The European Commission has published a document on Tuesday announcing that it has carried out a preliminary assessment of Romania’s third payment request under the PNRR.
According to the document, the European Commission has proposed a partial payment suspension because the Government has not met six milestones, related to reforms in the governance of state-owned enterprises, investments in the transport sector, and a reform of the micro-enterprises fiscal regime.
This procedure gives the member states additional time to meet the remaining milestones or targets.
The Commission did not specify the amount to be suspended.
The third payment request covers significant stages in the implementation of 37 reforms and 17 investments that will bring positive changes for the citizens and businesses in Romania in the following areas: green and digital transition, sustainable transport, energy renovation, tax and pension systems, business environment, urban mobility, tourism and culture, healthcare, social reforms, good governance, education, water and waste management, and forestry.
Among the flagship measures in this payment request are:
- Stimulating energy efficiency in industry: a legislative framework has been enacted to introduce measures facilitating investments in energy efficiency in the industry. Among other things, this reform removes obstacles to energy performance contracts, introduces market surveillance and the application of energy efficiency standards, as well as new standards for green financial instruments.
- Reforming the public pension system: a new legislative framework has come into force, establishing that special pensions will be calculated based on the principles of contributions, seniority in the profession, and adjusting the percentage related to income obtained. According to the contribution principle, the value of pensions will depend on the sum of contributions paid during the professional life.
- Investments to improve the energy efficiency of existing building stock: renovation contracts have been signed to enhance energy efficiency and integrated renovation contracts (seismic strengthening and energy efficiency) of public buildings.
Next Steps
The Commission has already conveyed its positive preliminary assessment of the milestones and targets it considers satisfactorily achieved to the Economic and Financial Committee (EFC), which has four weeks to issue an opinion.
Simultaneously, the Commission has communicated to Romania the reasons why it believes that the respective milestones related to investments and reforms have not been satisfactorily met. Romania now has one month to provide its observations to the Commission.
Following the EFC's opinion on the positive preliminary assessment and after evaluating Romania's submitted observations, the Commission will make a payment decision, after which the payment to Romania can be made.
If, following Romania's observations, the Commission confirms its assessment that the relevant milestones have not been satisfactorily achieved, a portion of the payment will be suspended. The suspended amount will be determined by applying the Commission's methodology on payment suspensions, which applies to all member states.
From that point on, Romania will have a period of six months to meet the remaining milestones. At the end of this period, the Commission will assess whether the respective milestones have been satisfactorily met. If so, it will lift the suspension and release the suspended amount.
Romania's Recovery and Resilience Plan includes a wide range of investment and reform measures. The plan will be financed with €28.5 billion, of which €13.6 billion in grants and €14.9 billion in loans.