World Bank and Romania sign 600 mln euro loan to support transition to green, inclusive economy

The World Bank and Romania, through the Ministry of Finance, today signed a 600 million Euro loan for Development Policy Loan, with an emphasis on inclusive and green economic growth.

Approved on June 30 by the World Bank’s Board of Directors, this loan is the first in a series of two financing operations and is complemented by a $ 24.2 million grant from the IBRD Fund for Innovative Public Goods Solutions. Global (Innovative Global Public Goods Solutions Fund), also signed today. The loan and non-reimbursable financial assistance support the Romanian authorities in carrying out important structural reforms to advance social inclusion (including measures to respond to the humanitarian crisis), strengthen fiscal management, encourage decarbonisation and improve resilience to climate change.

“Romania’s recent transition to high-income countries is encouraging, but the population still has one of the highest levels of poverty and inequity in the European Union, which requires additional efforts. This partnership will support the Government’s efforts to stimulate social inclusion and respond to constraints that impede sustainable economic growth and have a positive impact on the environment in Romania,” said Anna Akhalkatsi, Country Manager for Romania, World Bank.

In the last two decades, Romania has made progress in reducing poverty and increasing economic performance. However, regional disparities in revenue and service provision remain large and there is still room for effort, which can support economic growth stimulated by measures aimed at streamlining institutions, including by improving the collection rate. taxes and cost-effectiveness, by extending the coverage of adequate social assistance, and by supporting climate change adaptation and the implementation of measures to mitigate their impact. According to the European Union’s Periodic Economic Report (“EU RER”), published yesterday by the World Bank, the pandemic and the war in Ukraine have further damaged the development environment and slowed Romania’s convergence with the European Union.

“The granting of this loan and, respectively, of the non-reimbursable financial assistance, signed today, confirms the recognition by the World Bank of the stability of our country’s macroeconomic framework and, at the same time, of the progress made in responding to the current humanitarian crisis. structural reforms on cost efficiency, tax reform, renewable energy and increasing the energy efficiency of buildings. On the other hand, this operation reconfirms the active role of the World Bank in responding promptly, through financing and technical expertise, to the specific needs and efforts of the Romanian authorities to increase the growth potential of our country. “, said Adrian Câciu, Minister Finance.

The loan is accompanied by technical assistance services provided to support the Government’s efforts to strengthen public sector institutions and support an integrated approach to implementing the necessary reforms. The financing and technical assistance package covers key areas of development, such as social assistance, public sector pension and wage reform, fiscal policy and administration, which are essential for strengthening fiscal management and encouraging medium-term fiscal sustainability. The loan also supports the mobilization of funding and private investment primarily in renewable energy, energy efficiency and forestry, while supporting the development of infrastructure and the business environment.