Country Profile | Romania

Name: Romania                                                                   

Capital: Bucharest                                        

Government: Unitary Semi-presidential Republic

Population: 19.151.817

Area: 238.397 km² 

GDP per capita: €24.670                                                      

Currency: Euro (€)

In the course of the 2014-2020 financiaal framework, Romania has been allocated a total of €36.47 billion from the European Structural and Investments Funds (ESIF) to be invested in various areas, to help the country reach the level of other European nations in terms of growth, employment and infrastructures.

In fact, the ESI Funds in Romania will be used to reach a variety of targets:

  • Improve the country’s competitiveness by strengthening the links between research, innovation, smart specialisation areas and competitive sectors, and boosting technology transfer.
  • Support SMEs, farms and cooperatives, fishery and aquaculture holdings, contributing to modernisation, higher productivity and agricultural restructuring.
  • Invest in energy, climate change and resource efficiency, with a focus on environmental conservation and protection.
  • Investing in transport accessibility, upgrading railways, new roads, and new metro lines to shorten average travel times.
  • Increase labour-market participation to boost the employment rate.
  • Promote social inclusion and combat poverty.
  • Enhance the reform of public administration and the effectiveness of the justice system.

For the 2014-2020 financial framework Romania saw an allocation of €36.47 billion to be invested in various areas through eight national and regional programmes. From Chart 1 is possible to see that the largest budget allocation comes from the European Regional Development Fund (ERDF), which allowed Romania to use €12.9 billion, 35.3% of the total.

Following the ERDF, the European Agricultural Fund for Rural Development (EAFRD) distributed €9.6 billion, just above one quarter of the €36.47 billion total budget. Other significant funding was granted by the Cohesion Fund (CF) and European Social Fund (ESF), with budgets of €8.1 billion and €5.4 billion respectively. The remaining €500 million came from the Youth Employment Initiative (YEI) and the European Maritime and Fisheries Fund (EMFF).

To fully understand the EU funding budget of the Romanian government, Chart 2 gives an overview of the total available budget divided into categories of expenditures: the building of network infrastructures in the transport and energy sectors has the bigger share, with €7 billion allocated thanks to the ERDF and CF funds.

Alongside infrastructure building, protection of the environment and resource efficiency enhancements are a priority for Romania. As it is shown above, the government was granted almost €6 billion in order to put the country at the forefront of environmental protection. Third comes the competitiveness of SMEs. At the core of Romania’s political agenda, the €4.5 billion budget for small and medium enterprises that the EU allocated to the government will help the country’s industry keep up with its European counterparts, increasing the number of companies and startups.

What is also worth mentioning is Romania’s history with ESIF’s absorption rates. In fact, the country was known for its low rates, especially during the 2007-2013 financial framework, which saw a disappointing 31% absorption rate at the end of 2013. 

The new 2014-2020 budgetary period saw Romania utilize merely 10% of the ESIF allotment in three years, reaching up to €4 billion of the total budget as of December 2017. However, things were improving by the end of 2018. In January 2019, Romania’s PM Viorica Dancila reported that the country had reached the EU average absorption rate of funds of 26% and that it will have reached a higher percentage by the end of the financial framework in 2020. In addition to the spent allocation of 26%, Romania has already allocated financial resources to selected projects for up to 69% of the total allotment, a budget of €25.5 billion. With only one and a half years remaining, Romania has the potential to outdo its previous results and improve the lives of nearly 20 million citizens.