NextGenerationEU: Green Light to Romania’s First Payment Request under RRF
The European Commission has endorsed a positive preliminary assessment of Romania’s first payment request for EUR 2.6 billion, of which EUR 1.8 billion in grants and EUR 0.8 billion in loans, under the Recovery and Resilience Facility (RRF), the key instrument at the heart of NextGenerationEU.
On 31 May 2022, Romania submitted to the Commission a payment request based on the achievement of the 21 milestones and targets selected in the Council Implementing Decision for the first instalment. They cover reforms in the areas of sustainable transport, decarbonisation, and road safety, in the electricity market, in the replacement of coal in the energy mix, in improving tax and tax administration processes, in stepping up the fight against corruption, as well as reforms of the compulsory education system to prevent and reduce early school leaving, and of Romania’s audit and control system for the implementation of the RRF.
With their request, the Romanian authorities provided detailed and comprehensive evidence demonstrating the fulfilment of the 21 milestones targets. The Commission has thoroughly assessed this information before presenting its positive preliminary assessment of the payment request.
The Romanian recovery and resilience plan includes a wide range of investment and reform measures in 15 thematic components. It is worth EUR 29.2 billion in grants and loans, 13% of which (EUR 3.7 billion) have already been disbursed to Romania in pre-financing.
Payments under the RRF are performance-based and contingent on Member States implementing the investments and reforms outlined in their respective recovery and resilience plans.
Next steps
The Commission has now sent its positive preliminary assessment of Romania’s fulfilment of the milestones required for this payment to the Economic and Financial Committee (EFC), asking for its opinion. The EFC’s opinion, to be delivered within a maximum of four weeks, should be considered in the Commission’s assessment. Following the EFC’s opinion, the Commission will adopt the final decision on the disbursement of the financial contribution, in accordance with the examination procedure, through a comitology committee. Following the adoption of the decision by the Commission, the disbursement to Romania would take place.
The Commission will assess further payment requests by Romania based on the fulfilment of the milestones and targets outlined in the Council Implementing Decision, reflecting progress on the implementation of the investments and reforms.
The amounts disbursed to the Member States are published in the Recovery and Resilience Scoreboard, which shows progress of the implementation of the national recovery and resilience plans in a transparent manner.
“I have good news for Romania. Sufficient progress has been made under its national recovery and resilience plan, so it’s ready to receive a first payment under NextGenerationEU. Once Member States give their greenlight, Romania will receive 2.6 billion euros as a result of its good and swift progress in implementing the plan’s first set of reforms and investments. These include measures to step up the fight against corruption as well as reforms to reduce early school leaving and important preliminary steps in reforming its public pensions system. Keep up the good work, Romania! The Commission stands by your side, on your way to recovery,” President Ursula von der Leyen said.
“Congratulations to Romania for meeting the first 21 milestones and targets set out in its recovery and resilience plan. Many of these will contribute to Romania’s green transition, with steps to decarbonise its economy and promote sustainable transport with a focus on developing rail infrastructure. Romania is also improving its tax administration and education systems, as well as strengthening the fight against corruption. Once the Commission’s assessment is reviewed and approved by Member States, Romania should receive EUR 2.6 billion in grants and loans to help create a more resilient economy with great benefits for its people and businesses,” Valdis Dombrovskis, Executive Vice-President for An Economy that Works for People, added.
“Today we are giving our green light to Romania’s first payment request under the Recovery and Resilience Facility, having concluded that it fulfilled the first 21 milestones and targets of its ambitious plan. These include important reforms to decarbonise Romania’s economy, improve the functioning of its public administration and enhance economic and social resilience. Romania has also strengthened its audit and control systems, which is key to ensure that NextGenerationEU funds deliver maximum benefits to citizens and firms. Following the Council’s approval, the Commission will disburse EUR 2.6 billion in loans and grants: a much-needed injection of confidence at this challenging time for all our economies, and a strong encouragement for Romania to continue on this path of investments and reforms,” Paolo Gentiloni, Commissioner for Economy, noted.
How do the milestones achieved by Romania so far effectively support the green transition?
The green transition is supported by several reforms covering renewable energy and sustainable transport.
The milestones achieved for this first payment request include the adoption of a strategy for the development of railway infrastructure in the period 2021-2025 and the implementation of an action plan, both of which are part of the sustainable transportation and decarbonisation reform. These measures are expected to increase rail freight traffic by at least 25% by 2026 compared to 2020, as well as raise the number of rail passengers by an average of 25% compared to the 2021 baseline. Other milestones concern the decommissioning of coal-fired power-production capacity (part of the electricity market reform and of the steps taken to replace coal in the energy mix reform).
How do the milestones achieved by Romania so far effectively contribute to the digital transition?
A number of the milestones achieved for this payment contribute to the digital transformation in Romania. These include the entry into force of the 5G network security law, which targets communications providers by only allowing them to use technologies, equipment, and software in 5G networks from manufacturers authorised in advance by government decision, and the adoption of a National Cybersecurity Strategy for the period 2021-2026. This strategy aims at strengthening the public-private-academic partnership to increase Romania’s overall cyber resilience, capability, and infrastructure of society as a whole.
How do the milestones achieved by Romania so far contribute to improving Romania’s economic and social situation, and its resilience?
Two of the milestones achieved for this payment lay the ground for the pension reform included in the plan. This reform aims to ensure fiscal sustainability in the context of an ageing population, to correct inequities and increase the levels of minimum and lower pensions. It also targets the economic sustainability and predictability of the pension system overall. The two milestones concern: the technical assistance to be sought by the government when preparing the legal framework for the pension reform; the establishment of a monitoring committee which, together with the technical assistance provider, will be in charge of reviewing the pension system and the related policy interventions.
Some of the other milestones achieved for the first payment request are related to the prioritising of investment in integrated community centres (with the main aim of increasing access to quality medical services for the population and particularly for the vulnerable groups) and to the implementation of the National Programme to reduce early school leaving and support students in the transition from lower to upper secondary education.
One of the achieved milestones sets up the coordination framework for the plan, entrusting a Coordinating Authority with the power and mandate to monitor, verify and control the implementation of the plan, and draw up and sign the payment applications. In the longer term, this will also foster lasting improvements in performance-based planning and control in public administration overall, building on the experience in managing the recovery and resilience plan.
Another achieved milestone included in the first payment request relates to the arrangements for control and audit, and more generally to the protection of the financial interests of the Union. These arrangements include the entry into force of the framework defining the procedures for monitoring the RRP, specifications on the format of the information to be shared, as well as the implementation of an IT system that allows for the collection of necessary data for monitoring, controls, and audits.
Why did Romania present these 21 milestones and targets for its first payment request?
The milestones and targets to be included in each of the payment requests are set out in the Council Implementing Decision approving the relevant national Recovery and Resilience Plan. In the case of Romania, this Decision lists for the first instalment the 21 milestones and targets that Romania has now achieved. While the Member States can decide when to submit a payment request for each instalment, they cannot unilaterally change the milestones and targets linked to each instalment, nor their number.
