurement, 

Romania  has  made  progress  in  using  public 
procurement  as  a  strategic  tool.  In  2024, 
Romania’s National Agency for Public Procurement 
(ANAP)  undertook  several  initiatives  to  advance 
strategic 
on 
sustainability,  innovation,  and  inclusivity.  Actions 
and 
focused 
stakeholder  engagement  by  promoting  openness, 
creating  an  environment  of  trust,  and  conducting 
stakeholder  analysis  and  management.  The 
improving 
laid  the  groundwork  for 
initiatives 
strategic public procurement in Romania. However, 

transparency 

enhancing 

focusing 

on 

(73)  SME Romania, Carta Albă. 

(74)  EIB IS 2024. 

(72)  NBR,  Raport  asupra  stabilității  financiare,  December  2024, 

(75)  Provisional  data  for  2024  put  single  bids  for  Romania  at 

p. 41-42. 

46%.  

48 

 
 
 
progress  in  inclusive  and  innovative  procurement 
remains  stagnant,  with  no  significant  advances 
observed  in  2023  and  no  clear  trends  visible  for 
2024. 

Single Market  

for  SMEs,  while 

Acting  on  restrictively  regulated  professions 
may  boost  productivity.  Regulatory  restrictions 
in  a  number  of  professions  remain  stricter  in 
Romania than the EU  average, creating additional 
costs,  especially 
lowering 
productivity.  This  applies  in  particular  to  civil 
engineers,  architects,  accountants,  tourist  guides, 
and  notaries.  Lawyers  are  also  subject  to  legal 
form,  incompatibility  rules  and  multidisciplinary 
restrictions, all of which affect the potential of the 
innovation.  The  fragmented 
legal  sector  for 
system 
their 
activities  seems  to  be  a  barrier  to  their  free 
movement  and  hampers  the  efficiency  of  service 
provision. 

regulating  civil  engineers  and 

Romania performs well in transposing Single 
Market legislation. Romania has a transposition 
deficit  of  0.8%  (same  as the  EU  average)  though 
its  performance  is  less  impressive  than  last  year. 
The  percentage  of  Single  Market  directives 
incorrectly  transposed  (conformity  deficit)  is  at 
(second  best  performance  among  the 
0.2% 
Member  States).  The  number  of  pending  Single 
Market  infringement  cases  in  Romania  is  above 
the EU average but their average duration is better 
than the EU average. Concerning SOLVIT, Romania 
resolved  92.3%  of  all  SOLVIT  cases  it  handled  as 
lead centre (EU average of 84.9% in 2024). 

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  (28%  of 
GDP vs 42% of GDP). Over the last 20 years, trade 
in goods has increased by 10% per year. The bulk 
of  intra-EU  exports  in  value  terms  (60%)  came 
from  large  companies,  which  indicates  that  SMEs  
may improve their presence on the single market. 
Accession to the Schengen area should make trade 
and attracting foreign investment easier. 

49 

 
Table A4.1:  Making Business Easier: indicators. 

*Change in methodology in 2024: reporting late payments from public and private entities separately. 
**The 2024 data on single bids is provisional and subject to revision. Please note that approximately 24% of the total data is 
currently missing, which may impact the accuracy and completeness of the information. Due to missing data, the EU average of 
direct awards data is calculated without Romania. 
Sources: (1) ECFIN BCS, (2) Eurostat, (3) EIB IS, (4) Digital Decade Country reports, (5) Intrum Payment Report, (6) SAFE survey, 
(7) OECD, (8) up to 2023: Single Market and Competitiveness Scoreboard, 2024: Public procurement data space (PPDS). 

50 

POLICY AREA20202021202220232024EU-27 average3.56.56.83.43.610.08.49.811.610.19.020.20.60.80.90.80.72.329.221.629.725.621.713.4-87.195.695.0-78.8-87.195.695.0-64.0-24.926.832.8-89.3Regulatory environment29.116.822.730.131.024.513.311.712.214.5-15.613.59.215.416.4-15.1from public or private entities in the last 6 months52.052.645.249.4--from private entities in the previous or current quarter----44.947.9from public entities in the previous or current quarter----29.816.628.631.533.530.128.041.6-----0.0501.12.90.30.20.80.81.30.91.01.20.20.988.486.993.291.092.384.937.030.032.032.028.024.44133424546-22172323-7.0RomaniaINDICATOR NAMEInvestment climateShortagesMaterial shortage, firms facing constraints, %1Labour shortage, firms facing constraints, %1Vacancy rate, vacant posts as a % of all available ones (vacant + occupied)2InfrastructureTransport infrastructure as an obstacle to investment, % of firms reporting it as a major obstacle3VHCN coverage, %4FTTP coverage, %45G coverage, %4Reduction of regulatory and administrative barriersImpact of regulation on long-term investment, % firms reporting business regulation as a major obstacle3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment5Payment gap - public sector, difference in days between offered and actual payment5Share of SMEs experiencing late payments, %*6Single MarketIntegrationEU trade integration, % (Average intra-EU imports + average intra EU exports)/GDP2EEA Services Trade Restrictiveness Index7ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, % resolution rate per country8Number of pending infringement proceedings8Competition and transparency in public procurementSingle bids, % of total contractors**8Direct awards, %**8Public procurement 
 
 
      
 
ANNEX 5: CAPITAL MARKETS, FINANCIAL STABILITY AND ACCESS TO FINANCE 

Graph A5.1: Net savings-investment balance 

Source: AMECO. 

net 

international 

As a net borrower from the rest of the world, 
the Romanian economy has been recording a 
negative 
investment 
position.  As  of  Q3  2024,  total  assets  on 
foreigners  stood  at  around  39%  of  GDP,  while 
liabilities  to  foreigners  amounted  to  just  above 
83%  of  GDP,  resulting  in  a  net  international 
investment  position  (NIIP)  equivalent  to  41.5%  of 
GDP  (see  Graph  A5.2).  The  only  factor  with  a 
positive contribution to the NIIP was the significant 
stock  of  official  foreign  reserve  assets  (at  20.8% 
of GDP), which reflects the central bank’s focus on 
a  relatively  steady  exchange  rate  of  the  leu, 
particularly  against  the  euro.  The  incoming  net 
foreign direct investment (-33.1% of GDP as of Q3 
2024) accounted for most of the NIIP, so that the 
net  external  debt  position  is  fairly  low.  The  net 
portfolio  investments,  which  are  directly  affected 
by  the  price  volatility  of  equity  valuations,  have 
also  been  negative  (at  -20.4%  of  GDP  as  of  Q3 
2024),  similarly  to  the  net  stock  of  other 
investments  (al  almost  9%  of  GDP).  Thus,  the 
Romanian  economy  seems  well  integrated  in 
international capital flows as a recipient of foreign 
capital, remaining a net capital importer, notably in 
terms of direct investments. 

low 

stable, 

domestic 

The  Romanian  economy  is  characterised  by 
savings, 
comparatively 
significant  foreign  inflows,  still  developing 
capital  markets  and  small  banking  and  non-
banking  financial  sectors.  Romania’s  capital 
markets  are  underdeveloped,  with  companies 
heavily  reliant  on  internal  financing  and  bank 
loans.  The  banking  sector,  while  important  and 
small 
remains 
generally 
compared  to  other  EU  countries.  17.6%  of  firms 
face  financial  constraints,  the  highest  level  in  the 
EU  While  the  green bond market  shows  potential, 
remains  a  major  barrier, 
financial 
restricting  investor  participation  and  companies’ 
access 
Institutional 
investors  have  the  lowest  asset-to-GDP  ratio 
these 
their  EU  peers.  To  address 
among 
challenges,  Romania 
the  national 
strategy  for  the  development  of  the  capital 
markets 2023-2026. 

to  alternative 

introduced 

relatively 

funding. 

literacy 

Availability and use of domestic 
savings  

invests 

ratio,  net  of 

The  Romanian  economy 
its  net 
savings  domestically  and  also  sources 
funding from abroad. From 2014 until 2023, the 
private  savings 
fixed  capital 
consumption,  stood  on  average  at  6.1%  of  GDP 
(below the EU average of 8.5% of GDP), peaking at 
8.8%  in  2020  (see  Graph  A5.1).  The  net  private 
investment 
the  net 
ratio,  which  denotes 
contribution  of  the  private  sector  to  capital 
accumulation in the economy, recorded an average 
of  4.4%  of  GDP  during  the  reference  ten-year 
period  and  reached  10.6%  in  2023.  At  the  same 
time, during the same period the government has 
been  running  sizable  budgetary  deficits,  which 
during  2014-2023  on  average  amounted  to  a 
budgetary deficit of 4.3%. These recurrent general 
government  budgetary  deficits,  combined  with 
only  a  small  positive  difference  between  net 
domestic  savings  and  net  investment,  resulted  in 
structural net borrowing by Romania from foreign 
economies  that  averaged  2.6%  of  GDP,  with  a 
peak  of  7.5%  in  2022.  Thus,  the  net  savings  in 
Romania  have  been  invested  domestically  (to 
finance  private  investment  or  borrowing  by  the 
government),  while  also  complemented  by  a 
substantial share of financing from abroad. 

51 

0510152025302017201820192020202120222023% of GDPPrivate investment, netLending to the governmentPrivate saving, netPrivate saving, grossBorrowing from the rest of the world 
 
   
 
 
Graph A5.2: International investment position 

Source: ECB. 

Structure of the capital markets and 
size of the financial sector  

The  Romanian  economy  stands  out  with  one 
of the most underdeveloped domestic capital 
markets in Europe.  The market capitalisation of 
listed equity reached 13.4% of GDP at the end of 
2023 (see Graph A5.3), which is well below the EU 
average  of  67%  of  GDP.  At  the  same  time,  non-
financial  corporations  (NFCs)  accounted  for  84% 
of that capitalisation, which implies that the stock 
market  in  Romania  is  predominantly  to  a  large 
extent  geared  towards  funding  the  non-financial 
segment  of  the  real  economy.  The  outstanding 
volume of debt securities reached almost 41% of 
GDP at end-2023, which is significantly below the 
EU  average.  Bonds  issued  by  the  government 
accounted for 95% of the total. 

Graph A5.3: Capital markets and financial 
intermediaries 

Source: ECB, EIOPA, AMECO. 

to  have 

significant 

While  the  financial  sector 
in  Romania 
remains  dominated  by  banks,  non-bank 
financial 
intermediaries  also  play  an 
important  role.  Starting  from  56%  of  GDP  in 
2020,  the  size  of  the  banking  sector  declined 
slightly  to  53%  of  GDP  in  2023  (with  the  EU 
average  at  257%)  and  52%  in  2024,  which 
constituted  the  lowest  ratio  in  the  EU  and  is 
considerably  below  the  peer  economies  in  the 
region.  The  overall 
low  degree  of  financial 
intermediation  in  Romania  could  be  explained  by: 
(i)  the  large  share  of  non-bankable  NFCs  that 
capitalisation 
continue 
weaknesses,  and  therefore  have  less  access  to 
finance; 
in  the 
(ii)  weak  payment  discipline 
economy; (iii) companies’ reliance mainly on loans 
from suppliers and shareholders, rather than loans 
from  financial  institutions;  and  (iv)  the  modest 
degree  of  financial  literacy.  Foreign  presence  is 
predominant  and  accounts  for  almost  66%  in 
terms  of  bank  assets.  The  consolidation  in  the 
banking  sector  has  been  ongoing  in  recent  years 
through  the  acquisition  of  smaller,  less  profitable 
banks  with  weaker  capital  positions  by  larger 
credit institutions. Currently, banking concentration 
appears  to  be  slightly  higher  than  on  average  in 
the EU, with the top five MFIs representing around 
63%  of  total  bank  assets.  The  insurance  and 
pension funds sectors, as well as investment funds 
(with  total  assets  of  almost  1.9%  of  GDP  and 
2.3% of GDP at end-2023), play a very limited role 
in  the  financial  intermediation  (see  section  on 
institutional investors). 

Resilience of the banking sector 

The  banking  sector  in  Romania  is  well-
capitalised  and  exhibits  good  resilience  to 
risks.  The  system-wide  capital  ratio  stood  at 
23.1% in Q3 2024, well above the EU average. In 
Q3 2024, the Romanian banking sector reported a 
consolidated common equity tier 1 (CET1) ratio of 
20%  (well  above  the  EU  average  of  16.6%),  as 
Romanian  banks  hold  a  significant  capital  buffer 
and  thus  ensure  a  good  capacity  to  absorb 
potential  unexpected 
in  the  event  of 
macroeconomic shocks. Banks have been strongly 
advised by the National Bank of Romania to retain 
earnings  rather  than  distribute  dividends,  so  the 
banking  sector's  profitability  in  recent  years  has 
supported  solvency,  underpinned  by  high  profit 
retention rates. The most recent stress test results 

losses 

52 

-100-80-60-40-20020406020172018201920202021202220232024-Q3% of GDPForeign Direct Investment, AssetsPortfolio Investment, AssetsOther investment, AssetsOfficial reserve assetsForeign Direct Investment, LiabilitiesPortfolio Investment, LiabilitiesOther investment, LiabilitiesNIIPNon-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIs​Insurance corporationsInvestment funds0102030405060   Listed equity                    Bonds                  Assets by sector% of GDP 
  
  
(for 2024-2026) showed that even under adverse 
conditions,  the  banking  sector  would  be  well 
positioned  to  cope  with  micro-financial  shocks. 
Banking groups in Romania have issued securities 
eligible  for  the  Minimum  Requirement  for  own 
funds and Eligible Liabilities (MREL). As of the end 
of  the  transition  period  (end-2023)  all  credit 
institutions  in  Romania  have  complied  with  the 
final  MREL  requirement  plus  the  combined  buffer 
the 
requirement 
transposition  of  the  latest  provisions  of  the  Basel 
III regulatory framework at EU level could result in 
an  increase  in  capital  requirements  for  the  group 
of  small  and  medium-sized  European  banks, 
including  banks  in  Romania,  by  the  date  of  full 
implementation in 2028. 

the  medium 

term, 

(76). 

In 

Despite a slight deterioration, banks’ balance 
sheets  show  robust  asset  quality.  With  an 
aggregate  non-performing  loan  (NPL)  ratio  of 
2.7% in Q3 2024, which is above the EU  average 
of  1.9%,  credit  quality  remains  adequate.  The 
corporate NPL ratio increased to 3.9% in Q4 2024 
(from 3.7% in 2023) but stood only slightly above 
the EU average (at 3.5%). At the same time, banks’ 
aggregate  coverage  ratio  of  NPLs  by  existing 
provisions  has  slightly  declined  to  62.5%  but 
remains  adequate  and  is  well  above  the  EU 
average (at 42.1%).  

Romanian  banks  maintain  very  strong 
liquidity  positions.  Banks  are  exposed  to  a  very 
low  liquidity  funding  risk.  Overall,  the  Romanian 
banking sector has proven an adequate capacity to 
manage  liquidity,  although  excess  liquidity  could 
also  be  highlighting  the  lack  of  opportunities  for 
banks  to  provide  loans  or  make  investments,  as 
well  as  a  low  risk  appetite.  The  sovereign-bank 
nexus  has  strengthened  in  recent  years  due  to 
both  the  sizeable  share  of  government  bonds  in 
the  balance  sheet  and  the  state  guarantees  for 
loans.  Even  if  government  bonds  are  a  profitable 
option  for  banks  to  use  their  large  liquidity,  they 
generate  exposure  to  the  potential  occurrence  of 
sovereign  risk.  The  large  share  of  government 
securities in total assets generates a concentration 
risk and amplifies the interest rate risk. Moreover, 
investment  in  government  bonds  may  crowd  out 
lending to the private sector. 

Resilience of the non-bank financial 
intermediaries 

The  Romanian  insurance  sector  is  relatively 
small  and  is  characterised  by  a  high  degree 
of  concentration.  Romanian  insurance  sector 
ranks  last  in  the  EU  in  terms  of  assets  in 
percentage  of  GDP  (1.9%  in  2023,  compared  to 
55.3%  on  average  at  the  EU).  The  market  is 
characterised  by  a  high  degree  of  concentration, 
both  in  terms  of  the  types  of  insurance  offered 
(mainly  car  insurance)  and  in  terms  of  the 
significant market shares held by a relatively small 
number  of  insurance  companies.  The  market  is 
dominated  by  non-life  insurance,  which  made  up 
84%  of  total  gross  premiums  written  in  2023, 
mainly  on  account  of  the  mandatory  nature  of 
motor  third-party  liability  and,  to  a  lesser  extent, 
In  2023, 
natural  disaster 
eligible  funds  were  sufficient  to  cover  solvency 
capital  requirements  (167.8%),  but  the  level  was 
far  below  the  EU  average  (258.6%).  Romanian 
insurance companies invest predominantly in fixed 
income  financial 
instruments  and  have  high 
exposure  to  government  bonds,  most  of  them 
domestic.  By  contrast,  exposures  to  complex 
financial instruments or alternative assets are very 
low. Romania is one of the most exposed countries 
in EU to nature-related risks, such as earthquakes 
and  floods  and  having  low  insurance  coverage  in 
these areas (below 50%) (77). 

insurance  policies. 

Sources of business funding and the 
role of banks. 

The  Romanian  corporate  sector  is  heavily 
reliant  on  internal  financing.  For  firms  in 
internal  sources  accounted  for  the 
Romania, 
(73%), 
investment  finance 
largest  share  of 
followed  by  external  finance  (26%),  with  the 
remainder 
intra-group 
coming 
financing (78).  On  average,  in  the  EU,  internal 
investment 
financing  accounted  for  66%  of 
finance,  followed  by  external  finance  (25%)  and 
(9%).  Trade  credit  and 
intra-group  financing 

from 

(1%) 

(76)  For additional information, see the European Banking 

Authority’s MREL Dashboard - Q4 2023. 

natural catastrophes. 

(78)  See EIB Investment Survey 2024. 

(77)  See EIOPA’s Dashboard on the insurance-protection gap for 

53 

 
 
 
advances  represent  an  important  part  of  non-
financial  sector  liabilities,  which  creates  systemic 
risk  in  the  economy  by  creating  interlinkages 
between  companies,  and  exposure  to  the  risk  of 
non-payment  by  customers.  One  of  the  reasons 
behind this type of financing is the large share of 
that  have 
non-financial  corporations 
significant 
and 
therefore  have  less  access  to  external  finance. 
Payment discipline in the economy remains weak. 

capitalisation  weaknesses, 

(NFCs) 

Romanian  firms  also  rely  on  bank  loans, 
which  represent  99%  of  Romanian  companies’ 
external  debt  financing.  However,  Romania  has  a 
relatively small banking sector, with an overall low 
degree  of  financial 
in 
addition,  is  on  a  downtrend.  The  ratio  of  banks’ 
total  assets  to  GDP  reached  52.8%  in  2023  (see 
Table  A5.1),  which  was the  lowest  ratio  in  the  EU 
(with 
is 
considerably  below  the  country’s  peer  economies 
in the region. 

the  EU  average  at  256.9%)  and 

intermediation,  which, 

robust 

capitalisation, 

(NPL)  ratio  to  2.7% 

The  banking  sector  in  Romania,  which,  to  a 
large  extent,  is  foreign-owned,  continues  to 
exhibit 
and 
profitability  metrics  remain  exceptionally 
strong.  Asset  quality  indicators  remain  solid, 
despite a marginal increase in the non-performing 
loan 
in  Q3 2024.  The 
interconnection between Romania’s banking sector 
and  the  government  sector  has  strengthened, 
reaching  the  highest  level  among  EU  countries: 
The  share  of  banking  sector  claims  on  the 
loans  and  securities, 
government, 
total  assets  as  of 
accounted  for  25%  of 
September  2024.  While  this  enhances  solvency 
and  liquidity,  it  also  increases  concentration  and 
interest rate risks. 

including 

still 

Market-based  finance  is  low  as  Romania’s 
capital  markets 
relatively 
are 
underdeveloped  and  have  significant  room 
for growth. More specifically, at the end of 2023, 
listed shares were equivalent to only 11% of GDP 
and  bond  stood  at  0.3%,  compared  to  44%  and 
10.8% in the EU (see Graph A5.4). 

Graph A5.4: Composition of NFC funding as a % of 
GDP 

The sum of NFC liabilities only reflects the total for the NFC 
liabilities considered. Reference period 2023. 
Source: Eurostat. 

Romania  stands  out  as  the  EU  country  with 
the  highest  proportion  of  companies  using 
subsidies or grants for investment activities. 
Despite  this,  the  share  of  firms  experiencing 
financial  constraints stands at 17.6%, the highest 
level  recorded in  the  EU. This  suggests  that  there 
to 
is  a  substantial 
investment demand. This gap  may be  even larger 
for firms with limited capacity for internal funding, 
such as innovative start-ups. 

financing  gap 

relative 

In recent years, bank lending has grown at a 
strong pace, driven by, among other factors, 
government  programmes  such  as  state 
guarantees. After reaching a peak in early 2023, 
interest  rates  on  loans to households  and  NFCs  –
most of which are tied to floating rates – began to 
decline. In 2024, bank lending to the non-financial 
sector  maintained  a  high  growth  rate  of  9.8%, 
though  this  was  slower  than  the  12.8%  rate  in 
2023. During the third quarter of 2024, Romanian 
credit  institutions  reported  a  tightening  of  credit 
standards  for  loans  and  credit  lines  to  NFCs, 
following  four  quarters  of  unchanged  standards. 
Bank  lending  to  households  also  saw  positive 
growth, reaching 11.4% in 2024. Credit standards 
for  loans  related  to  house  and  land  purchases 
remained  steady,  while  banks  eased  credit 
standards  for  consumer  loans  once  again  in 
Q3 2024. 

54 

050100150200250ROEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equity 
 
  
Retail investors in capital markets 

Graph A5.5: Composition of HH financial assets per 
capita and as a % of GDP 

(BVB)  – 

lack  of  dynamism, 

Romania’s  capital  markets  have  significant 
room for growth.  The Romanian stock market – 
is 
the  Bucharest  Stock  Exchange 
characterised  by  a 
low 
capitalisation and low levels of liquidity, driven by 
a  large  number  of  inactive  shares  and  low  levels 
of  companies’  free-float (79).  Moreover,  Romania 
does  not  yet  have  its  own  fully  operational 
domestic  central  clearing  counterparty  (CCP).  The 
underdeveloped stock market is partly a reflection 
of  the  Romanian  corporate  sector,  with  many 
companies  showing  low  financial  strength  and 
structural 
negative 
characteristics, the trend in recent years has been 
very  positive.  Bucharest’s  BET  stock  index  was 
among  the  world’s  best  performers  in  2024.  This 
was  mainly  driven  by  the  successful  initial  public 
offering  (IPO)  of  Hidroelectrica  in  2023,  which 
revived  the  interest  of  domestic  and  foreign 
investors in the stock exchange. This IPO could be 
followed  by  the  listing  of  other  state-owned 
companies. 

equity.  Despite 

these 

corporate 

bond  market 

The 
remains 
underdeveloped.  Although  the  domestic  equities 
market  is  somewhat  more  advanced  and  active, 
the  corporate  bond  market  is  among  the  least 
liquid in the region, with a relatively small number 
This 
of 
underperformance  has  not  only  significantly 
limited  access  to  financing  for  large  segments  of 
it  has  also 
the  Romanian  corporate  sector, 
reliance  on 
investors’ 
institutional 
increased 
Romanian government securities. 

outstanding 

issues. 

bond 

Romania  has  developed  a  comprehensive 
strategy  to  boost  its  capital  markets:  the 
national strategy for the development of the 
capital markets  2023-2026.  This  strategy  sets 
out  a  series  of  recommendations  that  focus  on 
improving  the  institutional,  legal  and  regulatory 
framework,  to  enhance  opportunities  to  develop 
the domestic market. Certain key measures in this 
strategy have been adopted but not all have fully 
matured yet. 

(79)  See Capital Market Review of Romania: Towards a National 

Strategy, 2022, OECD. 

55 

The sum of HH assets only reflects the total for the HH assets 
considered. Reference period 2023. 
Source: Eurostat. 

to 

products. 

One  of  the  main  obstacles  to  the  expansion 
of  Romania’s  capital  markets  is  the  limited 
levels  of  household  savings  and  their  low 
allocation 
Retail 
capital 
investment remains relatively modest compared to 
other EU countries, partly due to limited disposable 
income  and  a  cultural  preference  for  traditional 
savings  methods,  such  as  bank  deposits  (see 
Graph A5.5). One of the objectives of the national 
strategy  is  precisely  to  increase  the  participation 
of 
in 
investors.  Financial 
Romania is still lagging behind that of its EU peers. 

individual 

inclusion 

The role of domestic institutional 
investors 

The  assets  of  Romanian 
institutional 
investors,  when  expressed  as  a  percentage 
of  GDP,  are  the  lowest  in  the  EU.  Within 
institutional  investors,  the  largest  category  of 
assets  is  pension  funds,  including  mandatory  and 
voluntary  funds,  followed  by.  investment  funds, 
with insurance corporations ranking last. 

Since 
its  creation  in  2007,  the  private 
pension  sector  has  complemented  the  public 
system  and  become  a  major  investor  in 
government  bonds  and  shares  listed  on  the 
BVB. The accumulated assets of Romanian private 
pension  funds  amounted  to  RON 131.5 billion  in 
2023 (about EUR 26.5 billion), equivalent to 8.48% 
of  GDP.  Investments  are  highly  concentrated  in 
in 
local 

investments  are 

(93.1%  of 

issuers 

0501001502002500102030405060708090ROEUROEUper capita (000 EUR) (lhs)% of GDP GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
 
  
investors 

Romanian  assets).  Moreover,  the  private  pension 
sector is one of the state’s major creditors, holding 
more  than  10%  of  the  public  debt  issued.  Apart 
from  sovereign  bonds,  pension  funds  are  also 
major 
in  BVB-listed  shares.  The 
sluggishness  of  the  capital  markets  prevents 
pension  funds  from  diversifying  their  portfolios 
towards a more efficient balance between risk and 
return. Another challenge stems from the fact that 
pension funds in Romania face regulations limiting 
investments  in  certain  assets.  Lastly,  although 
pension funds are important institutional investors, 
their buy-and-hold policies mean that they are not 
major providers of liquidity. 

collective 

The 
investment  undertakings 
market in Romania is less developed than in 
other EU countries, due to factors such as lower 
financial  literacy,  a  less  mature  financial  market 
and  lower  overall  wealth.  Nearly  half  of  equity 
investments  come  from  Fondul  Proprietatea, 
created  to  compensate  those  whose  assets  were 
expropriated  during  the  communist  regime.  The 
investment  fund  industry  is  centred  around  large 
banking groups, with 15 fund managers operating 
in  the  country,  most  of  which  belong  to  banking 
groups.  These  groups  also  dominate  depositary 
services. 

The  Romanian  insurance  sector  is  relatively 
small  and  ranks  last  in  the  EU  in  terms  of 
(1.9% 
assets  as  a  percentage  of  GDP 
compared  to  the  EU  average  of  55.3%).  The 
market  is  characterised  by  a  high  degree  of 
concentration,  both  in  terms  of  the  types  of 
insurance  offered  (mainly  car  insurance)  and  in 
terms  of  the  significant  market  shares  held  by  a 
relatively small number of insurance companies. In 
2023,  71%  of  total  gross  written  premiums  were 
made by five insurance companies. The sector has 
experienced  a  tumultuous  period,  with  several 
insurance  companies  failing  in  recent  years.  The 
total  value  of  insurance  companies’  investments 
(including  assets  held  for  unit-linked  products) 
amounted to EUR 5.8 billion in Q1 2024. Romanian 
insurance companies invest mainly in fixed-income 
financial  instruments  and  have  high  exposure  to 
them 
government  bonds 
Romanian.  Collective  investment  undertakings  are 
the  second  largest  category,  representing  16%  of 
assets  in  2023,  most  of  them  being  cross-border 
in  Romania  only 
funds. 
allocate 5% of their assets to corporate bonds. 

Insurance  companies 

(63%),  most  of 

The depth of available venture and 
growth capital 

for 

their 

Romania’s  domestic  venture  and  growth 
capital  market  remains  underdeveloped  and 
insufficient  to  meet  the  financing  needs  of 
innovative companies. At present, private equity 
equates to only 0.04% of GDP and venture capital 
to just 0.01% of GDP, well below the EU average. 
This  gap  highlights  the  limited  availability  of 
start-ups  and  high-growth 
investment 
companies.  Romania  has  an 
insufficiently 
developed venture capital ecosystem. This is partly 
due  to  the  relatively  small  scale  of  institutional 
investment  allocation. 
investors  and 
Complicated  and  typically  very  low  investment 
limits for pension funds invested in venture capital 
and  private  equity  can  also  contribute  to  this 
gap (80).  Romania  also  has  the  lowest  level  of 
research and development (R&D) expenditure as a 
percentage  of  GDP  in  the  EU,  which  probably 
contributes  to  the  low  level  of  venture  capital 
activity.  The  lack  of  strong  R&D  investment  limits 
the  creation  of 
innovative  and  technological 
companies,  which  further  stifles  capital  market 
development.  In  recognition  of  these  challenges, 
one of the key objectives of the national  strategy 
is  to  stimulate  the  growth  and  maturation  of  the 
private  equity  and  venture  capital  markets, 
fostering an ecosystem that can better support the 
country’s innovative and high-potential companies 
and connect them with investors. 

Financing the green transition 

The  green  bond  market  in  Romania  has 
developed  slowly,  but  recent  private  sector 
issuances 
indicate  a  positive  trend  and 
growing  interest.  Notable  efforts  have  been 
made,  particularly  within  the  banking  sector,  as it 
has  been  gradually  exploring  and  issuing  green 
bonds.  There  is  considerable  potential  for  further 
development  in  the  near  future  as  demand  for 
sustainable investments rises. 

(80)  See 2024 Survey of Investment Regulation of Pension 

Providers. 

56 

 
 
In  2023,  the  Ministry  of  Finance  revised  its 
funding strategy to incorporate green, social 
and  sustainability  bonds,  and  developed  a 
green  bond  framework.  In  February  2024, 
Romania  issued  a  EUR 2 billion  sovereign  green 
bond, marking the largest green euro-denominated 
bond ever issued by an emerging market. Building 
on  the  success  of  its  previous  transaction,  in 
October  2024  Romania  issued  a  JPY 33 billion 
(approximately  EUR 200 million)  Samurai  green 
bond on the Japanese market. 

implementing  policy 
Romania  has  been 
actions  to  facilitate  the  financing  of  the 
green  transition.  The  national  strategy  for  the 
development  of  the  capital  markets  aims  to  raise 
investors  of  the 
awareness  among  potential 
opportunities  offered  by  investments  in  products 
that  promote  environmental  and/or  social  or 
sustainable  projects,  while  also  raising  awareness 
among  issuers  of  the  importance  of  facilitating 
recovery  and 
sustainable 
resilience  plan 
includes  several 
(RRP)  also 
measures  in  this  area,  such  as  the  recovery 
venture  capital  fund  to  facilitate  the  green 
transition. 

investment. 

The 

Financial literacy 

lack  of 

literacy.  This 

Romania  ranks  the  lowest  in  the  EU  on 
financial 
financial 
knowledge is a barrier to increasing retail-investor 
participation  in  capital  markets  and  to  helping 
companies explore alternatives to traditional bank 
financing.  According  to  the  2023  Eurobarometer 
survey, only 13% of Romanians have a high level 
of  financial  literacy,  57%  have  a  medium  level, 
and  the  remaining  30%  possess  a  low  level.  In 
contrast,  the EU average is 26% for high literacy, 
50% for medium, and 24% for low. 

initiatives 

recommended 

Several recent initiatives aim to promote the 
financial 
literacy  of  entrepreneurs.  The 
National Committee for Macroprudential Oversight 
improve 
has 
entrepreneurs’  financial  education.  These  include 
collaboration  with  academia  and  the  financial 
system  to  raise  awareness  about  the  potentially 
higher  costs  of  funding  through  trade  credits  and 
shareholder  loans  (compared  to  borrowing  from 
financial institutions or using capital market-based 
funding).  An  action  plan  has  been  developed,  the 

to 

first step of which is to assess the current level of 
financial  literacy  among  entrepreneurs.  The  first 
round  of  this  financial  literacy  assessment  was 
included in the June 2023 survey on the access to 
finance  of  NFCs  in  Romania.  In  addition,  the 
National  Bank  of  Romania  launched  the  TOP 
Entrepreneurship  project  in  October  2023,  aimed 
at  enhancing  entrepreneurs’  financial  knowledge, 
improving  financial  behaviour  and 
increasing 
financial  inclusion.  This  project  also  focuses  on 
digitalising  financial  and  business  activities,  with 
plans  to  organise  events  in  collaboration  with 
academia,  the  banking  sector  and  the  private 
sector,  and  to  develop  applications  and  platforms 
to 
literacy  of  Romanian 
businesses. 

improve  the  digital 

57 

 
 
Table A5.1:  Financial indicators 

(1) Annualised data. 
Credit growth and pension funds EU data refers to the EA average. 
Source: ECB, ESTAT, EIOPA, DG FISMA CMU Dashboard, AMECO. 

58 

20172018201920202021202220232024-Q3EUTotal assets of MFIs (% of GDP)53.050.649.756.457.954.752.849.3248.4Common Equity Tier 1 ratio17.417.719.021.819.919.219.520.016.6Total capital adequacy ratio19.419.721.023.522.222.422.723.120.1Overall NPL ratio (% of all loans)6.65.04.33.93.42.82.52.71.9NPL (% loans to NFC-Non financial corporations)12.08.87.36.65.54.13.73.93.5NPL (% loans to HH-Households)5.95.14.44.54.03.73.83.72.2NPL-Non performing loans coverage ratio58.560.362.162.364.963.963.562.542.1Return on Equity111.713.612.39.013.115.716.819.810.0Loans to NFCs (% of GDP)12.011.511.011.512.412.712.111.630.0Loans to HHs (% of GDP)14.013.813.313.913.712.410.810.644.5NFC credit annual % growth5.19.36.06.720.019.112.810.20.8HH credit annual % growth8.510.97.04.79.76.03.910.50.7Stock market capitalisation (% of GDP)---8.411.49.013.413.169.3Initial public offerings (% of GDP)0.000.000.000.000.000.000.00-0.05Market funding ratio29.727.527.327.925.423.624.7-49.6Private equity (% of GDP)0.270.170.180.030.050.030.04-0.41Venture capital (% of GDP)0.000.000.010.000.010.010.01-0.05Financial literacy (composite)------47.5-45.5Bonds (as % of HH financial assets)1.41.81.92.21.82.02.4-2.7Listed shares (as % of HH financial assets)2.92.42.22.03.73.03.4-4.8Investment funds (as % of HH financial assets)5.64.34.43.33.42.32.1-10.0Insurance/pension funds (as % of HH financial assets)12.012.613.713.714.013.315.1-27.8Total assets of all insurers (% of GDP)2.32.12.12.22.01.91.92.054.8Pension funds assets (% of GDP)--------23.41-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States.Banking sectorNon-banks sector 
 
 
  
 
ANNEX 6: EFFECTIVE INSTITUTIONAL FRAMEWORK 

framework 
institutional 
Romania’s 
influences  its  competitiveness.  Overall,  the 
perceived  quality  of  government  ranks  below 
average  among  the  EU  Member  States.  There  is 
scope  for  improvement  in  quality  of  legislation, 
regulatory  simplification,  and  ensuring  a  skilled 
and  motivated  workforce 
public 
administration,  and  businesses’  perception  of 
corruption.  Romania 
in 
digitalisation  of  public  services.  However  further 
efforts  are  needed  to  achieve  the  Digital  Decade 
targets.  

is  making  progress 

the 

in 

(82).  Against 

this  backdrop,  public 
average 
administration  reform  priorities  under  Romania’s 
recovery  and  resilience  plan  include:  (i)  improving 
the  capacity  for  strategic  coordination  at  the 
the  General 
centre  of  government  within 
Secretariat 
reducing 
(ii) 
administrative burden for citizens and businesses; 
(iii) digital transformation of public administration; 
and  (iv)  civil  service  reform  and  strengthening 
administrative capacity.  

of  Government; 

Graph A6.1: Trust in justice, regional / local 
authorities and in government 

Quality of legislation and regulatory 
simplification 

legislation 

Performance 
is 
in  developing 
above  the  EU  average.  It  is  stronger  for 
impact 
stakeholder  engagement  and  ex-ante 
assessments  than  for  ex  post  evaluation  of 
legislation.  The  latter  shows  a  visible  gap  with 
respect  to  the  EU  average  on  account  of  weaker 
the  methodology, 
requirements 
systematic  adoption,  transparency,  oversight  and 
quality  control  of  ex  post  evaluation  of  both 
primary and subordinate legislation (Graph A6.2).  

governing 

Graph A6.2: Indicators of Regulatory Policy and 
Governance (iREG) 

(1) EU-27 from 2019; EU-28 before 
Source: Standard Eurobarometer surveys 

Public perceptions 

Trust in public institutions is in general below 
the  EU  average  but  has  improved  in  recent 
years. Within the national institutions the biggest 
gap is between trust in the justice institutions and 
central government (Graph A6.1). Key aspects that 
Romania’s 
can 
public 
increase 
less  bureaucracy,  more 
administration  are 
and  more 
communication  with 
transparency in decision-making and use of public 
money  (81).  The  perceived  quality  of  government 
has  improved  slightly  but  remains  below  the  EU 

citizens 

trust 

in 

Source: OECD (2025), Regulatory Policy Outlook 2025 and 
Better Regulation across the European Union 2025 
(forthcoming). 

(81)  Understanding Europeans’ views on reform needs - April 
2023 - - Eurobarometer survey, Country Fact Sheet. 

(82)  Inforegio – European Quality of Government Index 

59 

00.10.20.30.40.50.60.7AutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSummerWinterSummerWinterSpringAutumnSpringAutumn2014201520162017201820192020202220232024Justice,  legal system EU27Justice,  legal system RORegional or local public authorities EU27Regional or local public authorities ROGovernment  EU27Government  RO0.00.51.01.52.02.53.03.54.0Primary lawsSubordinateregulationsPrimary lawsSubordinateregulationsPrimary lawsSubordinateregulationsRO_StakeholderengagementRO_Regulatory ImpactAssessmentRO_Ex-post evaluation oflegislationMethodologySystematic adoptionTransparencyOversight and quality control2021EU-27 
 
      
 
   
 
 
 
 
 
Table A6.1:  Romania. Selected indicators on administrative burden reduction and simplification 

This table presents a subset of iREG indicators focusing on regulatory costs. The indicators refer to primary legislation. 
Source: OECD (2025), Regulatory Policy Outlook 2025 [https://doi.org/10.1787/56b60e39-en] and Better Regulation across the 
European Union 2025 (forthcoming).t 

of 

Romania’s  recovery  and  resilience  plan 
includes  a  measure,  aiming  to  improve  the 
and 
process 
involvement  of  stakeholders.  The  target  is  a 
20%  increase  in  the  number  of  draft  legislative 
acts  subject  to  public  consultation  and  the 
involvement of stakeholders at central level.  

consultation 

public 

of 

use 

government 

The 
emergency 
ordinances  has  been  rising,  particularly  in 
recent  years  (156  in  2024,  131  in  2023,  192  in 
2022, compared to 89 in 2019) (83). 

There  is  scope  to  further  strengthen  the 
mechanisms  for  simplifying  regulation  and 
identifying  administrative  burdens. 
For 
example,  regulators  are  not  required  to  identify 
substantial  costs  of  compliance  with  new 
regulations.  Ex  post  evaluations  of  legislation  do 
not  have  to  contain  an  assessment  of  those  and 
an  evaluation  of  administrative  burdens  either. 
Moreover,  periodic  ex  post  evaluation  of  primary 
legislation is mandatory for some (not all) primary 
laws,  nor  has  the  government  conducted  recently 
in-depth  reviews  of  specific  regulatory  areas  and 
public stocktakes of legislation (see table A6.1).  

(83)  Legislative Council database. 

Efficiency of selected administrative 
procedures 

Selected indicators point to Romania’s public 
administration  taking 
longer  than  other 
Member  States  to  complete  procedures.  For 
example,  the  B-READY  indicators  (84)  show  that 
there  is  much  potential  for  cutting  the  time 
needed  to  register  new  domestic  and  foreign 
firms,  obtain  a  building  permit,  draft  and  file  tax 
returns, obtain a VAT refund and receive payment 
from a government contract.  

Moreover,  according  to  a  report  monitoring  the 
Commission 
implementation 
Recommendation  and  Guidance  on  speeding  up 
permit-granting  procedures  for  renewable  energy 
and  related  infrastructure  projects  (85),  there  is 

the 

of 

(84)  World Bank. 2024. Business Ready 2024. Washington, DC: 

World Bank. doi:10.1596/978-1-4648-2021-2   

(85)  European Commission: Directorate-General for 

Energy, Monitoring the implementation of the Commission 
recommendation and guidance on speeding up permit-
granting procedures for renewable energy and related 

60 

Ex ante impact assessment of legislationEx post evaluation of legislationIdentify and assess the impacts of the baseline or ‘do nothing’ option.Is required to consider the consistency of regulations and address areas of duplication.Identify and assess the impacts of alternative non-regulatory options.Is required to contain an assessment of administrative burdens.Quantify administrative burdens of new regulations.Is required to contain an assessment of substantive compliance costs.Quantify substantial costs of compliance of new regulations.Compares the impact of the existing regulation to alternative options.Assess macroeconomic costs of new regulations. Periodic ex post evaluation of existing regulations is mandatory.Assess the level of compliance.Government uses stock-flow linkage rules when introducing new regulations (e.g., one-in one-out).Identify and assess potential enforcement mechanisms.A standing body has published an in-depth review of specific regulatory areas in the last 3 years.In the last 5 years, public stocktakes have invited businesses and citizens to assess the effectiveness, efficiency, and burdens of legislation.When developing new legislation, regulators are required to …Yes /  For all primary laws For major primary laws For some primary lawsNo / Never 
 
 
 
 
   
 
 
Table A6.2:  Digital Decade targets monitored through the Digital Economy and Society Index 

Source: State of the Digital Decade report 2024 

scope  for  further  aligning  national  practices  in 
Romania with the guidance, to support faster and 
shorter  procedures  for  the  licensing  of  renewable 
energy  projects.  Unlike  19  other  EU  Member 
States,  Romania  lacks  a  dedicated  institution  to 
promote pro-productivity policies. 

Social dialogue 

and 

have 

timely 

partners 

for 
in 

policymaking 

improvements, 
remains 

Social dialogue in Romania continues to face 
limited 
challenges.  Social 
and  meaningful 
opportunities 
reform 
involvement 
the 
implementation.  Despite 
collective  bargaining  coverage 
low, 
particularly  at  sectoral  level.  Romania  adopted  a 
new  Social  Dialogue  Law  in  December  2022,  a 
reform  supported  by  its  RRP,  which  aims  to 
address  deficiencies  with  the  social  dialogue 
process  and  to  increase  collective  bargaining 
coverage. The ESF+ is allocating EUR 85 million in 
the  2021-2027  programming  period  to  boost 
capacity  of  social  partners  and  civil  society 
organisations  to  engage  in  social  dialogue  and 
develop partnerships (86). 

infrastructure projects – Final report, Publications Office of 
the European Union, 2025, available at link.     

(86)  For  an  analysis  of  the  involvement  of  Romania’s  social 
partners at national level in the European Semester and the 
Recovery  and  Resilience  Facility,  see  Eurofound  (2025), 
National-level  social  governance  of  the  European  Semester 
and the Recovery and Resilience Facility. 

61 

Digital public services 

steady 

progress 

in 
Romania  made 
digitalisation  of  public  services  (Table  A6.2). 
Yet,  with  scores  of  52.2  and  50  respectively 
Romania  significantly  lags  behind  with  the  EU 
averages  of  79.4  and  85.4  respectively  is  still 
quite  significant.  However,  growth  rates  of  10-
12% indicate strong progress, suggesting potential 
convergence  with  the  EU  average  and  the 
possibility of reaching targets before 2030. Efforts 
to  digitalize  key  national  and  regional  services, 
establish  a  governmental  cloud,  and  create  an 
interoperability  portal  and  framework  are  crucial. 
Additionally, Romania has scope to improve access 
to  e-health  records  to  meet  the  digital  decade 
target. 

In  September  2024,  Romania  notified  the 
Commission  of  one  eID  scheme  with  a 
substantial  level  of  assurance,  ROeID.  While  the 
use  of  ROeID  is  growing  fast,  just  1.6%  of 
individuals  in  Romania  have  used  their  eID  to 
access  services  provided  by  public  authorities  or 
public  services  in their  country  in the  previous  12 
months,  compared  to  an  EU  average  of  35.8%. 
Romania  has  also  not yet  set  up  and  notified  eID 
legal  persons  under  the  eIDAS 
schemes  for 
Regulation 
that  Romanian 
businesses  cannot  authenticate  themselves  to 
access  public  services  provided  by  other  Member 
States,  including  those  enabled  by  the  Once-Only 

(87).  This  means 

(87)  European Commission, eIDAS Dashboard. 

Digital Decadetarget by 20302022202320242024EU-27Digitalisation of public services144485279100Score (0 to 100)20212022202320232030242455085100Score (0 to 100)202120222023202320303na575979100Score (0 to 100)20212022202320232030RomaniaEU-27Digital public services for citizensDigital public services for businessesAccess to e-health records 
 
 
 
  
 
Technical  System,  part  of  the  EU  Single  Digital 
Gateway (88).  

positions was significant at 51.0 %, above the EU 
average of 45.4 % (91). 

is  developing 

the  necessary 
Romania 
infrastructure 
for  seamless,  automated 
exchange  of  authentic  documents  and  data 
across the EU. There are still additional steps to 
be taken by Romania to become technically ready 
to connect to the Once-Only Technical System (89).  

Graph A6.3: Participation rate of 25-64 year olds 
in adult learning (%) by occupation 

Source: ew European Commission, based on the Labour Force 
Survey 

Civil service  

Romania has a relatively young civil service, 
with  a  higher  ratio  of  staff  aged  49  or  below 
compared to those aged 50 or above than the EU 
average (90). The main challenge facing Romania is 
improving  the  attractiveness  of  public  sector 
employment 
and 
professionals who perceive the public sector to be 
unattractive.  Moreover,  the  share  of  civil  servants 
in  Romania  who  participate  in  adult  learning  is 
below  that  of  the  EU-27,  albeit  increasing  (Graph 
A6.3). The share of women in senior administrative 

skilled  managers 

for 

(88)  European Commission, The Once Only Principle System: A 

breakthrough for the EU’s Digital Single Market 

(89)  European Commission, Once-Only Technical System 

Acceleratormeter 

(90)  Eurostat. Labour Force Survey. Employment by sex, age and 

The management of the public administration 
workforce 
lack  of 
is  undermined  by  a 
integration  and  coherence,  despite  national 
efforts  to  improve.  The  regulatory  framework 
for  a  national  electronic  system  with  data  on 
sector  employees  on  organizational 
public 
structure,  functional  classification,  salary  and 
other  employment  aspects  was  adopted  (92). 
Measures 
IT 
resources 
platforms 
processes are included in the RRP.  

targeting 
for  managing  human 

the  development  of 

Integrity 

consider 

corruption 

in  combating  corruption, 

to  be 
Businesses 
widespread.  In  Romania,  94%  of  companies 
consider that corruption is widespread (EU average 
64%)  and  71%  consider  that  corruption  is  a 
problem  when  doing  business  (EU  average  36%) 
(93).  Moreover,  34%  of  companies  believe  that 
people and businesses caught for bribing a senior 
official  are  appropriately  punished  (EU  average 
31%) (94). The authorities maintain a positive track 
record 
including  as 
regards  high  level  corruption  cases.  However, 
following  rulings  by  the  High  Court  of  Cassation 
and  Justice  on  the  statute  of  limitations,  Courts 
have  closed  many  corruption  cases  and  annulled 
convictions  (95).  Romania  adopted  the  Law  no. 
319/2014 to widen the scope of bribery of foreign 
public  officials  and  to  increase  the  currently  low 
sanctions for legal persons (96). Furthermore, public 
procurement  remains  a  sector  with  a  high  risk  of 
corruption  in  Romania.  24%  of  companies  (EU 
average 27%) think that corruption has prevented 
them  from  winning  a  public  tender  or  a  public 
procurement  contract  in  practice  in  the  last  three 

(91)  European Institute for Gender Equality (EIGE) - Gender 

Statistics Database 

(92)  Government decision No. 833 of 11 July 2024. 

(93)  Flash Eurobarometer 543 on Businesses’ attitudes towards 

corruption in the EU (2024).  

(94)  Ibid. 

(95)  See the 2024 country-specific chapter for Romania of the 

Rule of Law Report, pp. 13-14. 

economic activity.  

(96)  Ibid, p. 12. 

62 

02468101214161820ROEU-27ROEU-27ROEU-27ROEU-272021202220232024Public administration and defence; compulsory social securityHigh-skilled occupationsMedium-skilled occupationsUnskilled occupationsArmed forcesTotal economy 
   
 
 
years  (97).  With  the  support  of  the  EU’s  Technical 
Support  Instrument,  Romania  aims  to  identify 
which areas and procedures of public procurement 
are most prone to corruption (98). 

Romania remains without a lobby register for 
contacts  with  Members  of  Parliament.  The 
engagement  of  Members  of  Parliament  with 
lobbyists  and  other  third  parties  seeking  to 
influence the legislative process therefore remains 
unregulated  and  there  are  also  no  clear  rules  on 
gifts,  hospitality,  favours  and  other  benefits  (99). 
Increased  transparency may  help  preserve  a  level 
playing field for businesses. 

Justice 

justice  system  performs  efficiently 
The 
overall.  The  average  length  at  first  instance  in 
civil  and  commercial  cases  is  decreasing  (204 
days  in  2023  compared  to  209  in  2022).  The 
average  length  at  first  instance  in  administrative 
cases  increased  (387  days  in  2023,  compared  to 
321  in  2022).  The  high  rate  of  vacancies  for 
magistrates remains a concern (100). The quality of 
the  justice  system  is  good  overall.  Continuous 
efforts  are  being  made  to  improve  digitalisation 
within the justice system. However, with regard to 
procedural  rules  enabling  digital  technologies  in 
courts,  the  use  of  digital  technologies  in  the 
prosecution  service,  access  to  electronic  files  of 
ongoing cases, and digital solutions to conduct and 
follow  criminal  case  proceedings,  Romania  is  still 
to 
below  EU  average.  Progress  was  made 
safeguard  the  independence  of  the  judiciary  with 
the adoption of the Justice Laws in 2022 and the 
Ministry  of  Justice  is  considering  evaluating  their 
including 
implementation,  which  stakeholders, 
from  the  magistracy  and  civil  society,  would 
welcome. (101) 

(97)  Flash Eurobarometer 543 on Businesses’ attitudes towards 

corruption in the EU (2024).  

(98)  See the 2024 country-specific chapter for Romania of the 

Rule of Law Report, p. 19. 

(99)  Ibid., pp. 17-18. 

(100) Ibid., pp. 7-8. 

(101) For more detailed analysis see the upcoming 2025 EU 
Justice Scoreboard and the 2024 Rule of Law Report. 

63 

 
 
 
SUSTAINABILITY 
ANNEX 7: CLEAN INDUSTRY AND CLIMATE MITIGATION 

faces 

significant 

regulatory  measures.  Although 

Romania 
challenges 
regarding  its  clean  industry  transition  and 
climate  mitigation:  While  efforts  to  increase 
manufacturing  capacity  in  net  zero  technologies 
are underway, progress is hindered by fragmented 
lack  of 
ecosystems,  skills  shortages,  and  a 
the 
targeted 
country  is  less  dependent  on  imports  for  critical 
raw  materials,  its  low  circular  material  use  rate 
highlights  an  urgent  need  for  enhanced  recycling 
high 
and 
greenhouse  gas  emissions  intensity  and  slow 
transition 
renewable  energy  sources 
necessitate a broader portfolio of decarbonization 
improved  waste 
instruments,  as  well  as 
management  and 
in 
sustainable practices. This annex reviews the areas 
in  need  of  urgent  attention  in  Romania’s  clean 
industry  transition  and  climate  mitigation,  looking 
at different dimensions. 

strategies.  Romania's 

investments 

circularity 

increased 

toward 

Strategic autonomy and technology 
for the green transition  

Net zero industry 

in 

Although  Romania’s  manufacturing  capacity 
in  net  zero  technologies  is  modest  and 
fragmented,  it  appears  to  be  ramping  up  its 
capacity 
the  battery  and  storage 
industry(102). It lacks scale as well as established 
ecosystems  supporting  local  supply  chains  and 
innovation.  Combined  with  a  prevailing  skills 
shortage,  this  is  a  serious  hurdle  that  Romania 
needs  to  overcome  to  scale  up  its  net-zero 
manufacturing capabilities.  

Romania’s  regulatory  framework  related  to 
net  zero  manufacturing  is  focusing  on  high-
industrial  policy,  without  targeted 
-level 
measures.  Romania's  2023-2027 
Industrial 
Strategy  focuses  on 
the  digital  and  green 
transitions  and  expanding  domestic  production  in 
strategic  and  high-tech  sectors.  Progress  was 
made  with  the  introduction  of  the  Industrial 

License  Office  in  charge  of  the  rationalisation, 
simplification  and  digitisation  of  the  specific 
procedures to grant a single industrial license.  

Incentives  schemes  supporting  investment 
and skills in net zero technologies have been 
put in place. In terms of investment, the National 
Plan  for  Recovery  and  Resilience  (Planul  Național 
de  Redresare  și  Reziliență)  allocates  EUR  199 
million  in  grants  for  projects  involving  batteries 
and  solar  cells/panels.  The  plan  aims  to  promote 
investment  in  production,  assembly,  and  recycling 
capacities  for  batteries  (at  least  2  GW)  and 
photovoltaic cells/panels (at least 200 MW), with a 
maximum  annual  budget  of  EUR  150  million. 
Various  skills  programmes  are  also  available, 
including  Romania’s  recovery  and  resilience  plan 
(RRP) and REPowerEU. 

Transforming the car industry  

The  automotive  industry  is  a  crucial  sector 
for  Romania.  Automotive  is  the  top  industrial 
sector with 13-14% of GDP and 1/3 of exports. It 
accounts  for  as  much  as  half  of  manufacturing. 
With more than half a million cars a year, Romania 
ranks 6th to 8th among the biggest producers in the 
EU, on a par with Hungary and Italy. The sector has 
moved  up 
the  value-added  chain.  70%  of 
everything  for  Dacia  is  made  locally  (everything 
except design). 

The  external  economic  environment  creates 
significant  challenges  for  the  future.  40%  of 
manufactured  exports  go 
to  Germany.  The 
weakening  of  the  German  economy  is  affecting 
the  automotive  sector  as  well  as  Romanian 
industry in general.  

The transition to e-vehicles is lagging behind 
EU  averages.  In  2022,  Romania’s  motorisation 
rate  (the  number  of  passenger  cars  per  thousand 
inhabitants) was 482, one of the lowest in the EU 
(EU  average:  659).  The  average  age  of  cars  was 
14.9 years, above the EU average (12.3 years). At 
40%, the share of new electric cars registered was 
the fifth highest in the EU in 2023(103). 

(102) European Commission: Directorate-General for Energy, The 
net-zero manufacturing industry landscape across the 
Member States 2025. 

(103) European Automobile Manufacturers’ Association (ACEA). The 

Automobile Industry Pocket Guide 2024/2025 (2024); 
European Environment Agency, New Registrations of Electric 
Vehicles in Europe, 2024. 

64 

 
 
 
 
 
 
 
Critical raw materials  

Romanian  manufacturing’s  dependence  on 
imports of critical raw materials is low.  With 
8.1% of material inputs stemming from imports in 
2023 (EU average: 22% (104)), Romania is the least 
vulnerable  to  supply  chain  disruptions  of  all  EU 
Member States. Its index of strategic dependencies 
on raw materials in 2023 was one of the lowest in 
the  EU,  suggesting  that  its  sources  of  supply  are 
well diversified. 

Romania  addresses  critical  raw  materials 
(CRMs)  and  CRM-rich  products  in  several 
national  laws  and  initiatives.  The  “National 
Strategy 
for  Non-Energy  Mineral  Resources, 
Horizon 2035” was adopted at the end of 2024. It 
will  tackle  the  circularity  of  CRMs  and  other 
to 
CRM-relevant  aspects.  Romania’s  efforts 
moderate  the  expected  rise  in  demand  for  CRMs 
also  include  increased  investment  in  R&D  and 
education via its national Circular Economy Action 
Plan.  Planned  measures  include  training  activities 
on the circular economy.  

Romania  can  help  reduce  the  EU’s  strategic 
dependencies.  The  country  may  be  a  source  of 
critical  raw materials  for  the  green transition,  but 
certification  and  exploitation  for  these  materials 
remain  difficult.  Permitting  for  CRM  works  well  in 
Romania (60 days, well below the EU target of 27 
months). 

Romania  has  a  very  low  circular  use  of 
materials.  This  has  been  slowly  declining  since 
2012  and  stood  at  1.3%  in  2023.  This  is  the 
lowest  rate  in  the  EU,  considerably  below  the  EU 
average of 11.8% (105). 

Climate mitigation  

Industry decarbonisation 

Romania's manufacturing industry has a high 
intensity  of  greenhouse  gas  emissions,  and 

(104) Statistics | Eurostat 

(105) Source:, Eurostat, ‘Circular material use rate’, last updated 

13.11.24. 

recent  years  saw  only  modest  reductions.  At 
18%,  the  share  of  manufacturing  in  Romania’s 
total  greenhouse  gas  emissions  is  below  the  EU 
average  of  21%  (106).  Romania’s  manufacturing 
sector emits 520 g of CO2eq of greenhouse gases 
per  euro  of  GVA,  almost  twice  the  EU  average  of 
270  g/€.  The  GHG  emissions 
intensity  of 
manufacturing declined by 6% between 2017 and 
2022,  much  less  than  in  the  EU  overall  (20%). 
Among  Romania’s  greenhouse  emissions  from 
manufacturing activity, 57% are related to energy 
and 
industrial 
processes and product use – the same shares as in 
the EU overall.  

remainder  comes 

from 

the 

Graph A7.1: GHG emission intensity of 
manufacturing and energy-intensive sectors, 
2022 

Source: Eurostat. 

from 

Romania’s  manufacturing  has  become  more 
energy  efficient,  but 
its  GHG  emissions 
industry  processes  and 
intensity 
product  use  is  still  high.  Between  2017  and 
2022, 
the  energy-related  greenhouse  gas 
emissions  intensity  of  Romania’s  manufacturing 
output decreased by 20%, to 124 g CO2eq/€ (93% 
of  the  EU  average),  while  in  the  EU  overall  it 
decreased  by  16%  (107).  At  the  same  time, 

(106) In  2023.  Manufacturing  includes  all  divisions  of  the  “C” 
section  of  the  NACE  Rev.  2  statistical  classification  of 
economic  activities.  In  the  remainder  of  this  section,  unless 
indicated  otherwise,  data  on  manufacturing  refer  to  the 
divisions  of  the  NACE  section  C  excluding  division  C19 
(manufacture  of  coke  and  refined  petroleum  products),  and 
the  year  2022.  The  source  of  all  data  in  this  section  is 
Eurostat;  data  following  the  UNFCCC  Common  Reporting 
Framework (CRF) are from the European Environment Agency 
(EEA), republished by Eurostat. 

(107) For the GHG emissions intensity of GVA related to energy use 
and  industrial  processes  and  product  use  respectively,  GHG 
emissions  are  from  inventory  data  in  line  with  the  UNFCCC 
Common  Reporting  Format  (CRF),  notably  referring  to  the 
source sectors CRF1.A.2 –  fuel combustion in manufacturing 
industries  and  construction  and  CRF2  –  industrial  processes 
and  product  use.  The  CRF1.A.2  data  broadly  correspond  to 

65 

0123456C-C19C17C20C23C24KG CO2eq / €RomaniaEU-27 
 
  
 
 
concerning  industrial  processes  and  product  use, 
the GHG emissions intensity from these sources of 
manufacturing  in  Romania  decreased  by  15%,  to 
208 g/€ (still over twice the EU average of 99 g/€). 
The  EU-wide  reduction  was  23%  in  the  same 
period.  In  the meantime,  the  share  of  renewables 
and  electricity  in  manufacturing’s  final  energy 
consumption decreased by 3 percentage points to 
32%, 
the  EU.  The 
lowest 
energy-intensity  characteristics  of  manufacturing 
have  improved  though,  with  the  final  energy 
consumption  by  the  sector  decreasing  by  8  per 
cent – by 1.9 GWh in 2017 per euro of GVA – to a 
figure of 1.8 GWh/€. 

third 

the 

in 

Graph A7.2: Manufacturing industry production: 
total and selected sectors, index (2021 = 100), 
2017-2023 

kg, 3.1 kg, and 5.4 kg CO2eq respectively per euro 
of  GVA,  the  manufacture  of  paper  and  paper 
products,  chemicals,  and  non-metallic  minerals  in 
Romania  had  emissions  intensity  among  the  third 
to fifth highest EU-wide in 2022. 

The GDP share of energy intensive industries 
dropped  significantly  following  the  increase 
in  energy  prices.  In  recent  years,  Romania  has 
seen  an  increase  in  energy  prices,  with  electricity 
prices for large consumers ranking fifth highest in 
the EU in 2023 (109). Except for the paper products 
industry, production in Romania’s energy-intensive 
sectors  has  declined  since  2021,  by  up to  around 
30%  in  metal  processing  and  more  than  20%  in 
the  chemicals  sector.  If  the  share  of  energy 
intensive industry  hovered  around  4-5% in  2018-
2021, it declined steeply to 2.8% by 2023. 

Romania  has  scope  to  broaden  its  toolkit  to 
support  decarbonisation  of  manufacturing 
production  The  current  plans  for  decarbonising 
industry  are  based  on  increasing  the  use  of 
renewables,  gas  and  nuclear  capacities.  Romania 
has  a  national  circular  economy  strategy  and 
action  plan.  Adding  further  instruments  such  as 
contracts  for  difference  and  the  increased  use  of 
power  purchase  agreements,  is  under  way,  with 
RRP support. This could step up support to industry 
to help it modernise and decarbonise. Green public 
procurement 
industry 
decarbonisation  on  the demand  side but  has  only 
been used little so far.  

support 

could 

also 

Source: Eurostat. 

Romania’s  energy-intensive  industries  have 
high  levels  of  greenhouse  gas  emissions 
intensity  by  EU  standards.  Energy-intensive 
industries (108) account for 11% of Romania’s total 
manufacturing gross value added (2022). With 1.2 

the NACE C and E sectors, excluding C-19. GVA data (in the 
denominator  for  both  intensities)  are  aligned  with  this 
sectoral  coverage.  Therefore,  they  are  not  fully  consistent 
with the data referred to in other part of this section 

(108) Notably,  the  manufacture  of  paper  and  paper  products 
(NACE  division  C17),  of  chemicals  and  chemical  products 
(C20),  “other”  non-metallic  mineral  products  (C23;  this 
division includes manufacturing activities related to a single 
substance of mineral origin, such as glass, ceramic products, 
tiles,  and  cement  and  plaster),  and  basic  metals  (C24).  To 
date,  these  industries  are  energy-intensive  –  i.e.  consuming 
much  energy  both  on  site  and/or  in  the  form  of  purchased 
electricity  –  and  greenhouse  gas  emissions  intensive,  in 
various combinations. 

Reduction  of  emissions  in  the  effort  sharing 
sectors 

(110). 

Romania is projected to reach its 2030 effort 
sharing  target  if  it  adopts  and  implements 
the  planned  additional  climate  mitigation 
measures 
In  2023,  greenhouse  gas 
emissions  from  Romania’s  effort  sharing  sectors 
are  expected  to  have  been  3.8%  below  those  of 
2005.  By  2030,  current  policies  are  projected  to 
reduce  these  emissions  by  8.9%  relative  to  2005 
levels.  Additional  policies  considered  in  Romania’s 

(109) For a detailed analysis of energy prices, see Annex 8 on the 

affordable energy transition. 

(110) The national greenhouse gas emission reduction target is set 

out in Regulation (EU) 2023/857 (the Effort Sharing 
Regulation). It applies jointly to buildings (heating and 
cooling); road transport, agriculture; waste; and small industry 
(known as the effort sharing sectors). 

66 

7075808590951001051102017201820192020202120222023ManufacturingManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of other non-metallic mineral productsManufacture of basic metals 
     
 
 
final  updated  energy  and climate  plan  (NECP)  are 
projected  to  involve  reductions  of  a  further  6.4 
percentage  points.  Hence  Romania  is  projected  to 
overachieve  its  effort  sharing  target,  a  12.7% 
reduction,  by  2.6  percentage  points  (111),  once  it 
has adopted and implemented those measures. 

Graph A7.3: Greenhouse gas emissions in the 
effort sharing sectors, 2005 and 2023 

average  and  the  lowest  in  the  EU.  Romania’s 
resource  productivity,  too,  was  below  the  EU 
average in 2023, with EUR 0.34 per kg of material 
consumed.  It  has  been  constantly  stagnating  and 
below  the  EU  average  over  the  past  decade;  this 
has negative environmental impacts and increases 
dependence  on  volatile  raw  material  markets.  In 
2023  Romania  adopted  its  national  Action  Plan 
promoting  the  Circular  Economy,  as  part  of  its 
2022  National  Strategy  for  the  Circular  Economy. 
The  Action  Plan  sets  a  general  direction  for 
accelerating  the  transition  from  a  linear  to  a 
circular economy model in Romania.  

to 

continues 

Despite  generating  less  waste  than  the  EU 
average,  Romania 
face 
challenges  with  waste  management.  It  saw  a 
decrease in the total amount of waste generation 
between  2010  and  2022.  However,  Romania’s 
municipal  waste  generation  has  slightly  increased 
in  recent  years.  In  2022,  the  country  generated 
303  kg/cap  of  municipal  waste.  With  a  recycling 
rate of 12%, which has stagnated since 2010, it is 
one of the worst performers. The landfill rate was 
74% in 2022, with no progress made since 2010. 
In  2021,  at  32%,  its  recycling  rate  for  plastic 
packaging was below the EU average (112). In 2022, 
52.1%  of  construction  and  demolition  waste  was 
recycled,  excluding  backfilling,  far  below  the  EU 
average of 79.8%. At the same time, the material 
footprint  of  33.2  tonnes  per  capita  is  more  than 
double the EU average (14 tonnes per person) and 
the  second  highest  value  in  the  EU.  Because 
Romania  missed  the  2020  municipal  waste 
targets, the  packaging  and  waste  targets  and the 
waste  electrical  and  electronic  equipment  target, 
the  Commission 
legal  proceedings. 
initiated 
Romania  is  at  risk  of  missing  both  the  2025 
municipal waste  and the packaging waste  targets 
and  may  also  not  meet  the  2035  target  of 
maximum  10%  of  municipal  waste  landfilled. 
Although  Romania  has  made  some  progress  on 
closing  substandard  and  illegal  landfills,  progress 
has  been  too  slow  and  it  is  paying  the  resultant 
financial penalties (113).  

Source: European Environment Agency 

Swift  action  on  decarbonising  transport  and 
buildings  appears  particularly  necessary  in 
Romania.  Between  2005  and  2023,  greenhouse 
gas  emissions  from  road  transport  increased  by 
65%  in  Romania,  while  they  decreased  by  5%  in 
the  EU  overall.  From  buildings,  they decreased by 
6%,  much  less  than  the  33%  seen  in  the  EU 
overall.  Speeding  up  climate  mitigation  in  these 
sectors would help protect households, businesses 
and transport users in Romania from the impact of 
the forthcoming carbon price. 

Sustainable industry 

Circular economy transition 

is  still 

lagging  behind  on 

its 
Romania 
circularity  transition. 
Its  circular  use  of 
materials  has  been  slowly  declining  since  2012. 
With  1.3%  in  2023,  the  rate  is  below  the  EU 

(111) The  effort  sharing  emissions  for  2023  are  based  on 
inventory  data.  The  final  data  will  be 
approximated 
review. 
established 
Projections  on  the  impact  of  current  policies  (“with  existing 
measures”,  WEM)  and  additional  policies  (“with  additional 
measures”, WAM), as per Romania’s final updated NECP. 

in  2027  after  a  comprehensive 

(112) The latest available data for packaging waste is for year 

2021. 

(113) In case (INFR(2008)2012), to date, 29 landfills remain open, 
with Romania paying the resultant penalties. In a different 
case, more than half of the landfills subject to the case 
(INFR(2017)2024) have already closed. 

67 

010203040506070809020052023MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
     
 
 
heavy  metals.  Romania  has  the  14th  highest 
amount  of  emissions  of  heavy  metals  to  water 
and  is  in  13th  position  for  emissions  intensity 
(below the EU average intensity of 0.864 kg/billion 
EUR  GVA).  The  main  contributors  of  emissions  to 
water  in  Romania  are  the  mineral  extracting 
industry 
for 
phosphorus  and  chemicals  for  total  organic 
carbon. 

for  heavy  metals, 

refineries 

to  ozone.  To  meet 

The costs of pollution remain far higher than 
the  investment  in  pollution  prevention  and 
control.  For  2022,  about  17 900  deaths  were 
attributed to fine particulate matter (PM2.5), 3 600 
deaths to nitrogen dioxide (NO2) and 2 800 deaths 
each 
its  environmental 
objectives  concerning  pollution  prevention  and 
control (towards zero pollution), Romania needs to 
provide  an  additional  EUR  805  million  per  year 
(0.28%  of  GDP),  mostly  related  to  clean  air  and 
noise.  The  current  investment  levels  supporting 
pollution  prevention  and  control 
reach  an 
estimated  EUR  1.3  billion  per  year  in  Romania  in 
2021–2027. Most of the financing concerns clean 
air  (EUR  1.2  billion  per  year).  Protection  from 
environmental  noise  receives  around  EUR  0.6 
billion  per  year,  with  a  further  EUR  47  million  for 
site remediation. EUR 2.1 billion per year is needed 
for pollution prevention and control (115). 

in 

the 

investment 

Current 
circularity 
transition  has  been  insufficient.  Romania  is 
estimated to  need  additional  investment  worth  at 
least EUR 426 million per year, with an additional 
EUR  108  million 
for  waste  management. 
Combined, this amounts to EUR 534 million a year, 
representing  0.19%  of  Romania’s  GDP.  Of  the 
circular  economy  gap,  EUR  112  million  relates  to 
for 
recent 
sustainable  products,  packaging  and  packaging 
waste,  labelling  and  digital  tools,  critical  raw 
materials  recycling  and measures  proposed  under 
the  amended  Waste  Framework  Directive.  EUR 
314 million constitutes further investment needed 
to 
economy 
potential (114).   

such  as  eco-design 

Romania’s 

initiatives, 

circular 

unlock 

Zero pollution industry 

Emissions 

the  National 

Romania  has  been  making  progress 
in 
is  now 
reducing  air  pollution,  which 
decoupled  from  GDP  growth,  but  several 
shortcomings  are  still  to  be  addressed.  The 
2020-2029  emissions  reduction  commitments 
Reduction 
under 
Commitments Directive have been met, except for 
NOx  and  PM2.5.  Romania  projects  to  meet  the 
stricter  emissions  reduction  commitments  for 
2030  and  onwards.  In  2023,  air  quality  limit 
values  for  nitrogen  dioxide  (NO2)  set  by  the 
Ambient Air Quality (AAQ) Directive were breached 
in  one  air  quality  zone,  and  for  PM10  in  four  air 
quality  zones.  Shortcomings  have  been  identified 
in  air  quality  monitoring  for  some  time  now. 
Romania  has  made  some  progress,  as  some 
monitoring  stations  have  been  added  to  the 
network,  but  gaps 
the 
appropriate  number  and  type  of  air  quality 
sampling points and data quality objectives. 

remain  concerning 

releases 

industry  still 

Romania’s 
large 
amounts of air and water pollutants. Although 
it has the 10th highest damage in the EU, it comes 
6th for emissions intensity, above the EU average 
of  27.5  EUR/thousand  EUR  GVA.  The  main 
contributors  to  emissions  to  air  are  the  energy 
sector  as  well  as  the  mineral  industry  for  NOX 
emissions;  the  waste  management  and  chemical 
industry for dust emissions; and the energy sector, 
metals  sector  and  mineral  sector  for  SO2  and 

(114) European Commission, DG Environment, Environmental 

(115) European Commission, DG Environment, Environmental 

investment needs & gaps assessment programme, 2025 
update. Expressed in 2022 prices. 

investment needs & gaps assessment programme, 2025 
update. Expressed in 2022 prices. 

68 

 
 
 
Table A7.1:  Key clean industry and climate mitigation indicators: Romania 

Source:  Net zero industry: European Commission: The net-zero manufacturing industry landscape across Member States: final 
report, 2025. Automotive industry transformation: Eurostat. Critical raw materials: Eurostat. Climate mitigation: See 
footnotes in the "climate mitigation" section; reduction of effort sharing emissions: EEA greenhouse gases data viewer; European 
Commission, Climate Action Progress Report, 2024. Sustainable industry: Years of life lost due to PM2.5: Eurostat and EEA, 
Harm to human health from air pollution in Europe: burden of disease status, 2024. Air pollution damage: EEA, EU large industry 
air pollution damage costs intensity, 2024. Emissions covered: As, benzene, Cd, Cr, Hg, NH3, Ni, NMVOC, NOX, Pb, dioxins, PM10, 
PAH, SOX. Water pollution intensity: EEA, EU large industry water pollution intensity, 2024. Releases into water covered from 
cadmium, lead, mercury, nickel. Other indicators: Eurostat. 

69 

Strategic autonomy and technology for the green transitionNet zero industryOperational manufacturing capacity 2023- Solar PV (c: cell, w: wafer, m: module), MW100-250 (m)- Electrolyzer, MW-- Wind (b: blade, t: turbine, n: nacelle), MW-- battery, MWh0-200Automotive industry transformation201720182019202020212022202320182021Motorisation rate (passenger cars per 1000 inhabitants), %307332357379400413425539561New zero-emission vehicles, electricity motor, %0.220.460.932.255.239.0010.631.038.96Critical raw materials201720182019202020212022202320182021Material import dependency, %10.79.59.310.19.98.124.222.6Climate mitigationTrendIndustry decarbonisation201720182019202020212022202320172022GHG emissions intensity of manufacturing production, kg/€0.560.550.550.640.610.520.480.340.27Share of energy-related emissions in industrial GHG emissions48.748.647.948.546.846.443.344.842.5Energy-related GHG emissions intensity of manufacturing258.4264.6256.2294.8286.6273.0-158.4132.9and construction, kg/€Share of electricity and renewables in final energy consumption34.733.632.931.130.432.134.043.344.2in manufacturing, %Energy intensity of manufacturing, GWh/€1.941.891.912.022.021.791.521.291.09Share of energy-intensive industries in manufacturing production10.17.3GHG emissions intensity of production in sector [...], kg/€- paper and paper products (NACE C-17)1.040.880.940.790.991.241.24-0.730.68- chemicals and chemical products (NACE C20)4.094.584.625.334.373.093.19-1.251.26- other non-metallic mineral products (NACE C23)4.014.274.705.544.745.375.52-2.532.24- basic metals (NACE C24)3.924.294.576.364.493.682.63-2.793.49Reduction of effort sharing emissions20182019202020212022202320182023GHG emission reductions relative to base year, % 5.94.03.8- domestic road transport47.351.047.256.669.064.81.45.2- buildings-0.8-0.70.914.96.6-6.021.432.92005202120222023TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %78.282.881.481.2-12.7-3.82.6Sustainable industryTrendCircular economy transition20182019202020212022202320182021Material footprint, tonnes per person23.428.029.430.530.433.214.715.0Circular material use rate, %1.6        1.4        1.5        1.5        1.5        1.3        11.611.1Resource productivity, €/kg0.5        0.4        0.4        0.4        0.5        0.5        2.12.3Zero pollution industryYears of life lost due to PM2.5, per 100,000 inhabitants1,329    1,091    1,175    1,122    1,423    -702571Air pollution damage cost intensity, per thousand € of GVA    47.3          27.5      Water pollution intensity, kg weighted by human factors per bn € GVA    0.7   0.9RomaniaEU-27RomaniaEU-27RomaniaEU-27 
 
  
 
ANNEX 8: AFFORDABLE ENERGY TRANSITION 

This  annex  outlines  the  progress  made  and 
the  ongoing  challenges  faced  in  enhancing 
energy  competitiveness  and  affordability, 
while advancing the transition to net zero. It 
examines  the  measures  and  targets  proposed  in 
the  final  (draft)  updates  to  the  national  energy 
and climate plans (NECPs) for 2030. 

Romania  has  a  good  situation  in  terms  of 
security  of  energy  supply,  and  contributes  to 
the stability of the region. Energy efficiency has 
continued  to  progress  well,  and  compared  to 
in  2024  there  was  a  more 
previous  years 
significant  deployment  of 
renewable  energy. 
However,  Romania  is  facing  a  number  of 
challenges  related  to  the  affordable  energy 
transition,  in  particular  structural  bottlenecks  in 
storage  solutions,  weak  consumer  empowerment, 
limited  cross-border  trade,  long  permit-granting 
procedures for renewable energy that are slowing 
down  their  deployment,  limited  development  of 
power  purchase  agreement  (PPAs),  and  a  high 
fiscal burden on electricity, distorting energy price 
signals for electrification.  

Energy prices and costs 

Graph A8.1: Retail energy price components for 
household and non-household consumers, 2024 

(i) For household consumers, consumption band is DC for 
electricity and D2 for gas. Taxes and levies are shown 
including VAT. 
(ii) For non-household consumers, consumption band is ID for 
electricity and I4 for gas. Taxes and levies are shown 
excluding VAT and recoverable charges, as these are typically 
recovered by businesses. 
Source: Eurostat 

and 

consumers 

Romania’s  retails  energy  prices  dropped  in 
2024  with  the  exception  of  gas  prices  for 
household 
remained 
considerably  below  EU  average.  Retail 
electricity prices for households were around 35% 
lower  than  the  EU  average  with  slightly  higher 
share  of  network  costs 
(35.1%  of the  final 
electricity  prices  for  an  EU  average  of  27.2%), 
while  for  non-household  consumers,  prices  were 
just  below  EU  average  with  the  shares  of  all 
components  (energy  and  supply,  network  costs, 
taxes  and  levies)  broadly  following  EU  trends. 
Retail  gas  prices  for  households  and  non-
household  consumers  were 
least 
expensive in the EU, but with slightly higher share 
of network costs and considerably lower taxes and 
levies  than  EU  average.  The  various  measures 
adopted by the Romanian authorities and in force 
throughout 2024, meant to cap the electricity and 
gas prices, also played a role in this evolution.  

third 

the 

Graph A8.2: Monthly average day-ahead wholesale 
electricity prices and European benchmark 
natural gas prices (Dutch TTF) 

(i) the Title Transfer Facility (TTF) is a virtual trading point for 
natural gas in the Netherlands. It serves as the primary 
benchmark for European natural gas prices. 
(ii) CEE and CWE respectively provide average prices in the 
central-western European (Belgium, France, Germany, 
Luxembourg, the Netherlands and Austria) and central-
eastern European (Poland, Czechia, Slovakia, Hungary, 
Slovenia and Romania) markets. 
Source: S&P Platts and ENTSO-E 

With  an  average  of  103 EUR/MWh 
in 
2024(116),  Romania  had  the  EU’s  fourth 
highest  wholesale  electricity  prices  –  and 
while prices in Romania declined early in the 

(116) Fraunhofer (ENTSO-E data). 

70 

 
 
 
 
 
 
 
 
(i) 

internal 

Romania  has  several  projects  of  common 
interest  in  electricity  transmission  that  also 
have a priority status under the CESEC High-
Level  Group.  These  are: 
lines 
Cernavoda-Stalpu,  and  Gutinas-Smardan  as  part 
of the Black Sea corridor with Bulgaria, (ii) internal 
lines  Portile  de  Fier-Resita,  Resita-Timisoara/ 
Sacalaz  and  Arad-Timisoara/  Sacalaz  and  lastly 
(iii)  cross-border  interconnections  such  as  the 
Resita-Pancevo line as part of the mid-continental 
east  corridor  with  Serbia.  The  completion  of  the 
infrastructure is also supporting the integration of 
the  European 
Moldova’s  power  system 
electricity  market  and  its  security  of  supply  by 
realising 
lines: 
Isaccea- Vulcanesti- Chisinau and Suceava– Balti. 

two  electricity 

transmission 

into 

is 

there 

room 

The national framework for the permitting of 
is  well 
energy 
infrastructure  projects 
structured.  However, 
for 
improvement  in  terms  of  coordination  among 
various  public  authorities  across  different  levels. 
The  administrative  procedures  involved  in  energy 
infrastructure  development  are  very  complex. 
Moreover,  the  permitting  framework  does  not  yet 
take  the  hydrogen  and  CO2  infrastructure  into 
account. There is scope for improvements in terms 
of  streamlining  environmental  assessments  and 
the duration of procedures. 

The  challenges  to  energy  system  integration 
are  significant,  with  the  waiting  times  for 
connecting  renewable  energy  sources  (RES) 
to  the  grid  remaining  long.  Grid  connection 
tends to be cumbersome due to limited availability 
in  specific  areas.  The  burden  of  high  costs 
associated  with grid  reinforcement  and  expansion 
continues 
investors,  while  some 
construction  deadlines  have  been  delayed  by  the 
transport  system  operator  (TSO)  and  district 
system operator (DSO) by up to two years. 

to  fall  on 

to  accelerate 

The  Romanian  recovery  and  resilience  plan 
the 
includes  measures 
deployment  of  renewable  energy.  These  are 
reforms  that  aim  to  decarbonise  the  energy 
land  as 
system,  facilitate  the  use  of  state 
acceleration  areas  for  RES 
investments,  and 
investments  supporting  the  installation  of  new 
renewable  power  production  capacity  (wind  and 
solar), as well as electricity storage. 

year  amid  falling  natural  gas  costs,  they 
surged  during  the  spring/summer  and  again 
in the winter, diverging from central eastern 
European (CEE) markets. This decorrelation was 
driven by  factors  affecting  both  consumption  and 
generation.  Prolonged  and  warmer  summer 
heatwaves and a colder winter in the region led to 
higher  consumption.  The  supply-demand  gap  was 
exacerbated  by  reduced  hydropower  reserves  and 
to  meteorological 
reduced  wind  output  due 
(-11%(117)  and 
conditions 
in  2024), 
-15% 
diminished nuclear generation due to malfunctions 
(-4%), lower coal  output (-15%)  due to rising CO2 
costs  and  limited  non-fossil  flexibility.  This  gap 
was mainly covered by higher imports, particularly 
from Hungary and Serbia(118), as well as increased 
costly natural-gas-fired generation (+8% in 2024) 
in  the  summer,  especially  during  peak  demand 
hours.  These  conditions  drove  concentrated  price 
spikes in the evening hours (18h-21h), when solar 
output  declined  and  demand  increased,  especially 
during  the  summer.  On  the  other  hand,  average 
daytime  hourly  prices  were  lower  compared  to 
2023, likely owing to the increased solar output in 
Romania (+88% in 2024)(119). 

Flexibility and electricity grids 

Romania  is  part  of  the  Core(120)  and  south-
east  Europe(121)  capacity  calculation  regions 
(CCRs)(122).  Member  States  should  ensure  that  a 
minimum  of  70%  of 
technical  cross-border 
capacity is available for trading. In the Core region, 
Romania  is  not  fulfilling  this  target,  and  has  a 
derogation  in  place  that  limits  the  cross-zonal 
capacity  available  for  trading.  In  the  south-east 
Europe CCR, electricity flows are heavily influenced 
by  exchanges  in  nearby  bidding  zone  borders, 
including the western Balkan countries. 

(117) ENTSO-E. 
(118)Both increasing natural gas-fired generation in 2024. 
(119)Yearly electricity data, Ember (generation and consumption 

data throughout the paragraph). 

(120)Core is the CCR which covers central European countries 

namely Austria, Belgium, Czechia, Germany, France, Croatia, 
Hungary, the Netherlands, Poland, Romania, Slovenia, 
Slovakia and, once connected, Ireland. 

(121)South-east Europe is the CCR to which Romania, Bulgaria 

and Greece belong. 

(122)A CCR is a group of countries which calculate the cross-

border electricity trade flows together. 

71 

 
 
prices 

In 2023 there were 32 occurrences of negative 
RES 
in 
electricity 
curtailment and the associated costs do not seem 
to  be  monitored  in  Romania  (this  is  flagged  by 
ACER  as  a  weakness  in  Romania’s  country  sheet 
2023)(124). 

Romania(123). 

storage 

electricity 

Romania’s 
capacity 
reported  in  the  draft  updated  NECP  is  around 
16.2 MW.  Romania  has  already  taken  steps  to 
promote  the  installation  of  electricity  storage,  in 
particular  power  battery  storage,  with  a  target  of 
at  least  1 200 MW  by  2030  (800 MW  of  which 
from pumped storage hydroelectric power plants), 
around  2 000 MW  by  2035  and  4 500 MW  by 
2040. 

regulatory 

framework 

Romania’s 
still 
presents  barriers  to  the  development  of 
flexible resources, hindering the participation 
of  demand-side  response  (DSR)  and  other 
distributed  energy  resources.  Romania  allows 
DSR  and  storage  to  sell  and  buy  electricity  in  the 
day-ahead  and 
intraday  markets,  although 
participation  is  limited.  DSR  and  storage  are  also 
allowed to participate in ancillary services and are 
also  eligible  to  provide  congestion  management 
including 
to 
services 
independent 
to 
participate  in  the  above-mentioned  markets  and 
services,  but  their  involvement  is  restricted  by 
regulatory and market barriers, such as the limited 
deployment  of  smart  meters  or  the  lack  of  a 
proper legal framework. 

Aggregators, 
are 

aggregators, 

allowed 

TSOs. 

Despite  progress  regarding  self  energy 
consumption, 
empowerment 
consumer 
remains  limited.  The  number  of  prosumers  is 
steadily  increasing.  In  2024,  194 903  prosumers 
were  registered.  However,  no  noticeable  progress 
has  been  made  regarding  the  participation  of 
in  energy  communities(125).  While 
individuals 
initiatives  exist  for  energy  communities,  the  legal 
framework in not always sufficiently clear and the 
current  procedures 
setting  up  energy 
for 
communities  are  often  viewed  by  the  interested 
parties  as  very  complex.  Romania  has  introduced 
measures  to  protect  vulnerable  consumers  of 
energy  by  maintaining  regulated  prices  and 

(123) ACER. 
(124) ACER Country_Sheets_MMR_Retail_2024.pdf. 
(125)The  latest  report  from  ACER  mentioned  only  two  energy 

communities for Romania. 

providing  state  support  schemes  for  energy 
efficiency  and  access  to  renewable  energy  (see 
Annex 11). 

Romania  lacks  explicit legislation  for  energy 
sharing despite efforts to redefine prosumers and 
promote  direct  energy  sales.  In  addition,  the 
country is experiencing some delays in its plan 
to  develop  smart  meters:  Romania  has  legal 
plans to reach an 80% target, but is still far from 
this target (in 2023 the smart meter roll-out stood 
at only 23%)(126). 

ratio 

price 

in  the 

largely  stagnant 

in  electrification  across  sectors 

In  2023,  electricity  accounted  for  15.3%  of 
Romania’s  final  energy  consumption,  below 
the EU average of 22.9%, and this share has 
last 
remained 
decade(127),  partly  due  to  an  unfavourable 
that 
electricity-to-gas 
cost-
disincentivizes  electrification  and 
effective  decarbonization.  When  it  comes  to 
households, electricity accounts for 15.0% of final 
energy consumption, while in industry it represents 
29.0% (see also Annex 7). For the transport sector, 
this  share  remains  negligible  at  1.0%.  Further 
progress 
is 
required  for  cost  effectively  decarbonising  the 
economy  and  bringing  the  benefits  of  affordable 
renewable  generation  to  consumers.  In  2024’s 
second semester, Romania had one of the highest 
electricity-to-gas  price  ratios  in  the  EU,  due  to  a 
fiscal burden skewed towards electricity. Excluding 
taxes and levies, this ratio was 3.1. for households 
and  3.5  for  energy-intensive  industries,  rising  to 
3.4  and  3;9,  respectively,  after  taxes  and  levies. 
For  households,  taxes  and  levies  accounted  for 
~25,7%  of  the  final  electricity  price,  compared  to 
~16%  for  gas.  For  energy-intensive  industries, 
non-recoverable  taxes  and  levies  made  up  ~11% 
of  the  electricity  price,  while  gas  was  nearly  tax-
exempt  (~1%),  making  it  more  costly  to  shift  to 
electricity-based 
industrial 
heating 
processes.(128) 

and 

(126) ACER report. 
(127)CAGR (compound annual growth rate) of -0.5% between 
2013 and 2023 and minimum/maximum share of 15.3% 
and 17.1%, respectively. Source: Final energy balances, 
Eurostat. 

(128)Analysis based on Eurostat data for the second semester of 
2024. For household consumers, consumption band is DC for 
electricity  and  D2  for  gas,  which  refer  to  medium-sized 
consumers and provide an insight into affordability. For non-
household consumers, consumption band is ID for electricity 
and I4 for gas, referring to large-sized consumers, providing 

72 

 
 
 
 
Renewables and long-term contracts 

establishment of regulatory sandboxes, as well as 
introducing legal clarity on energy communities. 

Renewable  energy  sources  represented  48% 
of electricity generation in Romania in 2024, 
compared  to  the  EU’s  overall  RES  share  of 
47%(129).  In  2024  the  renewable  energy  installed 
capacity  increased  by  14%,  marking  a  clear 
progress after several years of almost stagnation. 
This was due mostly to the significant increase (by 
57%) of solar. In 2024, Romania installed 1.7 GW 
of  solar  energy.  No  significant  increases  were 
renewable  energy 
observed 
sources.(130)  

the  other 

for 

Graph A8.3: Romania's installed renewable 
capacity (left) and electricity generation mix 
(right) 

Based on its updated NECP, Romania aims to 
ensure  that  38.3%  of  renewable  energy 
forms part of the gross final consumption of 
energy  by  2030.  This  applies  to  all  forms  of 
renewables,  from  which  15%  come  from  wind 
power  capacity  and  11%  from  solar  power 
capacity.  While  increased  compared  to  the  draft 
updated  NECP,  this  target  remains  below  the 
contribution 
the  EU 
Legislation (which is 41%). 

calculated  based  on 

So far, Romania does not have a market for 
power  purchase  agreements  (PPAs).  Beyond 
the  pipeline  of 
possible 
renewable  energy  projects  is  too  constrained  to 
allow for sufficient supply to feed a PPA market. 

regulatory  barriers, 

In  2024,  Romania  launched  a  contract  for 
difference 
the 
(CfD)  mechanism 
construction of renewable energy installations and 
opened  the  first  auction  for  1.5 GW  of  renewable 
energy  generation  capacities  –  500 MW  of  solar 
photovoltaics (PV) and 1 GW of onshore wind. 

for 

“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Ember 

Energy efficiency 

The  Romanian  permitting  framework 
is 
moderately  aligned  with  the  Commission’s 
Recommendation. Between 2023 and  2024, the 
Romanian authorities took several important steps 
to  improve  the  legal  framework  for  granting 
permits  for  projects  on  renewables.  This  included 
introducing  measures  to  facilitate  participation by 
individuals  and  communities  by  enabling  a 
simplified grid connection procedure for renewable 
self-consumers, as well as digital and transparent 
grid connection processes. However, the permitting 
process  for  renewable  energy  projects  is  not 
centralised. This results in parallel procedures and 
duplication  of  documentation  requirements.  There 
is  room  for  improvement  also  regarding  the 

an  insight  into  international  competitiveness  (price  used  for 
the  calculation  excludes  VAT  and  other 
recoverable 
taxes/levies/fees  as  non-household  consumers  are  usually 
able to recover VAT and some other taxes). 

(129) Yearly electricity data, Ember. 
(130) IRENA Renewable Capacity Statistics 2025. 

Energy  efficiency  gains  have  maintained 
their  pace  in  Romania,  although  a  large 
untapped  potential  still  exists. 
In  2023, 
primary  energy  consumption  (PEC)  decreased  by 
3.4%  to  29.95 Mtoe.  Final  energy  consumption 
(FEC) decreased by 3.1% to 23.28 Mtoe. Compared 
to 2022, FEC decreased in industry by 13.6% and 
in  residential  by  4.3%,  whereas  it  increased  in 
transport  by  7.8%  and  in  services  by  7.4%. 
According to the recast Energy Efficiency Directive, 
Romania should try to reach a PEC of 30.16 Mtoe 
and an FEC of 22.47 Mtoe by 2030. 

Under  its  long-term  renovation  strategy, 
Romania  aims  to  achieve  9%  savings  on 
the  annual 
energy  use  and 
renovation rates to 3.39% by 2030. Although 
final energy consumption in households decreased 
by  4.3%  between  2022  and  2023,  it  increased 
slightly  by  about  5%  when  applying  climate 

increase 

73 

 
 
 
corrections(131).  Unless  Romania  steps  up 
its 
improve  the  energy  efficiency  of 
efforts  to 
buildings,  it  would  be  difficult  to  reach  the 
expected objectives for 2030 in terms of reducing 
energy consumption in the buildings sector. 

final 

residential 

target  heat  pumps(132). 

Heating  and  cooling  represent  76%  of  the 
country’s 
energy 
consumption,  of  which  29%  comes  from 
renewables. 
2.5  million 
Approximately 
households  are  using  a  gas  boiler  for  heating 
purposes,  while  the  heat  pump  market  remains 
limited.  While  renovation programmes  exist,  there 
are  currently  no  financial  programmes  in  place 
that  specifically 
In 
Romania, electricity was 3.4 times more expensive 
than  gas  in  2023,  decreasing  to  3.2  times  more 
expensive  in  the  first  half  of  2024.  This  means 
that  end  users  save  energy  but  do  not  make  any 
significant financial savings if they choose a heat 
pump for heating. The residential electricity-to-gas 
price  ratio  has  decreased  by  14%  over  the  past 
five  years,  making  heat  pumps  slightly  more 
financially  attractive.  However,  Romania  is  taxing 
the 
increasing 
electricity  heavier 
obstacles for the deployment of heat pumps 

than  gas, 

Romania’s  national  financing  framework 
mobilising  investments  in  energy  efficiency 
is  mostly  composed  of  grants  and  subsidies. 
In  2024,  Romania  continued  to  implement  the 
support  scheme  to  improve  the  energy  efficiency 
of the industry sector, where investments support 
also the deployment of digital energy consumption 
measurement  systems  and  promote  on-site 
renewable  installation.  Little  private  funding  is 
leveraged,  in  the  absence  of  dedicated  financial 
instruments  for  energy  efficiency  and  with  an 
underdeveloped  energy  services  sector,  as  a  key 
efficiency 
market-enabler 
improvements. 

energy 

for 

(131)Climate correction applied to whole final energy consumption 
in  households  that  is  multiplied  by  the  average  heating 
degree  days (HDD) over  the  2006-2023  period  and  divided 
by the HDD in the corresponding year. 

(132)https://www.sustainability-

today.ro/index.php/2024/07/02/epg-scenarios-for-adoption-
of-heat-pumps-in-romania-until-2030/ 

74 

Security of supply and diversification 

renewables 

Despite  progress  in  renewables,  Romania’s 
overall energy mix in 2023 remained heavily 
reliant  on  fossil  fuels,  with,  oil  accounting  for 
36%  and  natural  gas  for  25%  of  the  energy 
mix(133)(134),  while 
(together  with 
biofuels) accounted for 20%. There is little change 
compared  to  the  previous  year,  and  overall,  still 
less  than  one  third  of  the  country’s  energy  mix 
(20%  renewables  and  9%  nuclear)  comes  from 
non-fossil  sources  of  energy.  The  recent  efforts 
made by Romania to decarbonise its energy sector 
are not yet reflected in the energy mix.   

The 

country 

Romania  covers  most  of  its  natural  gas 
demand  from  domestic  production  and  has 
diversified  the  sources  of  import  for  the 
remaining  part.  Romania  does  not  need  to 
develop  new  cross-border  gas  infrastructure  for 
security-of-supply 
is 
reasons. 
finalising the Tuzla-Podisor pipeline as part of the 
BRUA  corridor.  Maximising  the  use  of  existing 
infrastructure  is  essential  for  the  security  of 
supply of the entire south-east European region. In 
this context, the CESEC High-Level Group is looking 
into the gas quality harmonisation process, with a 
view to removing regulatory obstacles that impede 
the  use  of  the  Trans-Balkan  pipeline.  Romania’s 
engagement in this process is essential in view of 
the  important  role  it  plays  for  the  security  of 
supply in the region. 

Fossil fuel subsidies 

In  2023,  environmentally  harmful  ([1])  fossil  fuel 
subsidies  without  a  planned  phase-out  before 
2030  represented  0.47%([2])  of  Romania’s  GDP([3]) 

(133)Electricity and heat have been excluded to avoid double-

counting, focusing on primary energy sources. 

(134) Gross inland consumption, Eurostat. 
([1])  Direct fossil fuel subsidies that incentivise maintaining or 
increasing in the availability of fossil fuels and/or use of 
fossil fuels. 

([2])  Numerator is based on volumes disclosed by the Romanian 
authorities via the 2025 NECPR reporting. For all Member 
States, it includes public R&D expenditures for fossil fuels as 
reported by the IEA (Energy Technology RD&D Budgets) and 
excludes, for methodological consistency, excise tax 
exemption on kerosene consumed in intra-EU27 air traffic.  

 
 
 
(EU  weighted  average  of  0.49%).  Income/price 
support  accounted  for  72%  of  this  volume,  while 
tax  measures  and  direct  grants  represented  17% 
and  11%,  respectively.  Fossil  fuel  subsidies 
without  a  planned  phase-out  before  2030  and 
which  do  not  specifically  address,  in  a  targeted 
way,  energy  poverty  nor  genuine  energy  security 
concerns  included  ongoing  price  caps  for  heating 
supplied to households, an excise tax reduction on 
tax 
gasoil  used 
consumed  by 
exemptions  on  natural  gas 
households. 
2023 
Effective  Carbon  Rate([5])  averaged  EUR  54.6  per 
tonne of CO₂, below the EU weighted mean of EUR 
84.80(135). 

in  agriculture,  and  excise 

Additionally, 

Romania’s 

([3])  2023 Gross Domestic Product at market prices, Eurostat. 

([5])  The Effective Carbon Rate is the sum of carbon taxes, ETS 
permit prices and fuel excise taxes, representing the 
aggregate effective carbon rate paid on emissions. 

(135) OECD (2024), Pricing Greenhouse Gas Emissions 2024 

75 

 
 
 
 
Table A8.1:  Key Energy Indicators 

Source: Eurostat, ENTSO-E, S&P Platts 

76 

20212022202320242021202220232024Household consumer - Electricity retail price (EUR/KWh)0.1562          0.2889              0.1897              0.1873          0.2314              0.2649          0.2877          0.2879          Energy & supply [%]45.5%59.4%43.3%39.2%36.6%54.3%55.6%47.8%Network costs27.3%17.9%32.3%35.1%26.7%25.3%24.8%27.2%Taxes and levies including VAT27.3%22.7%24.4%25.7%36.7%20.3%19.6%25.0%VAT15.9%16.0%16.0%16.0%14.5%13.4%13.8%14.6%Household consumer - Gas retail price0.0373          0.0833              0.0552              0.0564          0.0684              0.0948          0.1121          0.1128          Energy & supply63.0%73.5%64.1%60.6%43.7%61.0%64.5%53.9%Network costs20.9%10.6%19.9%23.4%22.5%17.3%17.1%18.3%Taxes and levies including VAT16.1%16.0%15.9%16.0%33.8%21.7%18.4%27.8%VAT16.1%16.0%15.9%16.0%15.5%11.6%10.2%13.6%Non-household consumer - Electricity retail price0.1102          0.2813              0.1700              0.1588          0.1242              0.1895          0.1971          0.1661          Energy & supply54.8%70.7%61.5%58.5%43.0%66.5%63.0%55.8%Network costs16.9%7.8%15.4%16.5%15.8%10.7%11.9%15.5%Taxes and levies excluding VAT14.6%6.6%8.5%10.8%30.4%9.9%11.2%15.4%Non-household consumer - Gas retail price0.0332          0.1017              0.0478              0.0403          0.0328              0.0722          0.0672          0.0517          Energy & supply72.1%78.6%76.3%71.7%66.2%77.3%77.3%68.7%Network costs10.7%5.1%7.0%11.3%7.7%3.8%5.3%7.1%Taxes and levies excluding VAT1.8%0.6%0.8%1.2%12.5%6.1%7.3%11.6%Wholesale electrity price (EUR/MWh)214.6264.5104.0103.3111.0233.299.184.7Dutch TTF (EUR/MWh)n/an/an/an/a46.9123.140.534.420172018201920202021202220232024Gross Electricity Production (GWh)64 296           64 876              59 623              55 935           59 470              56 003           57 983           -Combustible Fuels28 672       27 308           23 787           20 088       22 162          21 569       18 367       -Nuclear11 509       11 377           11 280           11 466       11 284          11 089       11 191       -Hydro14 853       18 097           16 006           15 701       17 745          14 360       18 649       -Wind7 407         6 322             6 773             6 945         6 576             6 997         7 548         -Solar1 856         1 771             1 778             1 733         1 703             1 988         2 227         -Geothermal-              -                 -                 -              -                 -              -              -Other Sources-              -                 -                 -              -                 -              -              Gross Electricity Production [%]Combustible Fuels44.6%42.1%39.9%35.9%37.3%38.5%31.7%-Nuclear17.9%17.5%18.9%20.5%19.0%19.8%19.3%-Hydro23.1%27.9%26.8%28.1%29.8%25.6%32.2%-Wind11.5%9.7%11.4%12.4%11.1%12.5%13.0%-Solar2.9%2.7%3.0%3.1%2.9%3.6%3.8%-Geothermal0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Other Sources0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Net Imports of Electricity (GWh)2 894-             2 544-                1 518                2 792             2 199                1 224             3 018-             -As a % of electricity available for final consumption -5.9%-5.1%3.1%5.8%4.4%2.6%-6.9%-Electricity Interconnection [%]6.9%10.0%9.1%9.3%7.6%14.6%18.3%16.3%Share of renewable energy consumption - by sector [%]Electricity42.0%41.8%42.6%43.4%42.7%43.7%47.4%-Heating and cooling26.6%25.4%25.7%25.3%24.6%26.3%29.1%-Transport6.6%6.3%7.8%8.5%8.9%8.9%8.0%-Overall24.5%23.9%24.3%24.5%23.9%24.2%25.8%-20202021202220232020202120222023Import Dependency [%] 28.2%31.6%32.4%27.9%57.5%55.5%62.5%58.3%of Solid fossil fuels 22.0%23.2%20.0%13.0%35.8%37.2%45.9%40.8%of Oil and petroleum products 64.6%68.2%72.7%70.6%96.8%91.7%97.8%94.5%of Natural Gas 16.6%22.8%18.1%4.2%83.6%83.6%97.6%90.0%Dependency from Russian Fossil Fuels [%]of Natural Gas 44.8%77.6%12.8%0.0%41.0%40.9%20.7%9.3%of Crude Oil32.3%26.5%26.4%0.0%25.7%25.2%18.4%3.0%of Hard Coal99.2%99.0%59.4%20.8%49.1%47.4%21.5%1.0%2017201820192020202120222023Gas Consumption (in bcm)11.9               11.8                  11.0                  11.4               12.0                  10.0               9.6                 Gas Consumption year-on-year change [%]5.4%-0.9%-6.6%3.3%6.0%-16.9%-4.2%Gas Imports - by type (in bcm)1.2                 1.5                     2.7                     2.1                 3.6                    2.9                 2.7                 Gas imports - pipeline1.2                 1.5                     2.7                     2.1                 3.6                    2.9                 2.7                 Gas imports - LNG0.00.00.00.00.00.00.0Gas Imports - by main source supplier [%]Bulgaria1.1%1.6%4.5%2.5%18.5%71.0%95.2%Algeria0.0%0.0%0.0%0.0%0.0%0.0%3.8%Hungary0.0%11.7%58.6%52.8%3.8%14.7%1.0%Russia98.9%86.7%36.9%44.8%77.6%12.8%0.0%RomaniaEU 
 
   
 
ANNEX 9: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

action 

is 
increase 

Romania  is  one  of  the  EU  Member  States 
most  exposed  to  climate  risks  and  should 
take  urgent  action  to  build  up  resilience. 
required 
Additional 
clarify 
to 
its  preparedness  and 
responsibilities, 
water  resilience  and  reduce  its  economy’s  impact 
on  nature.  Climate  change  has 
increasing 
repercussions  in  Romania,  in  particular  due  to 
flooding, 
extreme  weather  events  such  as 
droughts  and  heatwaves.  Despite  abundant 
freshwater  resources,  the  country  faces  water 
pollution, 
flooding  and  water  management 
challenges.  Sustainable  water  management 
remains  a  major  environmental  issue,  particularly 
in 
terms  of  water  governance,  wastewater 
treatment  and  water  efficiency.  A  driver  of 
economic  growth,  Romania’s  manufacturing  and 
agricultural sectors are among the main causes of 
Romania’s  water  issues.  The  state  of  nature, 
ecosystems  and  soils  risks  degrading,  posing 
significant  risks  in  terms  of  the  economy  and 
competitiveness.  A  significant  number  of  key 
sectors  for  the  Romanian  economy  (agriculture, 
forestry,  fisheries  and  aquaculture,  mining  and 
metals,  construction,  water  utilities,  healthcare 
delivery,  supply  chain  and  transport,  food  and 
beverage)  are  highly  dependent  on  ecosystem 
services.  Romania  is  one  of  the  Member  States 
with  the  highest  dependence.  Addressing  climate 
risks and protecting the environment are therefore 
essential  to  ensure  business  and  production 
continuity, economic stability and competitiveness, 
and social fairness. 

Climate adaptation and preparedness 

Romania  faces  several  challenges  resulting 
from  climate  change,  including  river  and 
coastal  flooding,  droughts  and  heatwaves. 
The 2024 floods across Central Europe caused by 
storm  Boris  had  a  severe  impact  on  the  country. 
Climate  change  is  causing  increasingly  variable 
precipitation,  resulting  in  more  severe  floods, 
droughts, and water security challenges (136).  

Romania  should  consider  modernising  and 
reinforcing  its  water  infrastructure  where 
further 
necessary.  Flood 

risks  might  be 

exacerbated  by  the  high  concentration  of  dams 
and  poor  maintenance  of  reservoirs  and  flood 
defences  and  the  delay  in  the  implementation  of 
the  prevention  measures  set  out  in  Romania’s 
Flood Risk Management Plan (FRMP). Of the 2 627 
measures in the second FRMP, 67% have not been 
started,  mostly  protection  measures,  while  only 
56%  of  the  measures  under  the  first  FRMP  have 
been  completed  or  are  ongoing.  Nature-based 
solutions  should  be  systematically  considered 
rather  than  grey  solutions,  in  particular  at  the 
logging  also 
spatial  planning  stage. 
in 
especially 
threatens  disaster 
Romania’s  primary  and  old-growth  forest  and 
Natura  2000  sites. Climate  change is  expected to 
increase the number of heatwaves. 

resilience, 

Illegal 

between 

for  water 

Climate  risks  directly  affect  Romania’s 
economy and society. Romania has identified 16 
key  sectors  affected  by  climate  change,  with 
agriculture  being  particularly  vulnerable.  In  2019, 
droughts impacted 25% of arable land, potentially 
reducing  crop  yields (137).  Agricultural  losses  are 
estimated to be 16% higher in Romania in a world 
that  is  2.0 °C  hotter (138).  Climate  change  also 
threatens  Romania’s  water  security,  by  increasing 
competition 
electricity 
generators, 
industry,  agriculture,  tourism  and 
households.  Furthermore,  droughts  can  affect 
energy  production  and  energy  security,  which 
relies heavily on hydro and nuclear power (139). The 
country’s  high  climate  protection  gap  may  pose 
challenges to public finances, which might have to 
step  in  for  uninsured  economic  losses  following 
climate-related 
a 
pronounced  gap  in  insurance  against  flooding;  all 
climate-related 
insurance 
penetration of below 50% (140). Between 1980 and 
2020,  only  5%  of  economic 
losses  were 
insured (141).  Rising  temperatures  and  extreme 
events  can  also  increase  the  spread  of  infectious 

disasters.  Romania 

perils 

have 

has 

an 

(137) Climate ADAPT, 2024, Country Profile Romania – 

Assessment, Link. 

(138) The European Commission’s Joint Research Centre (JRC)’s 
PESETA project (Projection of Economic impacts of climate 
change in Sectors of the European Union based on bottom-
up Analysis, Link. 

(139) Climate ADAPT, 2024, Country Profile Romania – 

Assessment, Link. 

(140) EIOPA, 2024, Dashboard on insurance protection gap for 

natural catastrophes, Link. 

(136) EEA, 2024, Economic losses from weather- and climate-

(141) EEA, 2024, Economic losses from weather- and climate-

related extremes in Europe, Link. 

related extremes in Europe, Link. 

77 

 
 
 
 
 
 
diseases, 
tick-borne 
including  mosquito-  and 
illnesses. For example, Romania reported cases of 
human West Nile fever in 2023, which resulted in 
67 reported deaths in Europe. 

related 

policy  measures 

to 
National 
adaptation and preparedness remain limited, 
and  additional  efforts  are  needed.  Although 
Romania  has  developed  a  national  adaptation 
strategy  for  the  period  2024-2030,  with  its 
respective action plan, both are yet to be adopted. 
Romania  has  also  established 
the  national 
platform  for  adaptation  to  climate  change  (RO-
ADAPT)  to  support  the  development  of  national 
and  sectoral  climate  change  adaptation  policies. 
However,  its  2023  reporting  lacks  information  on 
nature-based solutions. The national recovery and 
resilience  plan  includes  measures  to  reduce  flood 
risks,  improve  water  disposal  and  storage,  and 
adapt  forest  ecosystems.  In  addition,  there  are 
cohesion policy support projects which target flood 
risk 
management  and 
response  system.  However,  Romania 
reports 
limited  funding  for  disaster  risk  reduction,  and 
beneficiaries  have  weak  administrative  capacity 
for developing and implementing projects. 

improvement  of 

the 

to 

to 

The 

took 

progress. 

first  steps 

Romania 
improve 
interinstitutional coordination and to address 
climate  adaptation  at  sub-national  level. 
Weak  cooperation  between  different  actors  and 
institutions has been identified as one of the main 
barriers 
Interministerial 
Committee on Climate Change established in 2022 
could improve cooperation by bringing together 15 
ministries  and  the  offices  of  the  President  and 
Prime  Minister.  The  number  of  cities  participating 
in  the  Covenant  of  Mayors  has  slightly  increased, 
as  has  the  number  of  Romanian  cities  and 
municipalities  that  have  developed  tailored  local 
adaptation 
some 
municipalities  and  regions  are  participating  in  the 
EU Mission on Adaptation to Climate Change. 

Furthermore, 

strategies. 

Water resilience 

Large  areas  of  Romania  are  water-stressed, 
and there is pressure on water resources due 
from  manufacturing  and 
to  demands 
agriculture. These sectors are heavily dependent 
on  water  supply,  and  irrigation  is  crucial  in  many 
is 
rural  areas.  Romania’s  water  productivity 

78 

considerably  lower  than  that  of  other  Member 
States,  standing  at  EUR 26  per  m3  of  abstracted 
water  in  2022  and  showing  a  slightly  fluctuating 
trend over a 5-year period. The water exploitation 
index plus (WEI+) reached 21 in 2022, showing an 
increasing  trend  over  the  last  few  years,  with 
exceptions in 2019 and 2021. Seasonal data show 
that  the  country’s  total  water  consumption  is 
generally  greater  than  its  renewable  freshwater 
resources  in  the  summer  months.  The  highest 
WEI+ value (32.5) was reached in the third quarter 
of  2022,  and  the  second  highest  value  (31.5)  in 
the  third  quarter  of  2017.  The  main  consumer  of 
water  is  manufacturing,  followed  by  agriculture. 
Between 2016 and 2021 water abstraction in the 
manufacturing sector increased by 4.5%, and that 
highest  water 
sector 
consumption,  at  2 029.5  million  m3,  i.e.  50.5%  of 
total  consumption  in  2021,  putting  a  significant 
strain on the country’s water resources. 

accounts 

the 

for 

as 

river 

third 

having 

Romania’s 

Water  quality  in  Romania  has  marginally 
improved. 
basin 
management  plan  (2022-2027)  under  the  Water 
Framework  Directive  shows  that  the  ecological 
status  and  potential  of  surface  water  bodies  has 
only  slightly  improved  since  the  second  plan. 
Approximately  67%  of  surface  water  bodies  are 
ecological 
classified 
status/potential. Their chemical status has slightly 
improved, as 97.6% of surface water bodies have 
a  good  chemical  status.  As  regards  groundwater 
status  has  not 
bodies, 
deteriorated  since  the  second  plan,  with  100% 
reported as having good quantitative status. Their 
chemical  status  has  slightly  improved,  with  at 
least  91.7%  now  reported  as  having  good 
chemical  status.  However,  8.4%  are  at  risk  of 
failing to achieve good chemical status by 2027. 

their  quantitative 

good 

cause 

treatment 
is  a 
Romania’s  wastewater 
particular 
concern.  Despite 
for 
improvements  in  compliance  over  the  years,  in 
particular  thanks  to  EU  funding,  Romania  has 
experienced  serious  difficulties  in  implementing 
the  Urban  Wastewater  Treatment  Directive. 
Overall,  Romania’s  compliance  rate  was  12%  in 
2020.  This  partial  implementation  has  forced  the 
European  Commission to  take  legal  action.  In this 
respect,  150  large  agglomerations  are  still  failing 
to  meet 
collection 
the  urban  wastewater 
obligations, while 154 large agglomerations do not 
comply with secondary  treatment obligations, and 
154 
tertiary 
treatment obligations. In addition, according to the 

large  agglomerations  with 

the 

 
third  RBMP,  water  quality 
is  affected  by 
discharges,  particularly  in  coastal  and  transitional 
waters. It is therefore necessary to take additional 
measures  and  implement  the  projects  needed  to 
fully  comply  with 
the  requirements  of  the 
Directive,  taking  advantage  of  the  available  EU 
funding,  i.e.  the  European  Regional  Development 
Fund  and  the  Recovery  and  Resilience  Facility.  As 
shown  in  Graph  A9.2,  the  investment  needs  for 
water  protection  and  water  management  are 
substantial, standing at around EUR 1.9 billion per 
year  by  2027.  Of  this,  EUR 0.8  billion  is  linked  to 
wastewater  measures.  Drinking  water  measures 
require an additional EUR 189 million per year and 
the  other  aspects  of  the  Water  Framework 
Directive  around  EUR 915  million  per  year  above 
the  existing  levels  of  financing.  The  2021-2027 
multiannual financial framework and the Recovery 
and  Resilience  Facility  already  help  to  meet 
Romania’s  investment  needs  for  water  protection 
infrastructure 
and  management. 
development  would 
improve  water 
management,  e.g.  wastewater  collection  and 
treatment, water reuse, reducing leaks in networks 
and the general water supply. Romania has one of 
the 
lowest  compliance  rates  with  EU  water 
legislation.  Additional  investments  are  needed  to 
improve  monitoring  (quality  and  quantity)  and 
support  nature-based  solutions,  flood  prevention 
and river restoration. 

Further 
help 

Biodiversity and ecosystems 

The  state  of  nature  and  ecosystems  risks 
degrading in Romania, reducing the country’s 
climate  resilience.  Romania  is  one  of  the  most 
biologically diverse countries in the EU, it hosts 87 
habitat  types  and  245  species  covered  by  the 
Habitats  Directive.  The  country  also  hosts 
populations  of  148  threatened  bird  species  as 
listed in Annex I to the Birds Directive. According to 
the  latest  available  data,  68%  of  the  country’s 
habitats have a good status, above the EU average 
of 14.7%. The conservation status of species, with 
46%  reported  as  having  a  good  status,  is  higher 
than the EU average of 27%. In the case of birds, 
some 19% of the breeding species showed short-
term increasing  or  stable  population  trends,  while 
that  figure  for  wintering  species  was  15%.  Data 
show an improving trend compared to the previous 
reporting  period.  However,  this  positive  trend 
needs to be nuanced due to the problems with the 
reported data, in particular uncertainties regarding 

79 

the  true  extent  and  condition  of  ecosystems  in 
Romania. 

Graph A9.1: Direct dependency(1) on ecosystem 
services(2) of the gross value added generated by 
economic sector in 2022 

(1) Dependency based on the sector’s own operations, 
excluding value chain operations within countries and across 
international value chains. A high dependency indicates a high 
potential exposure to nature-related shocks or deteriorating 
trends, which means that the disruption of an ecosystem  
service could cause production failure and severe financial 
loss. 
(2) Ecosystem services are the contributions of ecosystems to 
the benefits that are used in economic and other human 
activity, including provisioning services (e.g. biomass 
provisioning or water supply), regulating and maintenance 
services (e.g. soil quality regulation or pollination), and cultural 
services (e.g. recreational activities). 
Source: Hirschbuehl et al., 2025, The EU economy's 
dependency on nature, Link. 

to 

economy 

Romania's 

Nature  degradation  can  create  significant 
risks 
and 
competitiveness,  as  it  is  one  of  the  Member 
the  highest  supply  chain 
States  with 
dependency  on  ecosystem  services.  Direct 
dependency  on  ecosystem  services  (37%  highly 
dependent) is in line with the EU average (slightly 
below  the  EU  average  (44%).  30%  of  Romania’s 
gross value added is characterised by a high level 
of  dependency  in  the  supply  chain  compared  to 
the  EU-27  average  of  22%.  Several  sectors  such 
as  agriculture,  forestry,  fisheries  and  aquaculture, 
mining  and  metals,  construction,  water  utilities, 
and  healthcare  delivery  (see  Graph  A9.1)  are 
particularly dependent on ecosystem services, with 

0%20%40%60%80%100%AgricultureForestryFishery and acquacultureMining and metalsConstructionWater utilitiesHealthcare deliveryAviation travel and tourismFood beverages and tobaccoSupply chain and transportPublic services and othersElectricityChemical and materials industryElectronicsOil and gasReal estateHeat utilitiesAutomotiveRetail consumer goods and…Information technologyBanking and capital marketsInsurance and asset…Digital communicationsHighMediumLow 
   
100%  of  the  gross  value  added  of  these  sectors 
directly  dependent  on  ecosystem  services.  Other 
sectors are also heavily dependent, though not at 
100%.  Romania  shows  a  particularly  high 
downstream dependency of 52%, which seems to 
be  largely  due  to  high  dependency  in  the  IT  and 
the  insurance  sectors.  This  means  that  failure  to 
maintain  the  capacity  of  ecosystems  to  deliver 
services could entail significant costs or even stop 
these  sectors.  Protecting  and 
production 
restoring  key  ecosystems  would  ensure  that  the 
long-term  competitiveness  of  these  economic 
sectors is preserved. 

in 

Graph A9.2: Investment needs and gaps in EUR 
million, at 2022 constant prices 

global biodiversity agreements and undermines its 
long-term  economic  and  social  development.  This 
is mainly due to weak administrative capacity and 
lack of political interest. 

Sustainable agriculture and land use 

Romania’s  carbon  removals  fall  short of  the 
level  of  ambition  needed  to  meet  its  2030 
target  for  land  use,  land  use  change  and 
forestry  (LULUCF).  Recent  trends  show  that 
LULUCF  removals  have  been  slowly  decreasing 
since 2020 in Romania. To meet its 2030 LULUCF 
target,  additional  carbon  removals  of  -2.4  million 
tonnes of CO2 equivalent (CO2eq) are needed (142). 
The  latest  available  projections  show  a  gap  to 
target  of  2.0  million  tonnes  of  CO2eq  for  2030 
(143).  Additional  measures  therefore  need  to  be 
applied to reach the 2030 target. 

(UAA) 

to  12.7  million  hectares 

Romanian  agriculture 
is  a  source  of 
greenhouse  gas  emissions  and  has  a 
moderate  impact  on  air,  water  and  soils.  In 
2022,  agriculture  was  responsible  for  a  total  of 
17 988  million  tonnes  of  CO2eq.  This  includes 
9 917 million tonnes of CO2eq from livestock. The 
utilised  agricultural  area 
in  Romania 
decreased  by  7%  from  13.7  million  hectares  in 
2012 
in  2022. 
Furthermore,  according  to  data  from  the  Nitrates 
Directive,  12.6%  of  groundwater  monitoring 
stations  in  Romania  recorded  average  nitrate 
concentrations  above  50 mg/l  between  2016  and 
2019, exceeding the healthy threshold for human 
consumption. The livestock density index was 0.35 
in  2020,  which  is  below  the  EU  average  of  0.75. 
Ammonia  emissions  have  shown  a  decreasing 
trend with a reduction of 10% between 2015 and 
2022.  In  2022,  no  pesticides  were  detected  in 
surface water bodies. 

Romania  is  transitioning  to  a  sustainable  food 
system  by  implementing  policies  to  reduce  the 
environmental  impact  of  agriculture.  In  2022, 
3.35%  of  its  agricultural  land  has  landscape 
features  such  as  woods  and  non-productive 
grasslands,  which  is  below  the  EU  average  of 

(142) National LULUCF targets of the Member States in line with 

Regulation (EU) 2023/839. 

(143) Climate Action Progress Report 2024 COM/2024/498. 

80 

Source: European Commission, DG Environment, 
Environmental investment needs & gaps assessment 
programme, 2025 update. 

its  marine  areas 

Targeted  action  on  nature  protection  and 
restoration  is  needed  to  meet  Romania’s 
nature restoration targets. Taking into account 
both Natura 2000 and other nationally-designated 
protected  areas,  Romania  legally  protects  23.5% 
of its land areas (EU-27 average 26%) and 21.4% 
of 
(EU-27  average  12%). 
Romania  has  not  yet  presented  a  National 
Biodiversity  Strategy  and  Action  Plan.  Romania 
requires  EUR 3.8  billion  of  investment per  year  to 
effectively conserve and restore its natural capital, 
mitigate  the  impacts  of  climate  change,  and 
preserve the country’s rich biodiversity (see Graph 
for 
financing 
A9.2).  The  current 
biodiversity  and  ecosystem  conservation 
in 
Romania is around EUR 755 million per year. This 
shortfall puts at risk the country’s commitment to 

level  of 

 - 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000BiodiversityWaterBaselineGap 
   
 
5.6%.  Organic  farming,  which  reduced  the  use  of 
synthetic fertilisers and pesticides, made up 5.1% 
of  Romania’s  agricultural  land,  a  more  than  50% 
increase since 2018. Romania aims to reach 6% of 
UAA  under  organic  farming  by  2030,  which  it  will 
be  able  to  achieve  if  the  current  growth  trend  in 
organic  farming  area  is  maintained  over  the 
coming  years.  To  mitigate  the  environmental 
impact of agriculture, under the CAP strategic plan 
the Romanian government has taken measures to 
ensure  soil  protection  during  sensitive  climatic 
periods  and  has  incentivised  farmers  to  adopt 
environmentally-friendly  agronomic  practices.  The 
plan  also  supports  the  increase  in  the  share  of 
organic  farming  and  the  use  of  soil  covers, 
promotes  crop  rotation  and  diversification,  and 
helps  to  reduce  nutrient  losses,  as  well  as  other 
sustainable  agriculture  practices.  These  measures 
are  crucial  to  the  long-term  competitiveness  of 
Romania’s  agri-food  system  and  its  bioeconomy, 
which  play  a  significant  economic  role.  The 
bioeconomy,  encompassing  the  production  and 
processing  of  biological  products,  contributed 
EUR 17.9  billion  of  added  value  to  the  country’s 
in  2021.  Agriculture 
gross  domestic  product 
accounted  for  EUR 9.6  billion,  while  the  food 
industry contributed EUR 2.1 billion. 

81 

 
Table A9.1:  Key indicators tracking progress on climate adaptation, resilience and environment 

(1) The data show the average for the timespan 2006-2023 based on EFFIS - European Forest Fire Information System. 
(2) Scale: 0 (no protection gap) – 4 (very high gap). EIOPA, 2024, Dashboard on insurance protection gap for natural catastrophes. 
(3) van Daalen, K. R. et al., 2024, The 2024 Europe report of the Lancet Countdown on health and climate change: unprecedented 
warming demands unprecedented action. The Lancet Public Health. 
(4) This indicator measures total water consumption as a percentage of the renewable freshwater resources available for a given 
territory and period. Values above 20% are generally considered to be a sign of water scarcity, while values equal or greater than 
40% indicate situations of severe water scarcity. 
(5) European Commission, 2024, seventh Implementation Report from the Commission to the Council and the European 
Parliament on the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third 
River Basin Management Plans and Second Flood Risk Management Plans). 
(6) For this indicator, the EU average includes figures for the UK under the previous configuration, EU-28. 
(7) European Commission, 2023, EU Bioeconomy Monitoring System dashboards. 
(8) Nitrates can persist in groundwater for a long time and accumulate at a high level through inputs from anthropogenic sources 
(mainly agriculture). The EU drinking water standard sets a limit of 50 mg NO3/L to avoid threats to human health. 
(9) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2024 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 – Annex IIa. 
Source: Eurostat, EEA. 

82 

Climate adaptation and preparedness:20182019202020212022202320182021Drought impact on ecosystems0.040.2212.080.7714.931.276.772.76[area impacted by drought as % of total]Forest-fire burnt area (1)22 158     22 158     22 158     22 158     22 158     22 158     [ha, annual average 2006-2023]Economic losses from extreme events150          -           485          32            1 147       16            24 142       62 981       [EUR million at constant 2022 prices]Insurance protection gap (2)----1.00         1.00         [composite score between 0 and 4]Heat-related mortality (3)94            94            94            94            94            [number of deaths per 100 000 inhabitants in 2013-2022]Sub-national climate adaptation action40            32            33            34            31            31            4144[% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:20182019202020212022202320182021Water Exploitation Index Plus, WEI+ (4)17.818.323.318.521.0-4.54.5[total water consumption as % of renewable freshwater resources]Water consumption3 228       3 372       3 800       4 003       3 743       -           [million m3]Ecological/quantitative status of water bodies (5)[% of water bodies failing to achieve good status]Surface water bodies---33%---59%Groundwater bodies---0%---93%Biodiversity and ecosystems:20182019202020212022202320182021Conservation status of habitats (6)68.2-----14.7-[% of habitats having a good conservation status]Common farmland bird index------72.274.42000=100Protected areas---2324--26[% of protected land areas]Sustainable agriculture and land use:20182019202020212022202320182021Bioeconomy's added value (7)14 264     15 352     14 496     17 886     634 378     716 124     [EUR million]Landscape features----3.4           -[% of agricultural land covered with landscape features]Food waste------[kg per capita]Area under organic farming2.42.93.64.45.17.99-[% of total UAA]Nitrogen balance-27.4-27.61.1-16.2--[kg of nitrogen per ha of UAA]Nitrates in groundwater (8)------[mgNO3/l]Net greenhouse gas removals from LULUCF (9)46 770-     46 734-     49 110-     48 149-     46 466-     -           256 077-     240 984-     [Kt CO2-eq]RomaniaEU-27RomaniaEU-27RomaniaEU-27RomaniaEU-27 
 
  
 
FAIRNESS 
ANNEX 10: LABOUR MARKET 

the 

and 

groups, 

population 

Despite  improvements  in  employment  rates, 
Romania  still  has  one  of  the  lowest  labour-
market  participation  rates  in  the  EU.  This  is 
characterised  by  significant  disparities  across 
regions  and  persistent  underrepresentation  of 
certain 
low 
effectiveness  of  Active  Labour  Market  Policies 
(ALMPs).  Obstacles  to  the  country’s  ability  to 
innovate  and  compete  in  an  increasingly  digital 
and green economy include high rates of inactivity, 
low  levels  of  training  and  lifelong  learning  and  a 
lack  of  essential  skills  among  the  labour  force. 
Furthermore,  demographic  challenges  such  as  an 
ageing  population,  declining  birth  rates  and 
outward  migration  patterns,  culminating  in  a 
shrinking  working-age  population,  pose  a  long-
term threat to its labour market and to sustainable 
growth.  To  address  these  challenges,  useful 
measures  include  i)  improving  the  integration  of 
vulnerable  groups 
ii) 
in  the 
enhancing  the  scope  and  effectiveness  of  active 
labour  market  policies  and  iii)  modernising  the 
public  employment  service  (PES);  such  measures 
will  hopefully  contribute  to  competitiveness  and 
inclusive growth. 

labour  market, 

recent 

improvements, 

the 
Despite 
employment  situation  in  Romania  remains 
challenging.  The  employment  rate  remains  one 
of the lowest in the EU (69.5% in 2024 vs 75.8% 
in the EU), with significant geographical disparities. 
While  more  developed 
regions  have  higher 
employment  rates  (Bucharest-Ilfov,  81.1%)  and 
have  benefited  in  recent  years  from  foreign 
investment, 
face 
challenges  in  terms  of  employment,  with  some 
rates  even  declining  considerably  (north-east, 
69.6%  in  2024  down  from  79.5%  in  2019).  The 
south-east 
lowest 
employment rate in Romania at 62.6%, resulting in 
a gap of 18.5 percentage points (pps) between the 
highest  and  lowest  regional  employment  rates, 
thereby  exacerbating  regional  disparities  (see 
Annex 16).  

developed 

recorded 

regions 

region 

less 

the 

to 

Meanwhile,  the  unemployment  rate  in  2024 
remained  unchanged  compared 
the 
previous  two  years  and  was  below  the  EU 
average (5.4% compared to 5.9%). Long-term 
unemployment  in  Romania  decreased  in  recent 
years and is in 2024 below the EU average (1.8% 
vs EU: 1.9%). Romania's long-term unemployment 
accounts  for  33.4%  of  total  unemployment  (vs 

83 

to 

long-term  unemployment 

32.2%  in  the  EU  in  2024).  Some  key  factors 
contributing 
in 
Romania include the lack of adequate skills and a 
significant  proportion  of  undeclared  work, 
accounting  for  an  estimated  21.7%  of  the  total 
labour  output  in  2019,  according  to  the  latest 
available  estimates  (144).  Improving  labour  market 
outcomes  will  be  a  key  factor  in  achieving  the 
national  employment  rate  target  of  74.7%  by 
2030. 

Graph A10.1: Key labour market indicators 

Source: Eurostat 

While wage growth has been strong, in-work 
poverty  rates  remain  high.  Nominal  wage 
growth is expected to moderate at 9.9% in 2025, 
after  18.2%  in  2023  and  12.8%  in  2024.(145) 
Similarly, real wages have been increasing rapidly, 
outpacing  the  EU  average,  with  growth  reaching 
6.8%  in  2024.  Real  wages  growth  is  projected  to 
remain strong at 5.8% in 2025. The growth in real 
wages is due to both robust nominal wage growth 
and  rapid  disinflation  (inflation  decreased  from 
9.7%  in  2023  to  5.5%  in  2024).  The  statutory 
minimum wage also increased by more than 58% 

(144) ELA (2023), Factsheet on undeclared work – ROMANIA 

(145) Data for 2024 and 2025 are based on the European 
Commission Autumn 2024 economic forecast. 

01020304050607080051015202530352009201020112012201320142015201620172018201920202021202220232024%Activity rate 15-64 (rhs)Employment rate 20-64 (rhs)Unemployment rate 15-74 (lhs)Long-term unemployment rate 15-74 (lhs)Youth unemployment rate 15-24 (lhs)NEET rate 15-29 (lhs) 
 
 
   
 
 
 
is  associated  with 

between Q1-2022 and Q1-2025, corresponding to 
an increase of close to 24% in real terms. Despite 
relatively  high  labour  productivity  growth,  strong 
wage  growth 
risks  of 
competitiveness  losses  due  to  the  significant 
increases in unit labour cost (ULC) since 2014 and 
the  decrease  in  export  market  shares  in  recent 
years  (2021-23),  as  well  as  the  fact  that  wage 
growth  has  been  higher  than  what  could  be 
expected  based  on  economic  fundamentals  since 
2014.  At  the  same  time,  wage  levels  remain  low 
compared  to  most  other  Member  States  and  in-
work poverty is amongst the highest in the EU (see 
Annex  11).  Despite  being  employed,  18.2%  of 
single-person  households  in  Romania  face  are  at 
risk  of  in-work-poverty,  with  their  equivalised 
annual  disposable  income  falling  below  60%  of 
the national median (vs EU: 11.6%).  

is 

of 

indicative 

The  gender  employment  gap  remains  high, 
deep-rooted 
which 
inequalities  regarding  women’s  participation 
in the labour market. Romania still has one the 
lowest employment rates for women in the EU, at 
60.3%  in  2023  (9.2  pps  lower  than  the  general 
population  level  and  10.5  pps  below  the  EU 
average),  despite  some  improvements  in  recent 
years.  Consistent  with  the  general  EU  trend,  the 
gender  employment  gap  decreased  compared  to 
2023  (18.1  pps  in  2024  vs  10.0  pps  in  the  EU). 
Women  with 
low  qualifications  face  greater 
difficulties  in  finding  a  job,  as  reflected  in  the 
gender  employment  gap  among 
low-skilled 
individuals (32.4 pps vs 21.5 pps EU average).  

Women’s  participation  in  the  labour  market 
is  hampered  by 
ineffective  activation 
measures as well as by the limited access to 
early  childhood  education  and  care  services, 
especially  in  rural  areas.  Romania  has  one  of 
the  lowest  rates  of  children  under  3  enrolled  in 
formal  childcare (11.4% vs 39.2% in EU in 2024) 
and  the  system  of  parental  leave  predominantly 
reserved for mothers rather than fathers. Romania 
faces 
gender 
related 
employment  gap  that  are  deeply  rooted  in  socio-
cultural traditions (146). 

challenges 

the 

to 

a  significant  proportion  unemployed  or 
inactive.  Youth  unemployment  rates  remain 
among  the  highest  in  the  EU  (23.9%  in  2024  vs 
14.9% in the EU), and approximately 1 in 5 young 
people  (aged  15-29)  were  not  in  employment, 
education  or  training  (NEETs)  in  2024  (19.4%  vs 
11.0%  in  the  EU),  despite  decreasing  trends  for 
both  indicators.  The  difficulty  of  finding  work 
stems from high rates of early school leaving, and 
a  misalignment  between  the  skills  provided 
through the education and training system and the 
needs of the labour market (see Annex 12). As for 
young  NEETs,  Romania  also  faces  a  gender  gap, 
with  the  rate  for  women  aged  15-29  being  11.2 
pps  higher  than  for  men.  According  to  the  latest 
available  data,  the  rate  of  young  persons  with 
in  employment,  education  or 
disabilities  not 
training  in  Romania  was  46.3%  in  2022,  which 
was  one  of  the  highest  rates  in  the  EU(147). 
Furthermore,  over  half  of  young  people  from 
Roma communities are NEETs (59%)(148). 

including 

Vulnerable  groups, 
low-skilled 
adults,  persons  with  disabilities  and  Roma 
people,  also  face  barriers  to  labour  market 
integration.  The  employment  rate  of  low-skilled 
people remains well below the EU average (45.1% 
vs  EU:  58.7%  in  2024)  and  remains  significantly 
lower  compared  to  that  of  people  with  tertiary 
education  (90.0%).  With  a  disability  employment 
gap  at  44.8  pps  (EU:  24.0  pps),  and  one  of  the 
lowest  activity  rates  in  the  EU  (47.8%  in  2022, 
compared  to  the  EU  average  of  64%),  Romania 
faces 
in  helping  persons  with 
disabilities into work(149). Romania has set a target 
of 55% employment of persons with disabilities by 
2027.  Another  positive  development 
the 
adoption  of  the  national  strategy  on  preventing 
the  institutionalisation  of  adults  with  disabilities 
2022-30  (see  Annex  11).  Roma  labour  market 
participation  has  remained  low  in  recent  years, 
falling from 45% in 2016 to 41% in 2021, along 
with 
(the 
gender 
employment  rate  of  Roma  women  was  23%  vs 
59%  of  Roma  men).  Uneven  access  to  Public 
training 
Employment 

challenges 

significant 

disparities 

Services 

(PES) 

and 

is 

Access  to  the  labour  market  is  especially 
challenging for Romania's young people, with 

(146) Robayo-Abril, Monica; Chilera, Chifundo Patience; Rude, Britta; 

Costache, Irina. 2023. Gender Equality in Romania: Where Do We 
Stand? - Romania Gender Assessment. 

(147) European comparative data on persons with disabilities - 

Publications Office of the EU 

(148) All data on Roma communities come from the European Agency for 
Fundamental Rights (2022) Roma Survey 2021, except where 
explicitly mentioned otherwise. 

(149) European comparative data on persons with disabilities - 

Publications Office of the EU 

84 

 
 
 
opportunities 
widened 
vulnerable groups and the rest of the population. 

in  the  rural  areas  has  further 
the 

the  employment  gap  between 

levels 

increasing  by  9% 

Population  decline  and  working-age  people 
emigrating pose significant challenges to the 
labour  market.  Between  1991  and  2022, 
Romania's  population  fell  by  approximately  4.1 
million  (around  18%),  with  the  trend  increasing 
over  the  past  decade.  In  2016,  it  was  estimated 
that around 17% of Romanians were living abroad, 
with  emigration 
in 
2022(150). In 2022, of the total number of 36 000 
new  immigrants,  excluding  EU  nationals,  76% 
received  a  labour visa  and  were  integrated  in  the 
labour  market  in  Romania.  The  inflows  of  labour 
force  from  non-EU  countries  such  as  Ukraine, 
Nepal  and  Sri  Lanka,  and  the  positive  net-
migration  rate  of  5.2  per  thousand  inhabitants  in 
2023  seem  to  act  as  a  brake  on  the  shrinking 
labour force(151). In 2024, to tackle emigration, the 
Romanian  government  announced  the  launch  of 
an 
recovery  and 
resilience plan to develop a programme to attract 
from  abroad,  especially 
highly-skilled 
Romanian  expatriates,  in  the  fields  of  research, 
development  and  innovation.  While  it  is  too  early 
to gauge the effectiveness of these measures, it is 
a positive initiative to tackle the challenges in the 
labour  market.  If  implemented  properly  this  could 
boost Romania’s competitiveness.  

initiative  under  Romania’s 

talent 

and 

trends 

shortages 

could 
the  overall 

unfavourable 
Labour 
affect 
demographic 
competitiveness.  Although 
job-
vacancy  rate  is  among  the  lowest  in  EU  (0.7%  in 
the fourth quarter of 2024 vs 2.3% in the EU), the 
number  of  shortage  occupations  in  Romania  was 
among the highest in the EU in 2023. At the same 
time the country had one of the highest surpluses, 
(152). 
highlighting 
According  to  a  recent  study  by  2026,  the  labour 
force  deficit  is  estimated  to  reach  over  220 000 
posts, amounting to an estimated productivity loss 
of  EUR 9.5 billion(153).  The  manufacturing  and  ICT 
sectors  are  particularly  badly  affected,  recording 
the  most  severe  labour  shortages  in  absolute 
terms  in  2022.  Although  6.9%  of  all  post-

labour  market 

imbalances 

education 

graduates  were 

secondary 
ICT 
specialists,  among  the  highest  rates  in  the  EU, 
they  account  for  just  2.6%  of  total  employment. 
The  discrepancy 
largely  by  the 
is  explained 
difficulty of retaining talent in Romania. Romania’s 
performance  as  regards  women  in  the  digital 
sector  is  worth  highlighting  and  continues  to 
improve - female  ICT specialists account for 26% 
of  all  ICT  specialists,  against  an  EU  average  of 
19.4%.  Disparities  in  labour  shortages  are  also 
observed at regional level, with around 70% of the 
estimated  shortage 
the  more  developed 
in 
Bucharest-Ilfov,  north-west  and  centre  regions. 
Employers have reported that students and young 
graduates lack basic skills, and inter-personal and 
communication  abilities 
their 
employability.  A  very  small  proportion  of  the 
population holds a tertiary education qualification, 
amid  rising  demand  for  high-skilled  labour  (155); 
over  70%  of  the  population  lacks  basic  digital 
skills,  impacting  the  workforce‘s  preparedness  for 
the  digital  transition  (see  Annex  12).  With  a 
shrinking  working  population,  projected  to  decline 
by  23.7%  by  2050,  there  are  strong  indications 
that  skills  gaps  will  lead  to  growing  labour 
shortages, potentially threatening competitiveness. 

(154),  hindering 

the 

The  transition  to  a  green  economy  will 
further  increase  the  demand  for  skilled 
labour,  highlighting 
importance  of 
upskilling  and  reskilling.  Sectors  crucial  to  the 
green  transition  such  as  energy,  water  supply, 
sewage and waste management, reported some of 
the highest annual job vacancy rates in Romania in 
2023 (1.4% in vs 0.8% for the general economy). 
Skills  shortages  are  also  reportedly  holding  back 
the  activity  of  84%  of  small  and  medium-sized 
sector(156). 
enterprises 
Conversely,  the  phasing  out  of  coal  mining 
jobs  of  approximately  32 000 
threatens  the 
workers, predominantly men over the age of 50. It 
would  therefore  be  beneficial  to  boost  reskilling 
policies  to  ensure  the  green  transition  does  not 
actually hinder the prospects of certain population 
groups.  The  Just  Transition  Fund  supports  the 
worst  hit  regions  to  provide  the  workers  affected 
with relevant training. Long-term upskilling efforts, 
including  through  targeted  active  labour  market 
policies,  will  be  beneficial  if  we  are  to  meet  the 

construction 

the 

in 

(150) OECD (2022), OECD Economic Surveys: Romania 2022 

(151) OECD (2024), International Migration Outlook 2024. 

(154) (155)  According to CEDEFOP (2023), 2023 skills forecast EN 

Romania 

(152) EURES (2023), Report on labour shortages and surpluses 

(155) According to CEDEFOP (2023), 2023 skills forecast EN Romania 

(153) PwC (2023), Analysis of the Romanian labour market 

(156) Flash Eurobarometer 529 

85 

 
 
 
labour  and  social  demands  of  a  transforming 
economy.  

Improving the effectiveness of active labour 
market policies is crucial to addressing gaps 
in the labour market. Spending on active labour 
market  policies  (ALMPs)  accounted  for  64.1%  of 
the  total  budget  for  tackling  unemployment 
managed by the Romanian PES, one of the highest 
proportions in the past four years(157). At the same 
time,  government  expenditure  on  labour  market 
policies  is  among  the  lowest  in  the  EU  (0.09%  of 
approximately 
equal 
GDP 
EUR 292 million). Helping people with the greatest 
difficulties  in  getting  jobs,  such  as  women, young 
NEETs,  people  with  disabilities  and  Roma  people, 
would  help  tackle  labour  shortages  and  improve 
social  conditions.  In  2023,  61%  of  the  PESs‘ 
expenditure  on  ALMPs  was  devoted  to  subsidies 
for  both  employers  and  jobseekers,  job  creation, 
start-ups and graduate traineeships, while training 
activities  constituted  only  about  a  third  of  the 
allocation(158).  

2023, 

to 

in 

Targeting and outreach campaigns also seem 
to  be  ineffective.  Of  the  17 775  unemployed 
people enrolled on training courses offered by PES 
in  2024,  only  44  were  people  with  disabilities 
(0.24%  of  the  total  participants),  686  were  Roma 
people (3.8%), and 18.7% were young people aged 
15-30(159).  These  low  numbers  of  participants 
among vulnerable groups are evidence of the need 
for  tailor-made measures.  Steps  have been  taken 
with  the  launch  of  the  national  strategy  on  adult 
continuing  education  2024-2030(160),  targeting 
people  with 
especially 
disabilities,  Roma  people,  NEETs  and  other 
vulnerable groups. The idea is to provide access to 
fair,  flexible  and  appropriate  upskilling  and 
reskilling  training,  and  to  prepare  the  working 
population for the green and digital transition.  

low-skilled 

adults, 

The  ongoing  modernisation  of  PESs  with  EU 
support  has  the  potential  to  contribute  to 
improved labour market outcomes. Underlying 
issues  hindering  the  work  of  PESs  include  i) 

(157) ANOFM (2024), Activity report for the year 2023 

(158) Ibid. 

(159) ANOFM (2024), Progress report on the implementation of the 

training plan on 30.11.2024 

(160) Ministry of Education (2024), National Strategy on Adult Continuing 

Education 2024-2030 

underfunding, ii) inefficient targeting of ALMPs, iii) 
low  human  resources  and  capacity,  and iv)  a lack 
of  dialogue  with  the  social  partners.  Women, 
NEETs  and  persons  with  disabilities  who 
participate in ALMP measures appear to have less 
in  getting  work  compared  to  other 
success 
jobseekers.  To  address  these  issues,  it  would  be 
beneficial  to  enhance  the  effectiveness  of  PESs, 
focusing  on  effective  outreach  and  personalised 
support for jobseekers.  

Graph A10.2: Employment rate by educational 
attainment, ALMP expenditure and skills 
mismatch 

Source: Eurostat  

Romania  has  made  a  commitment  to  a 
comprehensive reform of its  PESs  supported 
by the ESF+ and the Recovery and Resilience 
‘Education  and 
Facility.  The  2021-27  ESF+ 
Employment’ 
invest 
will 
programme 
EUR 153.2 million until 2029 to boost the capacity 
of  PESs  by  investing  in  human  resources  and 
improving  service  quality.  The  ReCONECT  project, 
supported  by  the  2014-2020  ESF,  provided  tools 
for  i)  monitoring  the  integration  of  graduates  in 
vocational  education  and  training  and  higher 
education,  ii)  anticipating  skills  needs,  and  iii) 
evaluating  public  policies  for  decision  making  on 
active measures and training policies. Furthermore, 
it would be beneficial if social partners were more 
actively  involved  in  shaping  and  implementing 
employment  policies.  By  taking  steps  to  tackle 
these challenges and to modernise the PES, with a 
focus  on  efficient,  data-based  ALMPs,  Romania 
could improve activation, ultimately contributing to 
the achievement of the 2030 employment target.  

86 

30405060708090100201920202021202220232024High skilledMedium skilledLow skilled 
 
   
ANNEX 11: SOCIAL POLICIES 

Social  conditions  are  improving  in  Romania, 
but the country continues to face significant 
challenges  related  to  poverty  and  social 
exclusion,  particularly  among  vulnerable 
groups  and  in  rural  areas.  This  is  particularly 
due to limited economic opportunities, especially in 
rural  areas,  coupled  with  restricted  access  to 
healthcare, long-term care, education, employment 
and  social  services.  Moreover,  income  inequalities 
least  partially  due 
persist,  at 
low 
redistributive 
impact  of  the  tax  and  benefit 
system.  Demographic  shifts  raise  concerns  about 
the  adequacy  and  sustainability  of  pension  and 
long-term  care  systems.  The  limited  capacity  of 
the social protection system and uneven access to 
quality  services  also  pose  risks  to  Romania’s 
sustainable  and  inclusive  growth,  competitiveness 
and prosperity. 

the 

to 

Romania has made progress, but poverty and 
social  exclusion  risks  are  still  high.  The  at-
risk-of-poverty  or  social  exclusion  (AROPE)  rate 
has  been  falling  gradually  since  2016,  with  a 
decrease  of  4.1 percentage  points  (pps)  in  2024 
compared  to  2023.  This  is  mainly  due  to  a 
reduction 
in  the  severe  material  and  social 
deprivation  rate,  which  is  18.7 pps  lower  than  in 
2016.  Conversely,  the  at-risk-of-poverty  (AROP) 
rate  has  decreased  by  4.6 pps  since  2016.  These 
developments  can  be  attributed  to  above  EU 
average economic growth as well as a longer-term 
convergence  process.  However,  in  2024,  poverty 
rates remain among the highest in the EU, with the 
AROPE rate standing at 27.9% (EU: 21.0%), severe 
material  and  social  deprivation  at  17.2%  (EU: 
6.4%), and the AROP rate at 19.0% (EU: 16.2%). 

Graph A11.1: Percentage of people at risk of 
poverty or social exclusion (AROPE) and its 
components 

People at risk of poverty or social exclusion [ilc_peps01n], 
Severe material and social deprivation rate [tespm030], At-
risk-of-poverty rate [tespm010]. 
Source: Eurostat 

87 

Sustained  efforts  are  needed  to  reach  the 
national  poverty  reduction  target  for  2030. 
The  number  of people  at risk  of  poverty  or  social 
exclusion has decreased by 1.7 million since 2019 
(reaching  around  5.3  million  in  2024).  At  the 
current  pace,  achieving  the  2030  target  of  a 
reduction of at least 2.5 million, including 500 000 
children,  compared  to  2019  appears  feasible. 
Measures  will  still  need  to  be  stepped  up, 
especially as only modest progress has been made 
in  reducing  the  number  of  children  at  risk  of 
poverty  or  social  exclusion  (-171 000  only  in 
2024), and Romania has one of the highest depths 
of poverty in the EU: in 2024, the median income 
of those at risk of poverty was significantly below 
the  national  poverty  threshold  (27.3%  vs  22.8% 
for  the  EU).  This  gap  decreased  by  11.1 pps 
compared to the previous year. 

low  employment 

Rural  areas  and  vulnerable  groups  are 
particularly  affected  by  poverty  and  social 
exclusion. In 2024, the AROPE rate in rural areas 
was  26.1 pps  higher  than  in  urban  areas,  which 
represents one of the largest rural-urban divides in 
the  EU.  The  AROPE  rate  for  persons  with 
disabilities improved in 2024 but remained one of 
the highest in the EU (38.4% vs the EU average of 
28.8%).  Almost  50%  of  persons  with  severe 
disabilities  were  at  risk  of  poverty  and  social 
exclusion in Romania in 2024. This is also linked to 
the 
rate  of  persons  with 
disabilities and a large disability employment gap 
in  Romania  (see  Annex  10).  The  AROPE  rate  for 
older  people  (aged  65+)  has  improved  thanks  to 
the lower risk of income poverty but remains very 
high  (29.3%  vs  19.5%  for  the  EU  average)  as 
Romania  has  one  of  the  largest  populations  of 
older  people 
in  severe  material  and  social 
deprivation  in  the  EU  (19.6%  vs  5.1%  for  the  EU 
average).  In  2021,  78%  of  Roma  were  at  risk  of 
poverty,  up  8 pps  from  2016 (161).  In  response, 
around  EUR 2.5  billion  from  the  European  Social 
Fund Plus (ESF+) has been allocated to improving 
the  accessibility  and  quality  of  social  services.  As 
part of the social inclusion and dignity programme 
(2021-2027),  integrated  social,  healthcare  and 
educational services will be scaled up nationally to 
reach 2 000 disadvantaged rural communities and 
to train the staff required (with a EUR 677 million 
contribution from the EU). Approximately EUR 887 
million  from  the  ESF+  are  allocated  for  material 

(161) FRA report 2021 Roma in 10 European Countries - Main 
results | European Union Agency for Fundamental Rights. 

152025303540201920202021202220232024AROPE and depth of poverty (%)Depth of poverty (EU)Depth of poverty (RO)AROPE (EU)AROPE (RO) 
 
   
 
 
 
aid,  combined  with  accompanying  measures,  for 
the  most  vulnerable.  These  measures  should  be 
properly 
implemented  and  complemented  by 
additional  initiatives  to  effectively  address  the 
challenges  faced  by 
rural  communities  and 
vulnerable groups. 

Facility, including through the creation of day-care 
centres  and  creches,  educational  and  material 
assistance for the most deprived children and their 
families,  community-based  services 
to  avoid 
separating  children  from  their  families,  and 
integrated community services in rural areas. 

the 

and 

scarce 

general 

farming 

subsistence 

population,  with 

Employment  status  plays  an  important  role 
in  determining  poverty  risks,  and  in-work 
poverty is high. In 2024, a very high percentage 
of  quasi-jobless  households  were  at  risk  of 
poverty, at 83.3% (vs 64.8% for the EU), up from 
75%  in  2022.  Part-timers  and  the  self-employed, 
especially  in  rural  areas  where  job  opportunities 
are 
is 
predominant,  face  higher  poverty  risks  compared 
limited 
to 
improvements  in  recent  years.  In-work  poverty 
was  also  higher  than  the  EU  average  (10.9%  vs 
8.2% for the EU in 2024) (see Annex 10). In 2024, 
women  also  faced  a  higher  risk  of  poverty  or 
social  exclusion  (27.6%  vs  25.1%  for  men).  This 
gender gap is related to the lower participation of 
women  in  the  job  market  (58.3%  vs  76.3%  for 
men). In 2024, the AROPE rate among those with a 
low level of education fell by 2.7 pps, compared to 
2023,  but  remained  high  at  54.7%  (EU:  33.9%). 
This rate is notably linked to the low participation 
rate  of  the  low  skilled  in  employment  (36.9%  vs 
46.3% for the EU). 

resulting 

The risk of poverty or social exclusion among 
children  remains  among  the  highest  in  the 
EU.  Compared  to  2023,  the  AROPE  rate  for 
children  fell  by  5.2 pps,  reaching  33.8%  in  2024, 
which is the lowest level ever recorded in Romania. 
Yet,  it  remains  much  higher  than  the  EU  average 
(24.2%) 
in  significant  educational 
disadvantages  and  inequalities  (see  Annex  12). 
Risks  are  more  pronounced  for  children  whose 
parents  have  low  educational  attainment  or  who 
live  in  households  with  many  children.  By  2030, 
Romania aims to reduce the number of children at 
risk  of  poverty  or  social  exclusion  by  at  least 
500 000  compared  to  the  2021  level  of  1.5 
million.  To  mitigate  the  impact  of  poverty  on 
children,  Romania  is  implementing  its  European 
Child  Guarantee  (ECG)  action  plan  adopted  in 
November  2023.  The  2024  ECG  progress  report 
shows  that  Romania  has  made  progress  in  some 
areas, such as the provision of free healthy school 
improving 
meals.  At  the  same  time,  further 
services  for  children  in  rural  areas  is  needed.  The 
ECG’s implementation is supported by EU cohesion 
policy  funds  and  the  Recovery  and  Resilience 

88 

rapid 

income  growth, 

Despite 
income 
inequalities  remain  relatively  high.  The  gross 
disposable household income per capita in 2024 is 
at  178%  of  its  2008  level,  compared  to  113% in 
the EU, demonstrating a robust convergence trend. 
In  2024,  the  income  of  the  richest  20%  of  the 
population was 4.62 times higher than that of the 
poorest  20%  (EU:  4.66),  which  is  the  lowest  level 
in  the  last  10  years.  Some  of  the  key  factors 
driving  inequalities  are  a  high  proportion  of  low-
wage  earners  coupled  with  low  coverage  of 
collective  bargaining,  and  a  still  weak  income 
redistribution  system.  There  is  scope  to  improve 
the  effects  of  taxes  and  social  benefits  on 
inequalities (162).  Other  major  drivers 
reducing 
include the insufficient access to quality education, 
especially  among  families  at  risk  of  poverty  or 
social  exclusion,  low  educational  attainment  and 
low job market participation. 

Energy  and  transport  poverty,  as  well  as 
environmental  inequalities,  pose  challenges 
to  the  fair  green  transition.  In  2024,  the 
percentage of the population unable to keep their 
homes  adequately  warm  was  higher  than  the  EU 
average  (10.8%  vs  9.2%  overall  and  20.8%  vs 
19.7%  for  the  AROP  population),  though  the  gap 
has 
recently  narrowed.  Similarly,  14.5%  of 
individuals faced arrears on utility bills in 2024, an 
increase of 7.2 pps since 2021 and nearly  double 
the  EU  average.  To  address  this,  Romania  is 
preparing a national action plan on energy poverty. 
The  Romanian  recovery  and  resilience  plan  (RRP) 
includes  a  voucher  scheme  for  energy  efficiency 
and renewables in single-family homes prioritising 
vulnerable  households  and  a  one-stop  shop  for 
guidance.  Yet,  Romania  is  currently  addressing 
energy poverty mainly through recurring subsidies, 
with  few  structural  measures  tackling  its  root 
causes.  Additionally, 
in  2024,  a  significant 
proportion  of  the  population  lacked  access  to  a 
car,  far  exceeding  the  EU  average  (15.6%  vs 
5.6%).  This  makes  transport  options  scarce, 

(162) Economic inequalities in the EU - Key trends and policies, p. 33 
Publications catalogue - Employment, Social Affairs & 
Inclusion - European Commission. 

 
 
considering  the  concurrent  decline  in  the  use  of 
public  transport  for  passenger  travel  on  land, 
which dropped from 27% in 2011 to 20% in 2022. 
People  in  rural  areas,  who  often  lack  effective 
public transportation infrastructure, rely even more 
on  private  cars.  Overall,  Romania’s  transportation 
infrastructure  and  public  transportation  system 
may not be adequately addressing the needs of its 
population, particularly those in lower-income (and 
rural) communities. On environmental inequalities, 
the  consumption  footprint  of  the  wealthiest  20% 
of  the  population  was  2.4  times  higher  than  the 
footprint of the poorest 20% in 2022 (EU: 1.9). 

The  social  protection  system  presents 
adequacy and coverage gaps. Social protection 
benefits expenditure is among the lowest in the EU 
(16.0%  vs  26.8%  of  GDP  in  2023),  especially 
regarding  social  assistance  and  unemployment 
benefits. In 2022, households on minimum income 
benefits  had  a  net  income  of  only  9.9%  of  the 
AROP threshold, and only 7.8% of the net income 
of  a  low-wage  worker  (EU:  55.6%  and  46.1% 
respectively).  Moreover,  only  7.9%  of 
the 
unemployed  (for  less  than  12  months)  received 
benefits in 2023 (EU: 36.3%). The system’s limited 
capacity  to  alleviate  poverty  risks  means  there  is 
further  scope  to  increase  both  the  efficiency  and 
the effectiveness of social transfers. In 2024, the 
impact  of  social  transfers  (excluding  pensions)  on 
poverty reduction was among the lowest in the EU, 
at  less  than  half  of  the  EU  average  (18.8  %  vs 
34.4%), and 3.2 pp. higher than in 2023. Workers 
in  non-standard  forms  of  employment  (including 
casual  and  seasonal  workers)  and  the  self-
employed  have  limited  social  protection  coverage 
and face very high poverty and material and social 
deprivation rates. There is scope for further action 
to  strengthen  access  to  social  protection,  in  line 
with the 2019 Council Recommendation on access 
to  social  protection  for  workers  and  the  self-
employed (163). The  Romanian  RRP  includes  the 
formalisation  of  work  for  domestic  workers, 
aiming to help them acquire the status of insured 
person in the social  security  and health insurance 
system.  The  adequacy  of  minimum  income  is 
expected to improve following the implementation 
of the minimum inclusion income reform, enacted 
in January 2024 as part of the RRP, which roughly 
doubled  the  amount  of  support  provided.  Further 

(163) Council recommendation on access to social protection for 

workers and the self-employed (EUR-Lex - 32019.1115(01) 
- EN - EUR-Lex). 

steps  to  increase  the  adequacy  of  minimum 
income  schemes  would  help  secure  adequate 
minimum  income,  as  the  level  will  remain  well 
below  the  EU  average  in  relation  to  the  national 
poverty  threshold,  and  ensure  active  inclusion  as 
set  out  in  the  Council  Recommendation  on  this 
matter (164). 

Demographic trends pose a challenge for the 
future  adequacy  of  the  pension  system.  The 
aggregate  pension  replacement  ratio  (excluding 
other social benefits) defined as the gross median 
individual  pension  income  (for  the  65-74  age 
group) relative to gross median individual earnings 
from work (for the 50-59 age group) was equal to 
0.46  (below  the  EU  average  of  0.61).  The  severe 
material  and  social  deprivation  rate  for  the  age 
group 65+ is one of the highest in the EU (19.6% 
vs  5.1%),  and  significantly  higher  than  for  the 
Romanian  working-age  population  (15.2%).  The 
ongoing  reform  of  the  public  pension  system  as 
part  of  the  RRP  is  expected  to  have  a  positive 
effect  on  the  adequacy  of  low  and  medium 
pensions  and  the  social  benefits  for  pensioners. 
Yet, demographic trends are likely to put financial 
pressure  on 
is 
increasingly  relying  on  longer  working  lives  to 
maintain its adequacy and fiscal sustainability. The 
population aged 65+ is projected to increase from 
3.7  million  to  4.3  million,  while  the  working-age 
population  (20-64)  is  expected  to  decrease  by 
30% to 7.8 million in 2070 (165). Consequently, the 
old-age  dependency  ratio  is  projected  to  increase 
from 0.3 in 2022 to about 0.6 by 2070. 

the  pension  system,  which 

Access  to  long-term  care  services  for  older 
people  and  persons  with  disabilities  remains 
limited.  Romania’s  long-term  care  (LTC)  services 
are  severely  underfunded,  with  one  of  the  lowest 
public expenditure levels in the EU in 2022 (0.3% 
of  GDP  vs  1.7%  for  the  EU).  It  is  also  one  of  the 
countries with the highest self-reported LTC needs. 
Only  4.7%  of  people  aged  65+  with  high  care 
needs  used  formal  home  care  services  in  2019 
(EU:  28.6%),  and  61.6%  reported  a  lack  of 
assistance in personal care or household activities 
(EU:  46.6%) (166).  Rural  and  remote  communities 
must  often  rely  on  scarce,  undersized  insufficient 

(164) Council adopts recommendation on adequate minimum 

income - Employment, Social Affairs & Inclusion - European 
Commission 

(165) 2024 Ageing Report – Country Fiche for Romania 
(166) Ibid. 

89 

 
 
 
Overall  housing  affordability  has  improved 
over the past decade. House prices have grown 
less  rapidly  than  household  incomes  and  the 
standardised  house  price-to-income  ratio  has 
decreased by 37% since 2015 and stands around 
40%  below  its  long-term  average.  House  price 
levels  compared  to  income  levels  are  relatively 
lower  than  in  most  EU  countries.  Taking  into 
account  the  cost  of  mortgage  funding,  the 
borrowing  capacity  of  households  has  improved 
significantly  over  the  past  decade  as  well.  While 
the rental market is rather small, the ratio of new 
rents  to  incomes  has  decreased  over  the  last  ten 
years. 

Romania’s  housing  stock  faces  challenges 
due  to  the  lack  of  diversification.  A  vast 
majority  of  Romanians  (95.6%)  own  their  homes, 
with a small portion (4.4%) living in formal rentals, 
while the informal rental market may be larger. In 
2022, Romania had a limited social housing stock, 
with applications for rentals far outnumbering the 
available  units.  In  2022,  homelessness  affected 
over 8 000 individuals and was more concentrated 
in  urban  areas  (70%),  especially  in  Bucharest 
(35.5%), with lack of employment being the main 
cause  (44.1%).  The  lack  of  land  title  increases 
housing insecurity in informal settlements, making 
it harder to connect homes to utilities and limiting 
access  to  State  support  in  remote  areas.  The 
government’s  efforts  to  formalise  property  rights 
and connect permanent homes to roads, water and 
electricity  are  crucial  to  improving  the  living 
conditions of vulnerable populations. 

High  housing  costs  negatively  impact  living 
standards. In 2024, 4.7% of the population faced 
housing costs above 40% of their total disposable 
household income (net of housing allowances) (EU: 
8.2%).  For  people  experiencing  poverty  risks,  this 
housing  cost  overburden  rate  has  risen  in  recent 
years  driven  by  limited  access  to  affordable 
housing,  reaching  16.3%  in  2024  (EU:  31.1%). 
Housing  cost  overburden  rates  are  also  higher  in 
rural areas than in cities (5.8% vs 4.3%). 

The 

informal 

care (168). 

and low-quality services (167). The lack of qualified 
staff  restricts  adequate  access  to  LTC,  with  0.6 
workers  per  100  people  aged  65+  (EU:  3.2). 
Insufficient  availability  of  services  leads  to  a 
relatively  high  share  of  informal  carers  providing 
low 
high-intensity 
availability  and  affordability  of  quality  non-
residential,  community-based  care  delays  the 
deinstitutionalisation and transition to independent 
living of persons with disabilities. As of November 
2024, out of the 124 centres providing services to 
persons  with  disabilities,  only  4  were  located  in 
rural areas, while 6 out of the 41 counties lacked a 
registered  centre  in  their  territory (169).  In  2022, 
Romania adopted a national strategy on long-term 
care  and  active  ageing  for  2023-2030.  In  2024, 
Romania  also  adopted  a  wider  reform  aiming  to 
improve  the  financing  and  quality  of  social 
assistance (170). The reform is underpinned by RRP 
measures,  such  as  the  national  strategy  on 
preventing  the  institutionalisation  of  adults  with 
disabilities  for  2022-2030  and  the 
law  on 
supporting  the  process  of  deinstitutionalisation  of 
adults with disabilities. More than EUR 800 million 
from  2021-2027  cohesion  policy  funds  are 
earmarked  for  services  for  older  persons  and 
those with disabilities. 

House  prices  increased  modestly  in  recent 
years,  but  housing  market  activity 
is 
subdued.  Up  43%  since  2015  in  nominal  terms, 
house  prices  grew  by  3.3%  in  2023  and  3.9% 
year-on-year  in  Q3-2024,  after  an  increase  of 
4.4% in 2021 and 7.2% in 2022. However, housing 
market  activity  is  sluggish,  with  high  borrowing 
costs reducing home loan demand and depressing 
sales.  The  modest  growth  in  house  prices  has 
weighed on the real value of household net worth, 
and  negative  wealth  effects,  slow  hiring  and 
elevated  uncertainty  about  future  job  market 
conditions  are  acting  as  a  drag  on  consumer 
spending.  Despite  this,  EU-funded  infrastructure 
investments in energy efficiency and transport are 
benefiting  the  construction  sector.  However,  the 
country  has  experienced  a  significant  decline  in 
housing  construction  over 
the  past  decade, 
reinforcing the perception of insufficient supply in 
both social housing and private housing markets. 

(167) Romania Ministry of Social Affairs, Report on the 

implementation of the Council Recommendation on access 
to high quality and affordable long-term care. 

(168) More than 20 hours per week. 
(169) Romanian Government page – ADD description. 
(170) Law 100/2024. 

90 

 
 
Graph A11.2: Housing cost overburden and 
overcrowding rate (%) 

housing. These funds also support local authorities 
in  regulating  informal  settlements.  There  remains 
scope  in  Romania  to  improve  housing  market 
regulation  and  introduce  inclusive  zoning  policies, 
requiring  a  minimum  percentage  of  affordable 
and/or  social  housing  units  in  new  developments, 
and  to  strengthen  the  implementation  of  the 
2022-2027  national  strategy  for  the  social 
inclusion of the homeless. 

Housing cost overburden rate [tespm140], Overcrowding rate 
[tessi170]. People at risk of poverty or social exclusion 
[ilc_peps01n]. 
Source: Eurostat 

in 

Poor  housing  conditions  are  widespread, 
especially 
rural  areas  and  among 
marginalised communities (171). In 2024, 40.7% 
of  people  lived  in  an  overcrowded  household  (EU: 
16.9%).  For  people  at  risk  of  poverty  this 
percentage  rose  to  53.7%  (EU  28.8%).  In  2023, 
Romania  also  had  a  very  high  rate  of  people 
facing  severe  housing  deprivation  in  rural  areas 
(14.5%  vs  EU  3.5%).  The  rate  is  also  particularly 
high  for  households  under  the  poverty  threshold, 
families  with  children. 
single  parents  and 
Furthermore,  in  2023,  a  relatively  high  proportion 
of  the  population  and  of  those  below the poverty 
threshold lacked access to basic sanitary facilities 
such as indoor flushing toilets (15.4% and 43.3%, 
respectively). 

sectoral 

strategies. 

the  coverage  of 

Romania  has  an  ambitious 
strategic 
framework to address its social challenges. It 
is currently implementing the 2022-2027 national 
strategy  on  social  inclusion  and  poverty  reduction 
 (173)  and  multiple 
If 
implemented  well,  these  could  help  increase  the 
effectiveness  and  efficiency  of  social  protection 
measures  and 
the  most 
vulnerable.  To  this  end,  coordination  between 
social security and healthcare systems, as well as 
the  prompt  adoption  of  secondary  legislation  and 
procedures  to  deliver  the  new  social  assistance 
and  care  reform,  will  be  instrumental.  In  working 
with  marginalised  groups  such  as  homeless 
from 
people,  public  services  would  benefit 
improved  identification  and  outreach  methods,  in 
cooperation  with  civil  society.  The  success  of  the 
2022-2027  national  Roma  strategy  depends  on 
better  coordination  between  key  ministries, 
involving Roma NGOs and local Roma communities 
in designing, implementing and monitoring policies, 
and  will  require  action  to  combat  antigypsyism 
and segregation (174). 

is 

housing 

affordability 

increase  access 

implementing  measures 

to 
Romania 
improve 
and 
availability. In 2022, as part of its RRP, Romania 
adopted its first ever national housing strategy for 
to 
to 
2022-2050,  aiming 
adequate housing for vulnerable groups, especially 
young  people,  persons  with  disabilities,  people  in 
informal 
homeless 
people (172). The  RRP  includes  investments  in  new 
housing  for  young  people  and  for  healthcare  and 
education  professionals  working  in  marginalised 
communities.  The  cohesion  policy  funds  support 
energy-efficient  construction  and  renovation  as 
well  as  construction  and  renovation  of  social 

settlements 

and 

(171) ESPAN, Urban-rural divide and regional disparities in access 

to public services and regarding social inclusion indicators, 
2023. 

(172) 2022-2027 national strategy for the social inclusion of the 

homeless [Link]. 

(173) Strategia naţională privind incluziunea socială şi reducerea 

sărăciei pentru perioada 2022–2027 (mmuncii.ro). 

(174) DG JUST, Report on the implementation of national Roma 
strategic frameworks, 2024 (45a7ad5c-4fc3-4881-a681-
407e47d70d7b_en). 

91 

0102030405060201620172018201920202021202220232024Housing cost overburden rate and overcrowding rate (%)Overburden rate (EU)Overburden rate (RO)Overcrowding rate (EU)Overcrowding rate (RO) 
   
 
 
ANNEX 12: EDUCATION AND SKILLS 

Tertiary 

educational 

Skills  shortages  due  to  an  underperforming 
education  and  training  system  weigh  on  the 
competitiveness  of  Romania’s  evolving 
economy.  Due to rapid growth and the transition 
to  an  increasingly  services-dominated,  digital  and 
green economy, the demand for high-skilled labour 
is  rising,  exacerbating  existing  shortages  (see 
Annex 10). 
attainment 
remains  stagnant  at  low  levels,  while  the  number 
of  trained  STEM  professionals  is  insufficient  to 
meet  the  growing  demand.  Shortcomings  of  the 
education  and  training  system  are  reflected  in 
persistently  low  levels  of  basic  skills  (particularly 
among disadvantaged students) and high rates of 
early school leaving. Socio-economic disadvantage 
begins from an early age and is a key determinant 
of  educational  outcomes.  To  sustain  fair  growth, 
increase  innovation  capacity,  improve  productivity 
and  effectively 
improve  opportunities  for  all 
Romanians,  it  is  urgent  to  bolster  educational 
outcomes  and  improve  the  development  of  basic 
and  STEM  skills,  at  every  stage  from  early 
childhood education and care up to adult learning. 

for  children  aged  3 

Low  and  declining  participation  in  early 
childhood  education  and  care  (ECEC)  limits 
early  learning  and  worsens  inequalities.  In 
to 
2022,  enrolment 
compulsory  primary  education  was  75.7%  (EU: 
94.6%),  9.8 percentage  points  (pps)  less  than  in 
2015.  The  rate  is  particularly  low  for  the  Roma  - 
27% enrolled in 2021 (175) and in rural areas. The 
rural-urban gap (176) is widening due to access and 
socio-economic  factors.  For  children  aged  0-3, 
participation  in  childcare  remains  low  (7.3%  in 
2024,  EU  average  39.2%),  also  hampering 
women’s  participation  in  the  labour  market  (see 
Annex 10).  The  recovery  and  resilience  plan  (RRP) 
finances  nurseries,  complementary  ECEC  services 
and  teacher  training  for  quality  improvements. 
Nevertheless,  the  need  remains  to  better  align 
professional  development 
to  staff 
needs (177)  and  ensure  adequate  access  to  the 
ECEC network. 

in  ECEC 

(175) Fundamental Rights Agency (FRA), (2022), Headline 

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

(176) In 2023/2024, the gross enrolment rate for children aged 3-5 

was 72.7% in rural areas, compared to 95.5% in urban areas. 

(177) OECD (2025), Education and Skills in Romania, Reviews of 
National Policies for Education, OECD Publishing, Paris 
(forthcoming on 27 May 2025) 

(PISA)  showed 

A  lack  of  basic  skills  among  young  people 
undermines  human  capital  potential  and 
hampers  the  country’s  competitiveness.  The 
2022  OECD  Programme  for  International  Student 
that  48.6%  of 
Assessment 
Romanian  15-year-olds  lack  a  minimum  level  of 
proficiency in  mathematics  (EU:  29.5%),  41.7%  in 
reading  (EU:  26.2%)  and  44%  in  science  (EU: 
24.2%) (178).  These  are  among 
the  highest 
underachievement  rates  in  the  EU.  In  response, 
Romania  will  start 
implementing  a  national 
programme to improve basic skills, which includes 
measures  co-financed  by  the  European  Social 
Fund Plus (ESF+). Nevertheless, effective upscaling 
of  the  programme,  delivery  of  the  necessary 
remedial 
generally 
addressing  the  wider  drivers  of  low  basic  skills 
performance are yet to be seen. 

and  more 

education, 

Graph A12.1: Early leavers from education and 
training by degree of urbanisation 

Source: Eurostat 

The  poor 
level  of  basic  skills  reflects 
challenges  linked  to  teaching  and  school 
curriculum.  Most  Romanian 
schoolteachers 
received  limited  pedagogical  preparation  in  initial 
teacher education (179), directly impacting teaching 
quality.  Continuous  professional  development  is  
not  sufficiently  adapted  to  teachers’  classroom 
needs (180),  including  competence-based  teaching. 
To  achieve  the  required  number  of  18 teaching 
hours  for  a  full-time  equivalent,  teachers  in  rural 
areas  often  teach  multiple  subjects,  without  the 
necessary  qualification.  Aspects 
to 
certification  and  career  progression  could  be 

related 

(178) OECD (2023), PISA 2022 Results (Volume I): The State of 

Learning and Equity in Education. 

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

Education, Kitchen, H., et al., Romania 2017. 

(180) OECD (2020), Improving the teaching profession in Romania. 

92 

0.5.10.15.20.25.30.20202021202220232024TotalCitiesTowns and suburbsRural areas 
 
 
 
  
 
 
 
further  considered (181).  Effective  implementation 
of  the  2012/2013  competence-based  curriculum 
for  primary  and  lower  secondary  education  has 
been  hampered  by  delays  with  providing  support 
for 
teachers  and  alignment  of  assessment 
practices,  and  challenges  with  monitoring.  Further 
changes,  for  example,  focusing  on  basic  skills 
across  all  subjects  and  preventing  overcrowding, 
could  also  be  considered.  The  curriculum  revision 
for upper secondary is ongoing. The new education 
laws  aim  to  improve  teacher  policies,  including 
initial 
education 
programmes,  review  quality  assurance  to  better 
support  schools,  and  enhance  equity  measures. 
However,  several  key  aspects  have  still  to  be 
worked out or have been postponed (182). 

continuous 

teacher 

and 

Students’  socio-economic  background  is  a 
strong  predictor of  basic  skills  performance. 
The PISA test showed that 57.8% of students from 
the  poorest  quartile  lack  a  minimum  level  in 
mathematics, reading and science simultaneously, 
compared  to  9%  from  the  richest  quartile. 
Furthermore,  the  concentration  of  disadvantaged 
children in rural schools has a strong influence on 
learning  outcomes.  The  urban-rural  gap 
in 
performance  was  119 points  in  maths.  Half  of 
Roma  children  attend  segregated  schools (183), 
learning 
exacerbating  marginalisation 
disadvantages.  With  45%  of  schools  operating 
with  less  than  50 students (184),  fragmentation  of 
the school network affects learning outcomes and 
efficiency of spending in education, with schools in 
rural areas often running multi-grade classes. 

and 

Low  shares  of  top-performing  students  in 
basic skills and with creative thinking impact 
on  talent  development,  high-end  skills  and 
innovation.  In  the  PISA  test,  only  4.0%  of 
advanced 
Romanian  15-year 
competencies  in  mathematics  (EU:  7.9%);  2.0% 
excelled in reading (EU: 6.5%); and 1.4% were top-
performers  in  sciences  (EU:  6.9%).  Only  14.3% 

demonstrated 

demonstrated  advanced  creative  thinking  in  the 
PISA test (EU average: 25.1%).  

rates 

High  early 
limit 
school-leaving 
opportunities  to  enter  the  labour  market 
with  minimal  qualifications  or  progress  to 
further education. In 2024, 16.8% of those aged 
18-24  were  early  leavers  from  education  and 
training  (EU:  9.3%).  The  rate  is  especially  high  in 
rural areas (26.5%), in towns and suburbs (15.3%), 
and for the Roma. More than 2 300 schools have 
benefited from the Recovery and Resilience Facility 
grants to prevent dropout in grades 5-8. However, 
24%  of  children  from  rural  areas  and  14%  in 
urban  areas  are  outside  the  school  system (185), 
requiring  specific  outreach  and 
reintegration 
measures.  Second  chance  programmes  are 
insufficient,  especially  in  rural  areas,  and  do  not 
address the needs of adults. 

in 

in 

persist 

ensuring 

scholarships’,  which, 

(VET)  graduates,  despite 

the 
Difficulties 
employability  of  vocational  education  and 
training 
their 
potential to  fill labour market  gaps.  In  2023, 
61.3%  of  pupils  in  medium-level  education  were 
enrolled  in  VET,  above  the  EU  average  of  52.4%. 
The  authorities  have  put  forward  measures  to 
increase  VET  attractiveness,  such  as  providing 
‘technological 
the 
2024/2025  academic  year,  are  supporting  over 
60 000  VET  students  with  a  monthly  grant  of 
RON 300  (around  EUR 60).  However,  the  2022 
PISA  results  show  a 
large  performance  gap 
between students enrolled in general vs vocational 
education.  School  dropout  is  also  considerably 
higher  for  the  latter (186).  Especially  concerning  is 
the low employment rate of recent VET graduates 
(age  20-34),  which  stood  at  only  65.7%  in  2024 
(versus  80%  in  the  EU).  Difficulties  in  ensuring 
quality  and  labour-market  relevant  VET  could  be 
linked to insufficient VET financing, deficiencies in 
the  teaching  workforce,  and  very  weak  links  with 
employers,  as  only  7.2% of  recent  VET  graduates 
had been exposed to work-based learning in 2024 
(versus 65.3% in the EU). 

(181) See the recommendations of OECD 2024: Reforming School 
Education in Romania: Strengthening Governance, Evaluation 
and Support Systems. 

(182) E.g. the set-up of ARACIIP (i.e. the quality assurance and inspection 
agency for pre-university education) and the reorganisation of 
county school inspectorates to provide support to schools, the 
National Centre for Training and Development in the Didactic Career, 
the national Centre for inclusive education are delayed. 

(183) FRA (2022). 
(184) Ministry of Finance and Ministry of Education (2023), Raportul de 
analiză și eficientizare a cheltuielilor publice în domeniul 
educație.) 

A  substantial  modernisation  of  the  VET 
system  is  underway,  with  support  from  EU 
funds. To tighten links with the labour market, the 
2023 law on pre-university education sets a target 

(185) ibid.  
(186) Ministry of Education, State of Education, Report for Pre-

university Education 2023/2024. 

93 

 
 
 
to  transition  all  secondary  VET  programmes  into 
the dual  system by 2029-2030. The main vehicle 
for achieving this is the establishment of regional 
dual  education  consortia,  as  part  of  the  RRP.  The 
RRP  is  also  funding  the  equipment  of  practice 
workshops  and  IT  laboratories  in  all  VET  schools. 
Around  40 000  VET  students  will  participate  in 
ESF+-funded 
to 
increase their preparedness for the labour market. 
Measures  such  as  better  school  guidance  and 
counselling  or  remedial 
learning  programmes 
would nevertheless be welcome to further support 
to successful transitions to the labour market. 

apprenticeships/traineeships 

twelfth  graders  not  sitting 

Low  tertiary  educational  attainment  limits 
the  availability  of  professionals  with  high-
end skills. Only 23.2% of people aged 25-34 had 
a  tertiary  degree  in  2024  (26.3%  of  women, 
20.3% of men), significantly below the EU average 
of  44.2%.  The  rate  is  structurally  constrained  by 
low  participation  in  university  programmes,  partly 
due  to  access  challenges  for  students  from 
disadvantaged backgrounds and high early school 
leaving.  In  addition,  there  is  still  a  considerable 
the 
number  of 
baccalaureate  exam  –  a  prerequisite  for  enrolling 
in higher education, although the passing rate has 
been  improving (187),  but  is  still  low  for  students 
track.  Dropout  from 
from 
university  programmes  is  widespread  and  many 
graduates  have emigrated.  To  improve  access  for 
rates, 
disadvantaged  students  and 
implementation  of  two  national  programmes  has 
started with ESF+ support. The recent introduction 
of  dual  VET  in  higher  education  is  meant  to 
including 
increase 
through  greater  involvement  of  employers  in 
programme  development.  It  also  aims  to  improve 
participation  in  higher  education,  including  by 
revising the baccalaureate exam.  

labour  market 

technological 

relevance, 

retention 

the 

in  future 

Trends 
labour  market  needs 
highlight  the  importance  of  increasing  the 
number  of  STEM  graduates.  From  2022  to 
2035,  employment  in  high-tech  manufacturing 
and  services  in  Romania  is  predicted  to  register 
one of the highest growths among all EU Member 
States (188).  30%  of  higher  education  students 
(International Standard Classification of Education 
level  5-8)  are  pursuing  a  degree  in  science, 

(187) In 2024, 78.2% of those who sat this exam in the July session were 

awarded a passing grade. 

(188) CEDEFOP (n.d.), Employment growth in high-tech economy. 

engineering 

technology, 
and  mathematics 
(EU:27.1%).  However,  the  low  participation  rate 
means  the  absolute  number  of  professionals 
trained  is  insufficient  (including  in  ICT).  In  2022, 
7.2%  of  university  students  were  enrolled  in  ICT 
programmes  (EU:  5.2%),  with  women  making  up 
32%  of  these  students  (compared  to  the  EU 
average of 20.2%). In 2022, 6.8% of all university 
students  graduated  in  ICT  (EU:  4.5%).  However, 
only  3.3%  of  PhD  students  studied  ICT  (EU 
average: 3.7%). In 2022, 36.1% of pupils enrolled 
in  medium-level  VET  in  Romania  were  studying 
STEM fields, close to the EU average of 36.2%. The 
higher  education 
law  envisages  a  national 
programme  to  support  learning  in  STEM,  but 
effective  implementation  is  yet  to  be  seen,  partly 
due to financial constraints.  

related 

literacy 

to  digital 

Improving 
is 
levels  of  digital 
particularly  critical  for  Romania’s  digital 
transition. Despite performing strongly in several 
areas 
infrastructure  and 
connectivity, Romania’s population is struggling to 
improve its levels of digital literacy, posing barriers 
to  the  wider  digitalisation  of  the  economy (189).  In 
2023,  less  than  a  third  of  those  aged  16-74  had 
basic digital skills (27.7% versus 55.6% in the EU). 
Moreover, 74% of Romanian 14-year-olds lack the 
essential  computer  and  information  literacy  skills 
needed  to  navigate  today’s  digital  world  (EU-23 
average:  43%) (190).  The  RRP  is  providing  support 
for  digital  infrastructure  in  schools  and  digital 
skills  training  for  teachers.  The  ESF+  co-funded 
project  ‘Digital  skills  for  the  labour  market’  is 
expected  to  upskill  45 000  employees  starting 
from 2025. 

The  transition  to  a  green  economy  could 
generate better opportunities for Romanians, 
if paired with  the  appropriate  upskilling  and 
reskilling  measures.  Romania  has 
recently 
stepped-up  measures  to  facilitate  learning  for 
sustainability 
including 
through a dedicated strategy (191), and the specific 
Green Week activities. Nevertheless, there is scope 
to  improve  students’  knowledge  on  sustainable 
development (192) 
dedicated 

in  school  education, 

develop 

and 

(189) Report on the state of the Digital Decade 2024, Romania 
(190) Results from ICILS 2023, International Association for the Evaluation 

of Educational Achievement (IEA). 

(191) National Strategy on Education for the Environment and Climate 

Change 2023-2030. 

(192) In the 2022 International Civic and Citizenship Education Study 

Romanian students scored below the EU-17 average on knowledge 
of sustainable development. 

94 

 
 
 
in  coal-intensive  sectors 

frameworks  in  higher  education.  Only  44%  of 
Romanians  believe  that  they  have  the  necessary 
skills to contribute to the green transition, which is 
significantly  below  the  EU  average  of  54% (193). 
Decarbonisation  efforts  are  affecting  the  jobs  of 
(see 
many  workers 
Annex 7). The large investments in green energy to 
be  made  in  the  next  few  years,  namely  through 
REPowerEU,  mean  that  skilled  workers  will  be  in 
high  demand  in  these  emerging  sectors.  Effective 
training  programmes  to  bridge  the  skills  gap  are 
vital. If Romania matches its projected contribution 
to  the  EU’s  2030  renewable  energy  target, 
between  2 000  and  6 000  additional  skilled 
workers will be needed for the deployment of wind 
and solar energy(194). 

risk 

these 

constraint 

Improving  skills  development  is  crucial  for 
competitiveness  and  tackling  existing  labour 
shortages. A significant percentage of Romanian 
firms identify the lack of adequate skills within the 
workforce  as 
for 
the  primary 
business (195), and 87% of SMEs note difficulties in 
finding  employees  with  the  appropriate  skillset. 
becoming 
shortages 
Moreover, 
exacerbated.  The  European  Centre 
the 
for 
Development  of  Vocational  Training  (CEDEFOP) 
projects that by 2035 there will be a 30% increase 
in demand for high-skilled labour, while the share 
of  low-skilled  employees  in  the  labour  force  is 
projected  to  decline  to  8%  by  2035.  Skills 
in  Romania  has  witnessed  an 
intelligence 
important development with the operationalisation 
of  the  ReCONECT  platform  in  December  2023, 
which 
skills 
forecasting,  tracking  VET  and  higher  education 
graduates,  and  monitoring  and  evaluating  public 
training policies. Romania should  now ensure that 
skills  intelligence  data  informs  policymaking  to 
effectively  address  labour  market  needs.  About 
EUR 2.67 billion  from  cohesion  policy  funding 
(2021-2027  programming  period)  are  channelled 
to  measures  supporting  skills  development  in 
Romania (196), including a pilot project on individual 
learning accounts. 

integrates  mechanisms 

for 

resilience  and  fairness  in  Romania’s  society. 
The rate of adult participation in learning reached 
19.1%  in  2022  (from  5.8%  in  2021) (197)  and 
surpassed  the  2030  national  skills  target  of 
17.4%. However, it remains only about half of the 
EU  average  (39.5%  in  2022).  The  reasons  behind 
low  engagement  include  high  costs  and  lack  of 
flexibility of available training options (198), as well 
as a general lack of recognition of the professional 
and  personal  benefits  it  offers (199).  Participation 
rates  also  vary  significantly  across  different 
population  groups.  Individuals  outside  the  labour 
market  and  those  from  rural  areas  exhibit  much 
lower  engagement 
(6.4%  and  11.2%, 
rates 
respectively).  The  largest  disparities  are  between 
those  who  did  not  complete  upper  secondary 
education and those with tertiary education (3.9% 
versus  41.2%).  Meanwhile,  individuals  with  lower 
qualifications  face  growing  challenges,  such  as 
rising  unemployment  and  higher  poverty  rates. 
This  underscores  the  need  for  skills  policies  that 
labour  shortages  and 
simultaneously  address 
inequalities, 
sustainable 
fostering 
competitiveness. 

thereby 

Their 

learning, 

drafting  was 

The  implementation  of  the  new  strategic 
framework for skills development is ongoing. 
After  several  years  without  a  national  vision  for 
two  complementary  national 
adult 
strategies were adopted in 2023 and 2024, by the 
Ministry  of  Labour  and  the  Ministry  of  Education, 
closely 
respectively. 
coordinated,  but  this  also  highlights  the  current 
fragmentation  in  skills  policymaking.  As  Romania 
moves  forward  with  implementation,  it  will  be 
cross-
important 
governmental cooperation and the involvement of 
business  and  social  partners.  Other  important 
policies 
foster  productivity  growth  and 
competitiveness include enhancing the role  of the 
private  sector  in  upskilling  efforts  -  namely 
through 
enforced 
and 
requirements  for  employee  training (200)  or  tax 
incentives  – and continuing to raise awareness of 
the benefits of lifelong learning. 

strengthen 

stronger 

further 

better 

to 

to 

Adults’ engagement  in learning  is improving, 
but more efforts will be required to increase 

(193) Special Eurobarometer 527. 
(194) EMPL-JRC AMEDI+ project. 
(195) 2024 World Bank Enterprise Survey for Romania.  
(196) DG EMPL, "An in-depth overview of the EU cohesion funds’ 
investments in skills in the context of the European Year of 
Skills"’ 

(197) Adult Education Survey - participation in education and 

training excluding guided on-the-job training. 

(198) National Statistical Institute, 2022 
(199) Centre for the Study of Democracy, Concordia Employers’ 

Confederation (2023), Research Report. The participation in lifelong 
learning in Romania. 

(200) According  to  the  Labour  Code  (Law  53/2003),  companies  are  only 
required to provide training and paid training leave once every two or 
three years (depending on their number of employees). Measures to 
enforce these provisions are not set out. 

95 

 
 
 
ANNEX 13: SOCIAL SCOREBOARD 

Table A13.1:Social Scoreboard for Romania 

(1) Update of 5 May 2025. Members States are categorised based on the Social Scoreboard according to a methodology agreed 
with the EMCO and SPC Committees. Please consult the Annex of the Joint Employment Report 2025 for details on the 
methodology (https://employment-social-affairs.ec.europa.eu/joint-employment-report-2025-0). 
Source: Eurostat 

96 

19,116,827,719,418,14,6269,55,41,8161,027,933,818,844,84,711,42,2Critical situationTo watchWeak but improvingGood but to monitorOn averageAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Equal opportunities and access to the labour marketSocial Scoreboard for RomaniaBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2024)Young people not in employment, education or training(% of the population aged 15-29, 2024)Gender employment gap(percentage points, population aged 20-64, 2024)Income quintile ratio (S80/S20, 2024)Dynamic labour markets and fair working conditionsSocial protection and inclusionShare of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2023)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2024)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2024)Self-reported unmet need for medical care (% of the population aged 16+, 2024)Disability employment gap (percentage points, population aged 20-64, 2024)Housing cost overburden (% of the total population, 2024)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2024)Employment rate(% of the population aged 20-64, 2024)Unemployment rate(% of the active population aged 15-74, 2024)Long term unemployment(% of the active population aged 15-74, 2024)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2023)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2024) 
 
 
 
  
 
 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Romania’s  health  system  faces  significant 
challenges.  These  needs  be  addressed  if  the 
country  is  to  improve  the  health  of  its 
population  and 
fairness,  while 
social 
boosting the competitiveness of its economy. 
Challenges  include:  (i)  low  life  expectancy,  high 
treatable  mortality  and 
impact  on  workforce 
productivity; (ii) inadequate allocation of resources 
in  poor  geographical  distribution, 
reflected 
ineffective  organisation  and  management  of 
health infrastructure, as well as insufficient focus 
on  disease  prevention  and  outpatient  care;  (iii) 
limited 
shortages  of  healthcare  workers  and 
access to care.  

Life  expectancy  at  birth 
in  Romania 
rebounded  above  its  pre-COVID-19  level  but 
was still among the lowest in the EU in 2023. 
There  is  a  striking  gender  gap,  with  women 
expected  to  live  7.8  years  longer  than  men.  That 
said,  they  can  only  expect  to  live  around  seven 
months longer than men in good health. Treatable 
mortality  is  the  highest  in  the  EU,  suggesting 
serious  shortcomings  in  the  effectiveness  of  the 
health  system.  Cardiovascular  mortality  is  high 
and  increasing,  due  in  part  to  behavioural  risk 
factors.  The  2024–2030  national  strategy  to 
cerebrovascular 
combat 
diseases,  published  in  October  2024,  sets  out 
integrated  measures  for  the  prevention  of  these 
diseases,  early  diagnosis,  treatment  and  patient 
in  several 
rehabilitation.  Romania  participates 
EU4Health-funded joint actions that aim to reduce 
the  burden  of  cardiovascular  diseases,  cancer, 
diabetes and respiratory diseases. 

cardiovascular 

and 

Graph A14.1: Life expectancy at birth, years 

than  the  EU  average.  As  a  result,  the  number  of 
potential  productive  life  years  lost  due  to  non-
communicable  diseases  such  as  cancer  and 
cardiovascular  diseases  is  considerably  higher 
than the EU average (201). Cancer in particular has 
a  major  impact  on  workforce  participation  and 
productivity 
are 
These 
exacerbating the effects of population ageing on a 
shrinking  labour  force.  Between  2022  and  2040, 
the working age population in Romania is forecast 
to shrink by 0.9% every year as a result of lower 
birth rates (EU average: 0.3%).  

challenges 

(202). 

Graph A14.2: Treatable mortality 

Age-standardised death rate (mortality that could be 
avoided through optimal quality healthcare) 
Source: Eurostat (hlth_cd_apr) 

Romania’s health system is strongly hospital 
centred.  In  2022,  health  spending  per  inhabitant 
was among the lowest in the EU, with the largest 
share  going  towards  inpatient  care  and  day  care 
(around  43%  of  total  health  expenditure).  This, 
together with a high number of hospital beds (640 
per 100 000 population in 2022, much higher than 
the  EU  average),  illustrates  Romania’s  strongly 
hospital-centred 
care  model.  Out-of-pocket 
payments  account  for  a  greater  proportion  of 
spending  on  health  in  Romania  than  the  EU 
average.  Nearly  two  thirds  of  all  out-of-pocket 
payments are for outpatient pharmaceuticals (203). 
Under  the  Romanian  recovery  and  resilience  plan 
(RRP), around EUR 2.11 billion is planned for health 
reforms  and  supporting  investments.  Significant 
funding  for  healthcare  (EUR 3.8 billion)  is  also 
planned  under  the  2021-2027  cohesion  policy 

Source: Eurostat (demo_mlexpec) 

Shortcomings  in  the  effectiveness  of  the 
health  system  negatively  affect  Romania’s 
workforce, productivity  and competitiveness. 
In  Romania,  mortality  at  working  age  as  a 
proportion of total mortality is significantly higher 

(201) Update  to  2021  data  of  analysis  presented  by  Health  at  a 

Glance: Europe 2016 - © OECD 2016 

(202) OECD/European  Commission  (2025),  EU  Country  Cancer 
Profiles  Synthesis  Report  2025,  OECD  Publishing,  Paris, 
https://doi.org/10.1787/20ef03e1-en 

(203) OECD/European  Commission  (2024),  Health  at  a  Glance: 
Europe 2024: State of Health in the EU Cycle, pp. 186-187. 

97 

75.674.272.875.176.481.380.480.180.681.420192020202120222023RomaniaEU210.6208.6235.1254.7215.091.389.291.793.389.720182019202020212022per 100 000 populationRomaniaEU 
 
      
      
 
 
 
Table A14.1:Key health indicators 

*The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used based on 2022 (or latest 2021) data except for Luxembourg (2017). Doctors’ density data refer to practising 
doctors in all countries except Greece, Portugal (licensed to practise) and Slovakia (professionally active). Density of nurses: data 
refer to practising nurses (EU recognised qualification) in most countries except France and Slovakia (professionally active) and 
Greece (hospital only). **‘Available hospital beds’ covers somatic care, not psychiatric care. ***The EU median is used for patents. 
Source:  Eurostat database; European Patent Office; ****European Centre for Disease Prevention and Control (ECDC) for 2023. 

by  the  low  share  of  public  funding  for  outpatient 
care,  and  the  uneven  distribution  of  healthcare 
resources  between  regions  and  between  income 
levels.  The  limited  scope  of  primary  care  services 
and the limited availability of general practitioners 
result 
in  people  making  avoidable  visits  to 
emergency departments, as this is the easiest way 
to  access  specialist  care. Furthermore,  the  limited 
role  of  primary  care  in  disease  prevention,  early 
diagnosis  and  treatment  in  Romania,  results  in  a 
high  level  of  avoidable  hospitalisations,  such  as 
for diabetes patients. The national health strategy 
for  2023-2030  aims  to  strengthen  the  role  and 
improve  the  performance  of  outpatient  care.  In 
addition,  specific  measures  under  both  the  RRP 
and  the  cohesion  policy  aim  to  improve  health 
services  in  primary,  outpatient  and  community 
care.  In  2024,  the  level  of  unmet  needs  for 
medical  care  has  decreased  compared  to  2023 
(5.2% in 2023 to 2.2% in 2024) although financial 
barriers  continue  to  contribute  to  unmet  needs, 
with  notable 
rural-urban 
disparities  remaining  (see  Annex  11).  To  improve 
access  to  innovative  treatments  for  patients  with 
various 
Romanian 
conditions, 
government  has  approved  the  introduction  of  28 
innovative medicines in the benefit package of the 
social health insurance, starting from 1 May 2024.  

income-related  and 

chronic 

the 

staff 

Shortages  of  health 
the 
availability  of  care.  The  density  of  doctors  in 
Romania is below the EU average (3.5 doctors per 
1 000 population in 2021 vs 4.2), with an uneven 
distribution  across  the  country.  There  were  only 

limit 

funds.  These  funds  aim,  in  particular,  to  improve 
the  performance  of  healthcare  providers,  with 
measures resulting in a higher quality of care, and 
a more effective organisation and management of 
(both  hospital  and  outpatient 
infrastructures 
settings), 
including  a  newly  created  National 
Agency for Development of Health Infrastructure. 

As  regards  public  health,  the  focus  on 
disease  prevention  is  still  insufficient.  In 
in  Romania 
2022,  spending  on  prevention 
accounted  for  2.8%  of  total  spending  on  health, 
far  below  the  EU  average  of  5.5%.  According  to 
2023  data,  vaccination  coverage  among  children, 
for example for measles and hepatitis B, is among 
the  lowest  in  the  EU,  reflecting  gaps  in  access  to 
primary  care  (204).  In  2023,  the  consumption  of 
antibiotics was well above the EU average, despite 
the  recommended  national  target  (205)  to  reduce 
total  consumption  by  27%  between  2019  and 
2030.  A  strategy  to  prevent  and  limit  healthcare-
associated infections  was approved  at  the end  of 
2023.  On  behavioural  risk  factors,  a  large portion 
of  the  population  is  overweight,  and  Romania  is 
among  the  countries  with  the  highest  increase  in 
alcohol  consumption  between  2010  and  2022, 
alongside having one of the lowest rates of fresh 
fruit consumption (206). 

Challenges  in  accessing  outpatient  care  is  a 
main  driver  for  the  high  levels  of  treatable 
mortality  in  Romania.  Access  to  care  is  limited 

(204) Health at a Glance: Europe 2024, pp. 160-161. 
(205) National  target  set  by  the  Council  Recommendation  on 
stepping up EU actions to combat antimicrobial resistance in 
a ‘one health’ approach, 2023/C 220/01. 
(206) Health at a Glance: Europe 2024, Chapter 4. 

98 

20192020202120222023EU average* (latest year) Cancer mortality per 100 000 population264.2260.3243.2240.8n.a.234.7 (2022)Mortality due to circulatory diseases per 100 000 population 830.6 918.21 005.4 924.5n.a.336.4 (2022)Current expenditure on health, purchasing power standards, per capita1 3111 4411 6621 627n.a.3 684.6 (2022)Public share of health expenditure, % of current health expenditure 80.5 80.3 78.3 77.8n.a.81.3 (2022)Spending on prevention, % of current health expenditure 1.52.03.72.8n.a.5.5 (2022)Available hospital beds per 100 000 population** 620 627 634 640n.a.444 (2022)Doctors per 1 000 population*3.23.33.53.6n.a.4.2 (2022)*Nurses per 1 000 population* 0.8 0.8 0.9 0.9n.a.7.6 (2022)*Mortality at working age (20-64 years), % of total mortality22.721.621.320.821.014.3 (2023)Number of patents (pharma / biotech / medical technology)3313129 (2023)***Total consumption of antibacterials for systemic use,                    daily defined dose per 1 000 inhabitants****25.825.225.727.627.420.0 (2023) 
 
 
      
 
0.9  practicing  nurses  (207)  per  1 000 population  in 
Romania  in  2022,  the  lowest  rate  in  the  EU  (EU 
average: 7.6), posing a significant challenge to the 
health  system  (see  Annex  11).  The  number  of 
nursing  graduates  per  100 000 population  is  also 
among  the  lowest  in  the  EU.  Despite  a  higher 
density of medical graduates than the EU average, 
emigration  of  health  workers  contributes  to  staff 
shortages.  To  tackle  health  workforce  issues,  the 
government  has  approved  a  multiannual  strategy 
(2022-2030) and sectoral action plans, as part of 
Romania’s RRP. 

management;  and  (iii)  accelerating  telemedicine 
adoption,  also  among  vulnerable  populations  and 
in  rural  areas.  These  initiatives  aim  to  integrate 
health  institutions  through  digital  infrastructure, 
to  health  data, 
improving  access 
reducing 
improving  the  quality  of 
fragmentation,  and 
healthcare services. 

innovation  and 

The  Romanian  health  system’s  potential  to 
drive 
industrial 
foster 
development 
in  the  EU  medical  sector 
remains  largely  untapped.  Romania  is  among 
the  EU  countries  that  report  the  lowest  public 
spending  on  health  research  and  development. 
This  is  reflected  in  the  low  number  of  European 
patents  granted:  only  seven  in  2023  in  the 
combined 
pharmaceuticals, 
biotechnologies  and  medical  devices  (vs  an  EU-
level  median  of  29  (208).  Clinical  trial  activity  in 
Romania  is  also  limited  (209).  At  the  beginning  of 
October  2024,  the  health  programme  under  the 
cohesion policy funds was amended to incorporate 
two  new  priorities  contributing  to  the  Strategic 
Technologies for Europe Platform resulting in new 
measures  to  support  skills,  and  research  and 
development promoting innovation in health.  

areas 

of 

and 

health 

overall 

Romania is lagging behind in the uptake of e-
health 
system 
digitalisation and needs to overcome gaps in 
data storage and sharing. For instance, in 2024, 
the  share  of  people  accessing  their  personal 
health  records  online in  Romania  (9.9%)  was  less 
than a fifth of the EU average. There is also a wide 
gap  in  patient  use  depending  on  an  individual’s 
socio-economic  background.  Significant  planned 
investments  under  the  RRP  and  cohesion  policy 
aim  to  boost  the  digital  transformation  of  the 
healthcare  sector in  Romania.  Measures  focus  on: 
increasing  the  digital  capacity  of  health 
(i) 
improving  data 
institutions  at  all 

levels; 

(ii) 

(207) Under  the  newly  adopted  Eurostat  definition  of  nurses 
(following the EU Directive 2005/36/EC on the recognition of 
professional  qualifications)  nurse  density  numbers  shown 
below  are  significantly lower  than  numbers  using  a broader 
definition, as for instance used for the OECD health statistics. 

(208) European Patent Office, Data to download | epo.org. 
(209) EMA (2024), Monitoring the European clinical trials 

environment, p. 9. 

99 

 
 
 
 
HORIZONTAL 
ANNEX 15: SUSTAINABLE DEVELOPMENT GOALS 

social 

fairness 

This  Annex  assesses  Romania’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  dimensions  of  competitiveness, 
and 
sustainability, 
macroeconomic stability. 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 
inequalities  and  tackle  climate 
poverty,  fight 
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 
the EU. 

As  regards  SDGs  linked  to  competitiveness, 
Romania is improving on SDG 8 (Decent work 
and  economic  growth)  and  SDG 9  (Industry, 
Innovation and Infrastructure), but is moving 
away  from  the  goal  for  SDG 4  (Quality 

Graph A15.1: Progress towards the SDGs in Romania 

(SDG 4), 

education). On SDG 8, although the percentage of 
young  people  not  in  employment,  education  or 
training  fell  from 20.9%  to  19.4%  between  2019 
and  2024,  the  figure  remains  well  above  the  EU 
average  of  11%  in  2024,  down  from  12.8%  in 
2019.  On  quality  education 
the 
percentage  of  adults  with  at  least  basic  digital 
skills  remained  stable  from  2021  to  2023, 
standing  at  around  27.7%.  This  is  significantly 
lower  than  the  EU  average  of  55.6%  in  2023,  up 
from 53.9% in 2021. Romania also needs to catch 
up with the EU average for SDG 9 (0.52% of GDP 
expenditure on R&D; EU average: 2.24% in 2023). 
To  address  the  challenges  linked  to  productivity, 
Romania’s recovery and resilience plan (RRP) aims 
to  create  a  full  professional  route  for  higher 
technical  education,  digitalise 
the  education 
process  to  improve  digital  skills  for  students  and 
teachers and support research and innovation. 

Romania is improving on all SDGs related to 
sustainability  (SDGs 2,  6,  9,  11,  12,  13,  14) 
except for SDG 15 (Life on land). Yet, Romania 

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). 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 
five 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 28 April 2025. Data refer mainly to the period 2018-2023 or 2019-2024. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

100 

 
 
 
 
 
 
 
needs to catch up with the EU average for most of 
these  (SDGs  2,  6,  9,  11,  12,  15).  On  SDG 12 
(Responsible  consumption  and  production),  the 
material  footprint  was  33.2  tonnes  per  inhabitant 
in  2023,  compared  to  an  EU  average  of  14.2 
(Sustainable  cities  and 
tonnes.  On  SDG  11 
communities),  the  number  of  road  traffic  deaths 
per  100 000  persons  was  8.1  in  2023,  compared 
to an EU average of 4.5 and the recycling rate of 
municipal  waste  in  2022  was  12.3%  for  an  EU 
average  of  48.2% in  2023.  On  SDG  9,  the  patent 
applications  to  the  European  Patent  Office  (EPO) 
per million inhabitants was 9 in 2024, while the EU 
average was 156. 

While  Romania  has  made  progress  on  some 
SDGs  related  to  gender  equality  (SDG 5), 
affordable  and  clean  energy  (SDG  7)  and 
good  health  and  well-being  (SDG 3),  and  in 
some cases significant progress (SDGs 1 and 
8), it is moving away from the target for SDG 
4  (quality  education).  While  the  percentage  of 
the  population  at  risk  of  poverty  and  social 
exclusion  decreased  between  2018  and  2023 
from  38.7%  to  32%,  though  the  self-reported 
unmet  needs  for  medical  care  increased  slightly 
from  4.9%  to  5.2%  over  that  period.  Romania’s 
track  record  on  gender  equality  is  concerning 
compared  to  the  risk  of  the  EU.  In  2024,  only 
19.5%  of  seats  were  held  by  women  in  national 
parliaments and governments compared to 33.4% 
in  the  EU.  As  regards  SDG  7,  the  RRP  aims  to 
support  clean  energy  production  and  energy-
efficiency renovation. 

(2012) 

linked  volumes 

Romania is improving on all SDGs related to 
macroeconomic  stability  (SDGs 8,  16,  17). 
Romania’s  real  GDP  per  capita  (SDG 8)  rose  from 
EUR 11,830  in  2019  to  EUR 13,130  in  2024  - 
(EU  average: 
chain 
EUR 33,530  in  2024).  However,  the  country  faces 
challenges related to trust in institutions, with the 
Corruption  Perceptions  Index  standing  at  46  in 
2024  (EU  average:  62).  The  index’s  scale  runs 
from  0  (highly  corrupt)  to  100  (very  clean)). 
Romania performs well on SDG 17 (Partnership for 
the goals). The RRP is expected to further improve 
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.  

101 

 
 
ANNEX 16: CSR PROGRESS AND EU FUNDS IMPLEMENTATION 

Romania  faces  structural  challenges  in  a 
wide  range  of  policy  areas,  as  identified  in 
the country-specific recommendations (CSRs) 
addressed  to  the  country  as  part  of  the 
European  Semester.    They  refer,  among  other 
renewable  energy  and  energy 
things, 
infrastructure,  the  functioning  of  the 
labour 
market,  education, 
training  and  skills,  fiscal 
governance,  public  administration  and  social 
protection. 

to 

The Commission has assessed the 2019-2024 
CSRs  considering  the  policy  action  taken  by 
Romania to date and the commitments in its 
recovery  and  resilience  plan  (RRP).  At  this 
stage, Romania has made at least ‘some progress’ 
on 74% of the CSRs (210), and ‘limited progress’ on 
22% (Table A16.2). 

by 

to  Romania 

competitiveness, 

EU funding instruments provide considerable 
resources 
supporting 
investments  and  structural  reforms  to 
increase 
environmental 
sustainability  and  social  fairness,  while 
helping  to  address  challenges  identified  in 
the  CSRs.  In  addition  to  the  EUR 28.5  billion 
funding  from  the  Recovery  and  Resilience  Facility 
(RRF) in 2021-2026, EU cohesion policy funds (211) 
are  providing  EUR 31  billion 
to  Romania 
(amounting  to  EUR 44.4  billion  with  national 
cofinancing) for 2021-2027 (212) to boost regional 
competitiveness  and  growth.  Support  from  these 
instruments combined represents around 18.3% of 
these 
2024  GDP 
instruments  to  different  policy  objectives 
is 
in  Graphs  A16.1  and  A16.2.  This 
outlined 
substantial  support  comes  on  top  of  financing 
provided  to  Romania  under  the  2014-2020 
multiannual  financial  framework,  which  financed 
cohesion  policy  projects  until  2023  and  has  had 

(213).  The  contribution  of 

(210) 9% of the 2019-2024 CSRs have been fully implemented, 
15% substantially implemented, and some progress has 
been made on 50%. 

(211) In 2021-2027, cohesion policy funds include the European 
Regional Development Fund, the Cohesion Fund, the 
European Social Fund Plus and the Just Transition Fund. The 
information on cohesion policy included in this annex is 
based on adopted programmes with the cut-off date of 5 
May 2025. 

(212) European territorial cooperation (ETC) programmes are 

excluded from the figure. 

(213) RRF funding includes both grants and loans, where 

applicable. GDP figures are based on Eurostat data for 2024. 

significant  benefits 
the  economy  and 
for 
Romanian  society.  Project  selection  under  the 
2021-2027  cohesion  policy  programmes 
is 
advanced, while significant volumes of investment 
are yet to be mobilised. 

The Romanian RRP contains 111 investments 
and  66  reforms  to  stimulate  sustainable 
growth,  foster  digital  transition  and  achieve 
climate objectives. A year before the end of the 
RRF  timespan,  implementation  is  on  its  way,  with 
33.13%  of  the  funds  disbursed  (214).  However, 
implementation of reforms and investments needs 
to urgently accelerate, to ensure completion of all 
RRP  measures  by  31 August  2026.  At  present, 
Romania has fulfilled 14 % of the milestones and 
targets  in  its  RRP.  The  main  bottlenecks  to  EU 
funds  implementation  in  Romania  are  delays  in 
ineffective 
procurement, 
governance 
administrative 
capacity.  

insufficient 

instability, 

political 

and 

Graph A16.1: Distribution of RRF funding in 
Romania by policy field 

With 

(1) Each RRP measure helps achieve the aims of two of the 
six policy pillars of the RRF. The primary contribution is shown 
in the outer circle, while the secondary contribution is shown 
in the inner circle. Each circle represents 100% of the RRF 
funds. Therefore, the total contribution to all pillars displayed 
on this chart amounts to 200% of the RRF funds allocated. 
Source: European Commission 

Romania  also  receives  funding  from  several 
other  EU  instruments,  including  those  listed  in 
Table  A16.1.  Most  notably, 
common 
agricultural policy (CAP) provides Romania with an 
EU  contribution  of  EUR 15  billion  under  the  CAP 
(215).  Operations 
strategic  plan  2023-2027 

the 

(214) As of mid-May 2025, Romania has submitted 3 payment 

requests. 

(215) An overview of Romania’s formally approved strategy to 
implement the EU’s common agricultural policy nationally 

102 

Green transitionDigital transformationSmart, sustainable andinclusive growthSocial & territorial cohesionHealth & resilienceNext generation 
 
 
      
 
 
 
 
amounting to EUR 2.8 billion (216) have been signed 
under  the  InvestEU  instrument  backed  by  the  EU 
guarantee,  improving  access  to  financing  for 
riskier operations in Romania. 

Graph A16.2: Distribution of cohesion policy 
funding across policy objectives in Romania 

supporting  youth  employment  and  promoting 
entrepreneurship.  Another  EUR 1.9  billion  aims  to 
improve education quality, address skills shortages 
and  foster  lifelong  learning.  EUR 145  million  is 
dedicated  to  green  skills  and  jobs,  while  over 
EUR 570 million supports vocational education and 
training,  higher  education,  and  adult  learning  in 
critical  technologies  (STEP).  More  than  1.5  million 
people  will  benefit,  including  more  than  500 000 
children  and  young  people,  with  240 000  finding 
jobs and 354 000 gaining new qualifications. 

Source: European Commission 

The 

and 

billion 

targets 

sectors, 

European 

allocation 

investments 

in innovation 

competitiveness 

Cohesion  policy  funds  aim  to  increase  the 
productivity 
of 
Romanian  firms  and  improve  the  business 
Regional 
environment. 
Development  Fund (ERDF)  and  the  Just  Transition 
Fund  (JTF)  provide  support  to  22 300  businesses, 
targeting 
and 
digitalisation.  Close  to  4 000  small  and  medium-
sized enterprises (SMEs) are investing in new skills 
and  400  public  institutions  will  be  supported  in  a 
swift digital transition.  More than half of JTF  EUR 
economic 
2.14 
diversification  in  territories  which  rely  on  high 
emission 
installations 
undergoing technological transformations towards 
a low carbon economy, as well as SMEs involved in 
strategic 
is 
mobilising  over  EUR  1.5  billion  of  cohesion  policy 
funding  in  support  of  the  objectives  of  the 
Strategic Technologies for Europe Platform (STEP) 
aiming  at  developing  critical  technologies  such  as 
including 
digital  technologies  (microelectronics, 
semiconductor 
artificial 
and 
technologies, 
intelligence),  and  clean  and  resource  efficient 
technologies  (green  hydrogen  production).  The 
European  Social  Fund  Plus  (ESF+)  is  investing 
EUR 1.7  billion  to  boost  competitiveness  and 
labour  market 
productivity  by  modernising 
dialogue, 
institutions, 

(STEP).  Romania 

strengthening 

technologies 

industrial 

social 

can be found at: https://agriculture.ec.europa.eu/cap-my-
country/cap-strategic-plans/romania_en  

(216) Data reflect the situation on 31.12.2024. 

are 

funds 

contributing 

to 
Other 
competitiveness  in  Romania,  for  instance 
through  open  calls.  The  Connecting  Europe 
Facility  has  financed  strategic  investment  in  rail 
transport,  projects  for  the  integration  of  the 
energy  market  and  security  of  energy  supply  and 
uptake  of  5G  in  smart  communities.  Horizon 
Europe  has  supported  research  and  innovation 
projects  in  priority  areas  such  as  climate,  energy 
and  mobility  and  food,  bioeconomy,  natural 
resources,  agriculture  and  environment. 
In 
Romania, the Technical Support Instrument (TSI) is 
focused on enhancing the capabilities of the public 
administration and supporting the development of 
a comprehensive regional green hydrogen market.  

to 

the 

Romania’s  RRP  also  contains  ambitious 
measures 
business 
improve 
environment  and  competitiveness.  Measures 
covered by submitted payment requests include: (i) 
the  entry  into  force  of  the  ‘Single  Industrial 
Licence’ law aimed  at reducing the administrative 
burden  for  the  business  environment  and  of 
legislative  amendments  to  streamline,  simplify 
and fully digitise business-related procedures; and 
(ii)  the  entry  into  force  of  a  law  that  encourages, 
facilitates  and 
the  voluntary  and 
functional  integration  and  merger  of  research 
institutions in Romania. 

regulates 

EU  funds  are  playing  a  significant  role  in 
promoting  environmental  sustainability  and 
green  transition 
in  Romania  during  the 
current  seven-year  EU  budget  (multiannual 
financial  framework).  Cohesion  policy  funding 
will  be  used  to  increase  capacity  for  renewable 
energy  generation  by  around  300 MW.  Around 
660 000 people will benefit from new or upgraded 
wastewater  treatment  capacity.  Investments  will 
also support the development of  additional waste 
recycling  capacity,  planned  to  reach  360 000 
In  addition,  EUR 306  million  are 
tonnes/year. 
disaster 
to 
earmarked 

address 

climate 

103 

Smarter EuropeGreener EuropeConnected EuropeSocial EuropeEurope closer to citizensJTF specific objective 
 
     
 
marginalised  groups  will  support  6 100  people. 
Nearly  260 000  people  per  year  will  benefit  from 
increased  capacity  in  healthcare  facilities.  The 
ESF+  dedicates  EUR 1.9  billion,  or  25.9%  of  its 
total  budget,  to  fostering  social  inclusion  by 
improving  social  services,  particularly  in  rural  and 
marginalised  communities,  and  to  supporting  the 
fund 
European  Child  Guarantee.  ESF+  will 
integrated  community  services  for  at 
least 
450 000  vulnerable  people,  provide  material 
support  to  1.2  million  deprived  Romanians  and 
350 000 children, and will improve community and 
home-based care for over 12 500 older people. 

system 

education 

Romania’s RRP contains several reforms and 
investments  related  to  fairness  and  social 
policies. Measures covered by the three payment 
requests submitted include a reform of the public 
pension system; a reform of the governance of the 
pre-university 
and 
professionalisation  of  management;  investments 
to support educational establishments with a high 
risk  of  dropouts;  the  adoption  of  a  national  long-
term  care  strategy;  and  implementation  of  a 
minimum  inclusion  income  to  help  the  most 
vulnerable people out of poverty. To help Romania 
implement  its  RRP,  in  2024  the  TSI  assisted  with 
measures 
regulatory 
improving 
frameworks  in  social  housing  and  for  combating 
bid rigging in public procurement. 

the 

for 

in 

ERDF 

across 

involve 

country 

friendly 

farming 

terms  of 

management. 
investments  will  also 
contribute to more sustainable urban environment 
by extending the length of tram and metro lines by 
improving  transport 
more  than  200 km  and 
connectivity 
through 
the 
reconstruction.  Through  its  CAP  strategic  plan, 
Romania allocates around 25% of direct payments 
to  eco-schemes.  These 
incentives  to 
farmers that go beyond the legal requirements or 
climate  and 
usual  practice 
environment.  Around  EUR 1.64  billion  in  support 
will  go  to  farmers  who  are  willing  to  implement 
practices, 
environmentally 
including  ensuring  soil  protection  during  sensitive 
climatic  periods,  diversifying  crops  and  protecting 
soil  through  minimum  tillage.  The  different  eco-
schemes  are  expected  to  be  applied  on  up  to  5.6 
million  hectares  of  land,  depending  on  their 
targeted  area.  Significant  support  (41%  of  the 
rural  development  budget)  will  also  be  used  to 
encourage  environmentally  friendly  practices  for 
areas  with  high  natural  value,  for  example  areas 
that  are  important  for  the  life  of  birds  and 
butterflies.  Annually,  farmers  are  expected  to 
apply these practices on 611 000 hectares of land. 
EUR 245  million  will  be  available  for  small  farms 
(up  to  10  hectares)  to  motivate  them  to  adopt 
sustainable  agriculture, 
practices  aimed  at 
improving 
preventing 
biodiversity. 

soil  degradation  and 

Romania’s  RRP,  including  the  REPowerEU 
chapter, has a comprehensive set of reforms 
and  investments  for  the  green  transition. 
Measures covered by submitted payment requests 
include:  (i)  the  development  of  flexible  and  high-
efficient  gas-fired  combined  heat  and  power 
generation  (CHP)  in  district  heating  to  achieve 
deep  decarbonisation; 
the 
electricity  market;  (iii)  the  establishment  of  a 
national  support  scheme  for  energy  efficiency 
renovation  and  integrated  renovation  (seismic 
consolidation  and  energy  efficiency)  for  public 
buildings;  and  (iv)  investments  in  sustainable 
urban mobility. 

reform  of 

(ii)  a 

The 

Promoting  fairness,  social  cohesion  and 
improving  access  to  basic  services  are 
among  the  key  priorities  of  EU  funding  in 
Romania. 
supporting 
ERDF 
the development  of  classroom  infrastructure  for 
childcare  facilities,  covering  more  than  130 000 
children. The capacity of new or modernised social 
housing will benefit more than 4 300 people, while 
inclusion  of 
targeting 
integrated  action 

the 

is 

104 

 
 
Table A16.1:Selected EU funds with adopted allocations - summary data (million EUR) 

(1) The cut-off date for data on disbursements under the RRF is 31 May 2025. 
(2) Cohesion policy 2014-2020 allocations include REACT-EU appropriations committed in 2021-2022. 
(3) These amounts relate only to disbursements made from 2021 onwards and do not include payments made to the Member 
State before 2021.  Hence the figures do not comprise the totality of payments corresponding to the 2014-2020 allocation. The 
cut-off date for data on disbursements under EMFAF and EMFF is 29 April 2025.  The cut-off date for data on disbursements 
under cohesion policy funds, AMIF, BMVI and ISF is 5 May 2025. 
(4) AMIF - Asylum, Migration and Integration Fund; BMVI - Border Management and Visa Instrument; ISF - Internal Security Fund. 
(5) Expenditure outside the CAP strategic plan is not included. 
(6) The cut-off date for data on EARDF disbursements is 5 May 2025. The information on EAGF disbursements is based on the 
Member State declarations until March 2025.  Disbursements for the Direct Payments (EAGF) started in 2024. 
Source: European Commission 

105 

Instrument/policyDisbursed since 2021   (1)             RRF grants (including the RepowerEU allocation)5 779.9RRF loans3 662.6Instrument/policyAllocation 2014-2020 (2)Allocation 2021-2027 Disbursed since 2021 (3)    (covering total payments to the Member State on commitments originating from both 2014-2020 and 2021-2027 programming periods) Cohesion policy (total)24 070.830 986.517 212.6European Regional Development Fund (ERDF)12 376.117 976.09 357.8Cohesion Fund (CF)6 535.03 537.74 038.3European Social Fund (ESF, ESF+) and the Youth Employment Initiative (YEI)5 159.67 333.03 153.3Just Transition Fund (JTF)2 139.7 663.3European Maritime, Fisheries and Aquaculture Fund (EMFAF) and the European Maritime and Fisheries Fund (EMFF) 168.4 162.578.5Migration, border management and internal security - AMIF, BMVI and ISF (4) 214.2333.6108.0The common agricultural policy under the CAP strategic plan (5)Disbursements under the CAP Strategic Plan (6)Total under the CAP strategic plan4 200.1European Agricultural Guarantee Fund (EAGF)3 600.6European Fund for Agricultural Development (EAFRD) 599.5Allocation 2023-202714 969.69 934.85 034.7Allocation 2021-2026 13 566.114 942.2FisheriesMigration and home affairs 
 
 
     
 
Table A16.2:Summary table on 2019-2024 CSRs 

(Continued on the next page) 

106 

RomaniaAssessment in May 2025Relevant SDGs2019 CSR 1Not relevant anymoreEnsure 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 anymoreSDG 8, 16Ensure the full application of the fiscal framework. Not relevant anymoreSDG 8, 16Strengthen tax compliance and collection.Limited progressSDG 8, 162019 CSR 2Substantial progressSafeguard financial stability and the robustness of the banking sector. Substantial progressSDG 8Ensure the sustainability of the public pension system and Substantial progressSDG 8the long-term viability of the second pillar pension funds.Substantial progressSDG 82019 CSR 3Some progressImprove the quality and inclusiveness of education, in particular for Roma and other disadvantaged groups.Some progressSDG 4, 8, 10Improve skills, including digital, notably by increasing the labour market relevance of vocational education and training and higher education. Some progressSDG 4Increase the coverage and quality of social services and Some progressSDG 1, 2,10complete the minimum inclusion income reform. Substantial progressSDG 1, 2, 10Improve the functioning of social dialogue. Substantial progressSDG 8Ensure minimum wage setting based on objective criteria, consistent with job creation and competitiveness. Substantial progressSDG 8Improve access to and cost-efficiency of healthcare, including through the shift to outpatient care.Some progressSDG 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 progressSDG 6, 7, 9, 10, 11, 12, 13Improvepreparationandprioritisationoflargeprojectsandaccelerate their implementation. Some progressSDG 16Improvetheefficiencyofpublicprocurementandensurefullandsustainableimplementationofthenationalpublicprocurementstrategy.Some progressSDG 92019 CSR 5Some progressEnsurethatlegislativeinitiativesdonotunderminelegalcertaintybyimprovingthequalityandpredictabilityofdecision-making,includingbyappropriatestakeholderconsultations,effectiveimpactassessments and streamlined administrative procedures.Limited progressSDG 16Strengthen the corporate governance of state-owned enterprises.Some progressSDG 92020 CSR 1Not relevant anymorePursuefiscalpoliciesinlinewiththeCouncil’srecommendationof3April2020,whiletakingallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuing recovery. Not relevant anymoreSDG 8, 16Avoidtheimplementationofpermanentmeasuresthatwouldendanger fiscal sustainability. Limited progressSDG 8, 16Strengthen the resilience of the health system, including in the areas of health workers and medical products, and improve access to health services. Some progressSDG 32020 CSR 2Some progressProvide adequate income replacement and Full implementationSDG 1, 2, 10extend social protection measures and Some progressSDG 1, 2, 10extend access to essential services for all. Limited progressSDG 1, 2, 10Mitigatetheemploymentimpactofthecrisisbydevelopingflexibleworking arrangements and activation measures. Substantial progressSDG 8Strengthen skills and digital learning and Some progressSDG 4ensure equal access to education. Some progressSDG 4, 8, 10 
 
 
  
 
Table (continued) 

(Continued on the next page) 

107 

2020 CSR 3Some progressEnsure liquidity support to the economy benefiting businesses and households, particularly small and medium-sized enterprises and the self-employed. Full implementationSDG 8, 9Front-load mature public investment projects and Some progressSDG 8, 16promote private investment to foster the economic recovery. Some progressSDG 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularonsustainable transport,Some progressSDG 11digital service infrastructure,Some progressSDG 9cleanandefficientproductionanduseofenergyandenvironmentalinfrastructure, including in the coal regions.Some progressSDG 6, 7, 9, 10, 11, 12, 132020 CSR 4Limited progressImprove the quality and effectiveness of public administration and Some progressSDG 16improvethepredictabilityofdecision-making,includingthroughan adequate involvement of social partners.Some progressSDG 162021 CSR 1Not relevant anymorePursuefiscalpoliciesinlinewiththeCouncilRecommendationof18June2021withaviewtobringinganendtothesituationofanexcessive government deficit in Romania.Not relevant anymoreSDG 8, 162022 CSR 1Not relevant anymorePursuefiscalpoliciesinlinewiththeCouncilRecommendationof18June2021withaviewtobringinganendtothesituationofanexcessive government deficit in Romania.Not relevant anymoreSDG 8, 162022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestonesandtargetsincludedintheCouncilImplementing Decision of 3 November 2021.SwiftlyfinalisethenegotiationswiththeCommissiononthe2021-2027cohesionpolicyprogrammingdocumentswithaviewtostarting their implementation.2022 CSR 3Some progressReduce overall reliance on fossil fuels.Some progressSDG 7, 9, 13Facilitatethefurtherexpansionofsustainableenergyproductionbyaccelerating the development of renewables,Limited progressSDG 7, 9, 13upgradingenergytransmissiongridsandincreasinginterconnectionwith neighbouring Member States.Limited progressSDG 7, 9, 13Increasethepaceandambitionofrenovationstoadvancetheenergy efficiency of the building stock.Some progressSDG 72023 CSR 1Limited progressPursuefiscalpoliciesinlinewiththeCouncilRecommendationof18June2021withaviewtobringinganendtothesituationofanexcessivegovernmentdeficitinRomaniaby2024,andtostrengthenRomania’s external position.Limited progressSDG 8, 16Winddowntheemergencyenergysupportmeasuresinforce,usingtherelatedsavingstoreducethegovernmentdeficit,assoonaspossiblein2023and2024.Shouldrenewedenergypriceincreasesnecessitateneworcontinuedsupportmeasures,ensurethatthesearetargetedatprotectingvulnerablehouseholdsandfirms,fiscallyaffordable, and preserve incentives for energy savings.Limited progressSDG 8, 16PreservenationallyfinancedpublicinvestmentandensuretheeffectiveabsorptionofRRFgrantsandotherEUfunds,inparticularto foster the green and digital transitions.Full implementationSDG 8, 16Fortheperiodbeyond2024,continuetopursueamedium-termfiscalstrategyofgradualandsustainableconsolidation,combinedwithinvestmentsandreformsconducivetohighersustainablegrowth, to achieve a prudent medium-term fiscal position.No progressSDG 8, 162023 CSR 2Ensureaneffectivegovernanceandstrengthentheadministrativecapacitytoallowforacontinuedswiftandsteadyimplementationoftherecoveryandresilienceplan.SwiftlyfinalisetheREPowerEUchapterwithaviewtorapidlystartingitsimplementation.Proceedwiththespeedyimplementationofcohesionpolicyprogrammes,inclosecomplementarityandsynergywiththerecoveryandresilienceplan.RRP 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.RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy programming is monitored in the context of the Cohesion Policy of the European Union. 
 
 
  
 
Table (continued) 

Source: European Commission 

108 

2023 CSR 3Some progressReduce reliance on fossil fuels andSome progressSDG 7, 9, 13acceleratetheenergytransition,inparticularbydeployingrenewableenergyfasterandimprovinggridcapacitytoallownewcapacity to operate in the market.Limited progressSDG 7, 9, 13Increaseenergyefficiencyandtheambitionofbuildingrenovationefforts,includingbyprovidingbetteraccesstoinformationandsustainable finance options.Some progressSDG 7Stepuppolicyeffortsaimedattheprovisionandacquisitionofskillsand competences needed for the green transition.Limited progressSDG 42024 CSR 1Some progressSubmit the medium-term fiscal-structural plan in a timely manner. Full implementationSDG 8, 16Tighten fiscal policy in order to achieve a fiscal adjustment for 2024 as a whole. In 2025, in line with the requirements of the reformed Stability and Growth Pact, limit the growth in net expenditure to a rate consistent with, inter alia, reducing the general government deficit towards the 3% of GDP Treaty reference value and keeping the general government debt at a prudent level over the medium term.No progressSDG 8, 162024 CSR 2Significantly accelerate the implementation of cohesion policy programmes and the recovery and resilience plan, including the REPowerEU chapter, ensuring completion of reforms and investments by August 2026, by guaranteeing effective governance and strengthening administrative capacity. In the context of the mid-term review, continue focusing on the agreed priorities, taking action to better address the needs regarding social housing, the related social services and the development of smaller urban areas, while considering the opportunities provided by the Strategic Technologies for Europe Platform initiative to improve competitiveness.RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy programming is monitored in the context of the Cohesion Policy of the European Union. 
 
  
 
ANNEX 17: COMPETITIVE REGIONS 

Favourable  economic  conditions  provide  an 
in 
opportunity  for  regional  convergence 
Romania. Harnessing the competitive advantages 
of  regions 
in  key  sectors  of  the  economy, 
promoting  equal  access  to  high  quality  public 
services  at 
levels,  and 
addressing  challenges  of  demography,  quality  of 
institutions and governance are all key in ensuring 
social and economic convergence. 

regional  and 

local 

Romania’s  GDP  growth  has  been  driven  by 
access  to  EU  funds,  foreign  investment  and 
economic  integration.  Romania  has  seen  a 
sustained growth in GDP per head, which increased 
from just 30% of the EU-27 average in 2002 to a 
record high of 78% in 2023. This positive trend is 
expected  to  continue  in  2024-2026,  driven  by 
capital  deepening  and  growth  in  total  factor 
productivity. 

Despite  the  significant  internal  economic 
disparities  between  the  capital  and  other 
regions,  convergence  has  been  particularly 
strong  in  Romania  since  2013.  While  all 
Romanian 
to  move 
regions  have  continued 
towards  the  EU-27  average  in  terms  of  GDP  per 
head,  the  capital  region  has  improved  more 
rapidly, widening regional disparities. In 2023, GDP 
per  head  in  the  București-Ilfov  region  was  190% 
of  the  EU-27  average,  in  stark  contrast  to  the 
other regions, which ranged from 78% in Vest to a 
low of 47% in Nord-Est. 

Creating  opportunities  across  Romanian 
regions  would  help  to  tackle  negative 
demographic  trends  and  support  regions' 
productive  base  and  growth  potential.  The 
capital  region,  Vest,  Nord-Vest  and  Centru  have 
shown  better  GDP  per  head  performance 
compared to the rest of the country, despite recent 
population  increases.  While  in  the  last  10  years 
population  in  Romania  declined  by  4.5  per  1  000 
residents,  between  2022  and  2023,  these  four 
regions  registered  annual  demographic  increases 
ranging from 8.2 (București-Ilfov) to 1.1 (Vest) per 
1  000  residents.  Of  the  other  regions  only  Nord-
Est recorded a population increase (0.8), with Sud-
Est  (-3.5),  Sud-Vest  Oltenia  (-3.7)  and  Sud-
Muntenia (-3.7) all recording a population decline. 

Competitiveness 

All  Romanian  regions  are  below  the  EU-27 
average  in  terms  of  competitiveness.  The 
Regional  Competitiveness  Index  2.0  (Map  A17.1) 
shows  that  the  regional  gaps  in  GDP  per  head 
between  the  capital  and  the  rest  of  Romania  are 
largely driven by disparities in labour productivity, 
as well as gaps in higher education, labour market 
efficiency and innovation. 

Map A17.1:  Regional Competitiveness Index 2.0, 
2022 edition 

Source: DG REGIO, JRC based on Eurostat 

Labour  productivity  growth  has  accelerated 
significantly  over  the  past  decade.  Annual 
growth  in  labour  productivity  between  2013  and 
2022 
(measured  as  GDP  per  hour  worked) 
outpaced  the  EU-27  average  (3.5%  vs  0.9%). 
However,  this  growth  was  unevenly  distributed 
across the country. The capital region showed the 
fastest  growth  (6.2%),  followed  closely  by  Vest 
(5.2%) and Nord-Vest (4.5%). Two regions - Centru 
(1.6%)  and  Sud-Est  (2.6%)  -  saw  lower  but  still 
above EU average productivity growth. In contrast, 
Sud-Vest Oltenia (0.6%) and Sud-Muntenia (0.5%) 
experienced below-average growth, while Nord-Est 
(-0.5%) saw a decline in productivity. 

109 

 
 
 
 
 
 
 
Table A17.1:Selection of indicators at regional level in Romania 

Source: Eurostat and ARDECO (JRC) 

Graph A17.1: Labour productivity per hour 

Unit: Real GDP per hour worked (EUR, 2015 prices). 
Source: ARDECO (JRC). 

regions, 

in  Romania  and 

Human  capital  and  educational  attainment 
are  the  key  factors  behind  the  productivity 
gaps 
in  particular  the 
differences  between  the  capital  region  and 
other  regions.  In  2024,  in  almost  all  less 
the 
developed 
population aged 30-34 with a tertiary degree was 
below the national average (23.6%), ranging from 
15.3%  (Sud-Muntenia)  to  21.4%  (Nord-Vest).  In 
stark contrast, the București-Ilfov region displayed 
a  significantly  higher  proportion  of the  population 
with  a  high level  of  education  (51.2%),  exceeding 
even the EU-27 average (44.8%). 

the  proportion  of 

The  divide  in  educational  outcomes  is  not 
only  regional  but  also  exists  between  urban 
and  rural  areas.  There  is  significant  scope  for 
targeted 
improve  educational 
to 
outcomes and human capital development in rural 
areas  (see  Annex  12).  The  rate  of  early  leavers 
from school and training was alarmingly high and 

initiatives 

deteriorating in rural areas (26.3%), whereas cities 
had a much lower rate (5.0%) Furthermore, in the 
International  Student 
2022  Programme 
Assessment  test,  the  performance  gap  between 
schools  in  urban  and  rural  areas  was  among  the 
highest 
for 
mathematics, compared to the EU average of 49). 

(119  score  points 

the  EU 

for 

in 

Increasing  the  proportion  of  women  and 
young people in regional labour markets and 
to 
reducing  unemployment  would  help 
improve competitiveness, in particular in the 
less  developed  regions.  Regional  variations  in 
labour  market  conditions  are  significant,  with  the 
unemployment  rate  ranging  from  2.2%  in  the 
capital region to 9.9% in Sud-Est. Rural areas have 
a  substantially  higher  unemployment  rate  (8.2%) 
than  cities  (2.1%).  Moreover,  the  rate  of  youth 
unemployment  was  alarmingly  high  across  all 
regions,  with  participation  in  the  labour  market 
hampered by significant gaps in skills, especially in 
the  less  developed  regions.  There  are  also  wide 
regional  disparities  in  the  employment  rate  of 
women:  only  half  of  the  female  population  aged 
20-64  was  employed  in  the  Sud-Est  region  in 
2023, compared to 76.6% in the capital region. 

There 
is  significant  scope  to  enhance 
innovation  by  supporting  the  scale-up  of 
innovative  enterprises,  especially  where 
major universities are located.  Chronically low 
investment 
innovation 
in  R&D  and  weak 
performance  exacerbate 
regional  disparities. 
Regarding  business  expenditures  on  research  and 
development  (BERD),  all  regions  fell  short  of  the 
EU  average  (1.53%),  with  a  national  average  of 
0.29%. The proportion of employment in high-tech 

110 

051015202530354045201220132014201520162017201820192020202120222015 EUR per hour workedOther NUTS2 regionsCapital regionNational averageEU27GDP per head (PPS)Real GDP per head growthProductivity - GDP per person employed (PPS)Real productivity growth (per person employed)Productivity - GDP per hour worked (PPS)Real productivity growth (per hour worked)R&D expenditureHuman resources in science and technology (core)Employment in knowledge-intensive servicesPopulation aged 30-34 with high educational attainmentPopulation growthAt-risk-of-poverty or social exclusionAccess to alternative fuel infrastructureUrban waste water not collectedIndex EU-27 = 100Average annual % changeIndex EU-27 = 100Average annual % changeIndex EU-27 = 100Average annual % change% of GDP% of total employment% of total employment% of population aged 30-34Average annual change per 1000 residents% of total populationNumber of electric vehicles charging points within 10 km% of generated load20232014-202320232014-202320222013-202220222024202420242014-2023202420222020European Union (27 MS)1001.61000.61000.92.2849.241.544.81.721.02872.4Romania784.1853.7713.50.4629.325.223.6-4.527.93136.9Nord-Vest715.5755.3614.50.2427.523.321.4-1.925.61932.0Centru703.1811.9701.60.4329.721.917.3-2.924.7936.0Nord-Est470.047-0.643-0.50.2422.018.619.0-1.433.8838.6Sud-Est611.9741.3622.60.0924.824.917.6-6.839.71130.3Sud-Muntenia600.6781.6630.50.2422.222.815.3-8.528.8555.6Bucureşti-Ilfov1907.81676.41306.20.8551.343.251.21.012.018618.7Sud-Vest Oltenia620.2700.3570.60.1326.321.716.6-9.135.1955.2Vest786.1906.1745.20.7630.422.219.5-8.321.31224.8 
          
 
 
     
 
sectors in 2024 was above the EU average (5.2%) 
only  in  București-Ilfov  (9.2%)  and  Vest  (6.0%), 
while  other  regions  had  proportions  ranging  from 
0.8%  to  3.4%.  These 
indicators  consistently 
suggest  that  Romania,  and  particularly  its  less 
developed  regions,  struggles  to  capitalise  on 
growth trends in advanced and dynamic sectors. 

is 

ICT  uptake 

transformation 

Digital disparities persist between Romania’s 
low.  Overall, 
regions,  and 
Romania continues to have major shortcomings in 
digital 
and 
digitalization of public services, whilst digital skills 
and digital infrastructure show better results.  This 
indicates  that  further  efforts  would  be  useful  to 
encourage technology transfer and boost  regional 
competitiveness. 

businesses 

of 

contrast,  the  price-to-income  ratio  was  between 
15-19 times the average annual  salary in all less 
developed  regions  at  NUTS 2  level.  On  a  more 
granular  (NUTS 3) 
level,  there  are  significant 
regional  disparities:  the  price-to-income  ratio  of 
Sălaj  (30.9)  is  nearly  three  times  as  high  as  in 
Bucharest  (10.6) (Map  A17.2).  On  average,  9%  of 
the  population  faced  housing  cost  overburden  in 
2023,  with  the  highest  percentage  in  the  Sud-Est 
region (13%). 

Map A17.2:  House prices relative to income, 2019 

Social fairness 

In  2024,  the  country  had  one  of  the  highest 
percentages of population at risk of poverty 
or  social  exclusion  (AROPE)  in  the  EU,  with 
significant  regional  disparities.  Additionally, 
stark  rural-urban  disparities  remain  in  the  risk  of 
poverty  or  social  exclusion,  with  cities  recording 
14.3%,  while  rural  areas  face  a  rate  three  times 
higher,  at  41.7%.  The  AROPE  rate  ranges  from 
21.3%  in  Vest  to  39.7%  in  Sud-Est,  compared  to 
12.0% in the capital region. 

Addressing  Romania’s  combination  of  high 
net  outmigration  and  ageing  population 
would  help  to  improve  social  cohesion  and 
the  Romanian  economy's  competitiveness, 
both at national and regional level. Six of the 
seven  less  developed  regions  are  trapped  in  a 
vicious  cycle  of  low  population  growth,  outward 
migration  of  skilled 
labour,  and  persistent 
workforce  shortages.  This,  in  turn,  erodes  social 
cohesion  and  imperils  people's  “right  to  stay”  in 
the  place  they  call  home,  putting  at  risk  their 
communities  and  undermining  the  stability  and 
wellbeing of the regions as a whole. 

Affordable  housing 
remains  a  major 
challenge in Romania, but bucking the current 
trend  within  the  EU,  the  issue  is  more 
pronounced  in  rural  areas  than  in  urban 
areas. Housing was more affordable in the capital 
region,  with  100  square  metres  of  living  space 
costing  11  times  the  average  annual  income.  By 

Source: European Commission, Mapadomo 

Structural  deficiencies  in  accessibility  and 
quality  of  public  transport  infrastructure 
significantly  affect  social  cohesion 
in 
Romania’s less developed regions. In 2021, in 
the  capital  region,  74.9%  of  the  population  living 
in a radius of 120 km can be reached in less than 
90 minutes, but this ratio drops to less than 40% 
in  most  of  the  less  developed  regions,  bottoming 
out at 26.1% in Centru. The situation is even more 
critical  in  rail  transport  performance:  on  average, 
3.8%  of  the  population  living  in  a  radius  of  120 
km can be reached by rail transport in less than 90 
minutes,  well  below  the  EU  average  of  15.7%. 
the  essential 
These  differences  undermine 

111 

 
 
 
 
preconditions  for  economic  development,  labour 
market participation and inclusive growth. 

Effective  and  equitable  access  to  essential 
services is of crucial importance for regional 
administrative 
Insufficient 
development. 
capacity, poor coordination and inefficiencies limit 
regional  and  local  authorities’  capacity  to  attract 
investments and provide basic services. The lack of 
key  infrastructure  in  waste,  water,  sanitation  and 
digital  connectivity  is  particularly  noticeable  when 
comparing  the  capital  region  with  the 
less 
developed  regions,  and  between  urban  and  rural 
areas.  In  response  to  decarbonising  transport, 
access to alternative fuel infrastructure, measured 
by  the  number  of  electric  vehicle  charging  points 
within  10 km,  is  severely  limited  in  all  Romanian 
regions,  with  none  reaching  even  6%  of  the  EU 
average (287) except for the capital region, which 
still only reaches two thirds of the EU average (217).  

Capacity deficits are also chronic at the level 
of  small  or  shrinking  cities,  hampering  the 
cohesion  policy  priorities  of  inclusive  and 
sustainable  urban  development.  Local  urban 
authorities  often  lack  the  experience  or  financial 
stability to implement participatory and integrated 
projects.  Moreover,  the  legal  basis  for  functional 
urban  area  partnerships  is  weak,  disincentivising 
cooperation between local territorial units. 

There  are  significant  regional  differences  in 
access  to  basic  services  such  as  healthcare 
and  long-term  care  in  rural  areas.  Social 
long-term  care  are  unevenly 
workers  and 
They  are 
regions. 
the 
distributed  across 
concentrated  in  the  București-Ilfov  region  and 
other  major  Romanian  cities,  while  rural  remote 
communities  often  have  to  rely  on  scarce, 
care 
low-quality 
undersized  and 
services (218).  Disparities  in  accessibility  are  often 
intertwined 
socio-economic 
challenges,  which  can  further  compromise  health 
outcomes and worsen disparities across the whole 
territory.  Access  to  education  and  health  facilities 
is  unequal  across  regions,  and  even  more  across 

long-term 

broader 

with 

(217) Indicators of access to alternative fuel infrastructure are 

based on calculations by DG REGIO and the JRC, using data 
from the European Alternative Fuels Observatory (EAFO), 
Eurostat, TomTom and Eco-Movement. 

Romania Ministry of Social Affairs Report on the 

(218) 
implementation of the Council Recommendation on access to 
high quality and affordable long-term care.  

the  urban-rural  divide.  The  percentage  of 
population  with  a  primary  school  within  15-
minutes'  walking  distance  is  70.5%  in  the  capital 
region,  but  drops  below  50%  in  all  other  regions, 
bottoming  out  at  30.7%  in  Nord-Est.  In  cities  in 
Sud-Muntenia  87%  of  children  under  15  have  a 
primary  school  within  15  min  walking,  but  this 
percentage drops to 14.7% in rural areas in Nord-
Est.  At  the  same  time,  challenges  remain  in 
balancing the physical access to primary education 
in rural areas and ensuring quality of education in 
these 
facing 
depopulation (see Annex 12).  

especially 

areas, 

areas 

in 

However,  potential  competitive  advantages 
exist  in  some  other  regions  besides  the 
capital.  With  13  universities,  Nord-Vest  stands 
out  in  terms  of  number  and  quality  of  higher 
education 
institutions,  both  nationally  and 
compared  to  other  central  and  eastern  Member 
States. Creating the conditions to improve people’s 
skills in  all  regions  would help  to  increase  growth 
opportunities and competitiveness. 

Sustainability 

regions  have  pollutant 
All  Romanian 
concentrations  above 
the  EU  average. 
Despite  making  progress  to  achieve  better 
air  quality  standards,  results  vary  according 
to  the  extent  of  urbanisation.  The  București-
Ilfov  region  ranks  highest  in  air  quality  concerns, 
with a concentration of PM2.5 pollutants and years 
of  life  lost  due  to  PM2.5  pollution  exceeding  the 
EU  average.  All  this  shows  a  pressing  need  for 
improve  air  quality, 
nationwide  efforts 
region.  Strategic 
particularly 
integrated  projects  supporting, 
for  example, 
implementation of air quality plans, would help to 
facilitate those efforts. 

to 
the  capital 

in 

vary 

significantly 

The  quality  and  provision  of  water  utility 
services 
between 
Romanian  regions  and cities.  Only  82%  of  the 
country’s  population  has  access  to  water  supply 
and  only  88%  to  sanitation  services  (respectively 
67% and 77% in rural areas). Romania has one of 
the 
lowest  compliance  rates  with  EU  water 
legislation and faces the highest investment needs 
to reach and maintain compliance. Although there 
has  been  some  progress  in  recent  years,  water 
leaks  in  the public  network  and  the  lack  of  urban 

112 

 
 
wastewater  treatment  are  ongoing  problems.  It 
would be beneficial to step up measures to extend 
and  modernise  drinking  water  and  wastewater 
infrastructure, and to ensure a sustainable service 
at a reasonable price. 

regions  experience  high 
All  Romanian 
climate-related  vulnerability. 
If  properly 
addressed, this could create opportunities for 
to  harmful  climate 
sustainability.  Exposure 
impacts,  especially  flooding  and  drought, 
is 
particularly  high  in  the  southern  and  eastern 
regions,  bearing  significant  human  and  economic 
costs (see Map A17.3). 

Map A17.3:  Climate change impact on GDP 

Unit: Additional economic costs of a 2°C global warming 
scenario by 2050 compared to the present day 
baseline. 
Source: DG REGIO, JRC 

in 

climate 

economic 

investment 

resources  and 

Limited 
low 
administrative  capacities  available  to  the 
regional  and  local  administrations  hinder 
adequate 
risk 
management  and  adaptation.  Improved  water 
infrastructure, 
nature-based 
combined  with 
solutions  and  the  use  of  renewable  energy 
sources,  also  through  energy  communities,  have 
the  potential  to  drive  innovative  and  sustainable 
growth  and  yield  additional  economic  and  social 
benefits.  For  example,  nature-based  solutions 
could  help  reduce  climate-related  disaster  risks 
such  as  floods,  but  also  attract  tourism,  increase 
property values and improve air quality and public 
health conditions. 

113