Romania risks losing billions from the National Recovery and Resilience Plan (or PNRR) if it does not adopt the promised reforms in the coming months, according to prime minister Ilie Bolojan. To do so, the crumbling centrist coalition must put aside its differences and pass nine laws.
PNRR funds finance some of the most important infrastructure projects in Romania, from new highways to extensive rehabilitation projects of railways, hospitals, and public buildings. Roughly EUR 10 billion must be accessed by Romanian authorities by August.
“We must approve 9 laws that will regulate various fields, as described below, from public sector wages to fiscal or energy aspects. The adoption of the 9 laws will be, beyond disputes and different approaches, a test of responsibility for Romania’s political class,” said Ilie Bolojan on Facebook.
“To receive this European money, we have committed to carry out reforms and meet certain conditions, the so-called milestones. By summer, we still have a few dozen milestones to fulfill. Each one means money: we receive it if we meet the milestones or we lose it if we fail to reach them,” the prime minister added.
The milestones
Bolojan presented an inventory of the nine most important milestones needed to access over EUR 7 billion.
The first concerns updating the legal framework for integrity in public office. Coordinated by the National Integrity Agency and the Ministry of Justice, it involves adopting a consolidated law on integrity, following the evaluation of existing legislation. Once this is done, Romania can access EUR 771 million.
Similarly, the Ministry of Agriculture must create a legal framework that allows the use of state-owned land, managed by the State Domains Agency, for the accelerated development of renewable energy projects. Another EUR 771 will be given for the completion of this milestone.
The Ministry of Development must finalize the Territorial Planning, Urbanism and Construction Code, a broad project that should reduce bureaucracy, digitalize administrative processes, and introduce integrated urban planning. The code also provides for shortening deadlines for issuing permits, the use of GIS systems, and measures for urban mobility and green infrastructure. Romania will be granted EUR 972 million for this milestone.
In the energy field, two milestones are essential. The first involves the gradual elimination of coal-based energy production, by decommissioning a capacity of 710 MW and adapting decarbonization legislation according to adequacy studies carried out for the transmission operator. The second concerns the decarbonization of the heating and cooling sector, through a legislative package that establishes the responsibilities of authorities, introduces rules on biomass use, diversifies energy sources, and allows prosumers to produce and sell energy under more flexible conditions. The two milestones are worth EUR 771 million together.
Moreover, the Ministry of Finance must complete the digitalization of the National Agency for Fiscal Administration, or ANAF, and introduce an incentive system for inspectors to increase the collection rate. For this, EUR 771 million will be made available.
The Ministry of Environment must rethink the economic mechanism of the National Administration of waters so that revenues from the use of water resources are better correlated with costs. EUR 972 million depends on this reform.
The Ministry of Labor must propose a new unified wage system, based on performance criteria and fiscal sustainability. The reform is essential for balancing budget expenditures. Another EUR 771 million will be made available after this law is passed.
Finally, the General Secretariat of the Government must reduce interim appointments in state-owned companies and improve corporate governance rules. The target is a 50% reduction of interim appointments at the central level and 10% at the local level, as well as simplifying reporting obligations for public enterprises. The reform will be rewarded with EUR 771 million.
Difficult political context
The prime minister’s post comes as the ruling pro-EU-wide coalition shows serious signs of breaking apart. Last week, the Social Democratic Party (PSD) decided to withdraw support for the prime minister in an internal vote. Subsequently, PSD ministers in the Bolojan government resigned from their positions.
Without the largest party of the ailing coalition, the government cannot rely on a majority in the legislature and is therefore vulnerable to a no-confidence vote. However, PSD announced that it is ready to participate in the formation of a new pro-European government and to support a new prime minister, whether political or technocratic.
Consultations with the four parties part of the coalition, namely the Social Democrats, the National Liberal Party (PNL), the reformist Save Romania Union Party (USR), and the minority Hungarian party UDMR, are currently ongoing, mediated by Romanian president Nicusor Dan. The meetings, scheduled on Monday, April 27, specifically focus on securing EU funds included in the PNRR and the Security Action for Europe (SAFE) program.
Romania has EUR 16.68 billion in soft loans allocated by the European Commission through the latter program. The funds are meant to boost defense spending, but also fund certain large infrastructure projects.
(Photo source: gov.ro)
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