Europaudvalget 2025
KOM (2025) 0223
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EUROPEAN
COMMISSION
Brussels, 4.6.2025
SWD(2025) 223 final
COMMISSION STAFF WORKING DOCUMENT
2025 Country Report - Romania
Accompanying the document
Recommendation for a COUNCIL RECOMMENDATION
on the economic, social, employment, structural and budgetary policies of Romania
{COM(2025) 223}
EN
EN
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ECONOMIC DEVELOPMENTS AND KEY POLICY
CHALLENGES
Romania’s economic growth decelerated
to 0.8% in 2024, down from 2.4% in
2023 (
1
).
Buoyant private consumption and
domestic demand supported by loose fiscal
policy had only a limited positive impact on
real GDP growth (adjusted for inflation), which
was dampened by the high negative
contribution of net exports (see Graph 1.1). In
addition, robust public investment in
infrastructure could not compensate for a
slowdown in private investment. Inflation fell
from close to 10% on average in 2023 to
5.8% in 2024, but high inflationary pressures
subsist. Labour demand decreased slightly, but
the growth in wages remained high. The
current account deficit widened to 8.4% of
GDP in 2024, from 6.6% of GDP in 2023,
mainly due to higher government spending
and incomes.
Graph 1.1:
Inflation
–
Real GDP growth and
contributions
14
pps.
12
10
8
6
forecast
Subdued economic growth and
large macroeconomic
vulnerabilities
Romania is converging to EU income and
productivity levels, but to achieve further
progress it needs to address structural
weaknesses
and
macroeconomic
vulnerabilities.
Since its EU accession,
Romania has increased its GDP per capita
from 44% of the EU average to close to 80%
in 2024. However, recent wage increases,
particularly in the public sector, while boosting
household incomes and domestic demand,
have contributed to high fiscal and current
account deficits. These weigh on investor
sentiment,
cost
competitiveness
and
productivity growth. In addition, outdated and
inadequate infrastructure relatively low R&D
capacity and persistent skills shortages
prevent Romania’s transition to higher-value-
added production.
Supporting the private sector and the
business environment is essential to help
Romania transition to a new growth
model.
So far, the country has largely relied
on advantages offered by lower labour costs,
but it would benefit from gradually shifting its
focus
towards
investments
in
new
technologies and innovation, as this would
strengthen its position in the EU value chain.
Romania could boost private investment and
its competitiveness by using EU funds to
support infrastructure, improve research,
innovation and digital capacity, develop
workforce skills and increase labour market
participation,
while
simultaneously
strengthening administrative efficiency and
making its policy framework more predictable.
4
2
0
-2
-4
-6
17
18
19
20
21
22
23
24
25
26
Investment
Priv. consumption
Net exports
Inflation
Inventories
Gov. consumption
Real GDP (y-o-y%)
Source:
European Commission
(
1
) The cut-off date for the data used to prepare the 27
country reports was 15 May 2024.
2
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Expenditures and Revenues (% of GDP)
Growth is likely to pick up only modestly.
Real GDP growth is projected to accelerate to
around 1.4% in 2025 and 2.2% in 2026,
supported by resilient private consumption and
a gradual recovery in private investment and
exports. However, political instability and
uncertainty over fiscal policy continue to affect
investor confidence, the pace of reforms and
the absorption of EU funds. Although Romania
is among the EU countries less exposed to the
US economy, growth is forecast to be hit by
the recent US tariffs through the trade and
investment channels. Inflation is projected to
hover at around 5% in 2025 and 4% in 2026.
The current account deficit is set to decline
gradually, supported by a moderation in
domestic demand, while remaining high at
about 7% of GDP in 2026.
Romania’s vulnerabilities have increased
as the twin government and current
account deficits widened, and cost
competitiveness deteriorated further in
2024.
That finding was highlighted in the in-
depth review that was part of the
macroeconomic imbalance procedure Romania
underwent earlier this year. The review also
stressed that policy progress was minimal,
including a marked deterioration in the fiscal
stance (
2
).
Romania’s high government deficit is a
key driver of high external borrowing
needs and has raised concerns among
investors and rating agencies.
In 2024, the
public deficit rose to 9.3% of GDP, mainly on
account of generous income policies and
higher-than-planned
public
investment
spending (see Graph 1.2). As a result,
government debt increased rapidly, reaching
nearly 55% of GDP by the end of 2024,
although it remains significantly below the EU
average of 81.6%. The fiscally induced surge
in domestic demand also increased imports. In
combination with weaker external demand,
this caused the trade deficit to widen, pushing
the current account deficit to 8.4% of GDP.
Without resolute fiscal consolidation and
structural reforms, the government and
(
2
) European Commission (2025), SWD (2025) 126 final.
current account deficits are likely to remain
very high, inflating debt stocks and leaving
Romania vulnerable to change in investor
sentiment and external shocks.
Graph 1.2:
General government deficit -
expenditure and revenues
50
MTP
10
40
5
30
0
20
-5
10
0
-10
15 16 17 18 19 20 21 22 23 24 25 26
Public balance (rhs)
Total revenues
Total expenditure
(1) 2024 figures based on actual outturns; 2025 and
2026 figures are based on MTP projections.
Source:
European Commission
The central pillar of Romania’s strategy
to reduce the government deficit is the
medium-term
fiscal-structural
plan
(MTP).
The plan caps annual net expenditure
growth at 5.1% in 2025 and gradually lowers
it to 4.3% by 2028. In line with the plan, the
Romanian government targets a budget deficit
of 7% of GDP in 2025. Romania aims to meet
net expenditure targets primarily by
restraining spending growth across most
expenditure categories. As a first step, at the
end of 2024 the government adopted
emergency measures to save 2.0% of GDP in
2025 by freezing wages and pensions,
removing several tax exemptions, and
reforming the microenterprise. In the MTP,
Romania committed to implement a set of
reforms and investments in order to extend
the fiscal adjustment period to seven years
(2025-2031). A key commitment in the plan is
the implementation of a tax reform in 2025.
This should raise at least 1.7% of GDP in
recurrent revenues, alongside other reforms
such as spending reviews and improvements
in tax administration.
3
Public Balance (% of GDP)
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Contributions to ULC Y-o-Y change (pps.)
Net expenditure growth is projected to
exceed the recommended maxima.
In
2024, net expenditure(
3
) in Romania grew by
19.9% (see Annex 1). This increase is due to
high growth in current expenditure (+18.7%
relative to 2023), in particular on the public
sector wage bill (+21.5% relative to 2023) and
social transfers including pensions (+19.5%
relative to 2023). In 2025, net expenditure is
forecast by the Commission to grow by 5.4%,
which is above the maximum growth rate
recommended by the Council(
4
). The
cumulative growth rate of net expenditure in
2024 and 2025 taken together is projected at
26.4%, which also is above the maximum
recommended by the Council. Among the
reforms and investments underpinning an
extension that were due by the 30 April, some
were not implemented such as the key reform
of the review of the tax system.
agriculture or working across borders. In
addition, the employment rate among people
with a low level of skills (ISCED 0-2) was only
45.1% in 2024, far below the EU average and
just half the rate for tertiary-educated
individuals in Romania (see Annex 10). At the
end of 2024, the unemployment rate edged up
by 0.2 pps to 5.7%. Youth unemployment also
rose in 2024 and remains among the highest
in the EU, together with the large proportion of
young people not in education, employment or
training.
Graph 1.3:
Breakdown of rate of change of
unit labour costs
20
15
10
5
0
Employment improved, but labour
force participation remains low
Labour market activity has improved
further in 2024, although significant
challenges remain.
In 2024, the employment
rate for people aged 20-64 rose to 69.5% but
remains among the lowest in the EU (see
Social Scoreboard in Annex 13). There are two
reasons for this: one is the low labour force
participation of women, young people, the low-
skilled, people with disabilities and Roma
people in the workforce; the second is a high
number of people engaged in subsistence
(
3
) Net expenditure is defined in Article 2(2) of Regulation
(EU) 2024/1263 as government expenditure net of (i)
interest expenditure, (ii) discretionary revenue
measures, (iii) expenditure on programmes of the Union
fully matched by revenue from Union funds, (iv)
national expenditure on co-financing of programmes
funded by the Union, (v) cyclical elements of
unemployment benefit expenditure, and (vi) one-off
and other temporary measures.
(
4
) Council Recommendation with a view to bringing an end
to the situation of an excessive deficit in Romania
(C/2025/5038) and Council Recommendation of 21
January 2025 endorsing the national medium-term
fiscal-structural plan of Romania (OJ C, C/2025/647,
10.2.2025, ELI: http://data.europa.eu/eli/C/2025/647/oj).
-5
-10
13 14 15 16 17 18 19 20 21 22 23 24 25* 26*
Inflation (HICP)
Productivity/hr. (neg. contrib.)
ULC in EU27
Real Compensation/hr.
ULC
Source:
European Commission
Wages continued to grow faster than
inflation and labour productivity.
In 2024,
nominal wages increased by about 15%, on
top of a similar increase in 2023, according to
the National Statistical Institute. With inflation
at about 6%, real wages rose by about 9%
year-on-year, well above productivity growth.
Public-sector wages increased by 18.5% in
2024, while the statutory minimum wage was
raised by more than a third cumulated in 2023
and 2024. The minimum wage is now
approaching the indicative reference value of
60% of the median wage suggested by the EU
Adequate Minimum Wage Directive. In
contrast, in-work poverty was 10.9% in 2024,
one of the highest levels in the EU. These
wage increases also drove up unit labour
costs, eroding external cost competitiveness
(see Graph 1.3). To make changes in the
minimum wage more predictable and less
distortive, Romania adopted a reform that
aligns increases with productivity gains and
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inflation, as outlined in the Romanian recovery
and resilience plan.
Convergence towards EU average
productivity is still held back by
obstacles to investment
Romania’s fast convergence towards
average
EU
productivity
masks
significant
regional
disparities.
Productivity measured as gross value added
per worker rose to more than 80% of the EU
average in 2023. Nevertheless, regional
disparities remained large and widened in
some instances, ranging from 154% of the EU
average in the Bucharest-Ilfov capital region
to 47% in the North-East region (see Annex
17). These productivity differences are driven
by stark variations in both skills and
educational attainment, and in investment in
Indicators (
5
), Romania performs worse than
its EU peers on government effectiveness and
regulatory quality. Romania continues to rank
poorly in Transparency
International’s indicator
of perceived corruption (
6
).
The OECD’s 2024
Economic Survey on Romania (
7
) notes that
simplified business registration and licensing
has reduced firms’ costs.
However, weak
management and oversight of state-owned
enterprises hinder competition in some sectors
and the creation of a level playing field for
businesses. The business environment is
hampered by suboptimal administrative
capacity
and
public
services,
while
overregulation imposes a heavy burden on
companies. In addition, competition in public
procurement remains insufficient and policy
predictability is still an issue, not least due to
the volatile tax burden (see Annex 4).
Investment and competitiveness are held back
by other significant shortcomings, presented in
more detail below.
Box 1:
UN Sustainable Development Goals (SDGs)
Romania has made improvements across several SDGs, particularly on some related to
environmental sustainability (SDGs 2, 6, 11, 12, 13, 14), although it still lags behind the EU
averages for most of them. On productivity-related goals, Romania is advancing on decent work
and economic growth (SDG 8) and industry, innovation and infrastructure (SDG 9), though it
remains significantly below the EU averages, particularly on R&D spending and innovation
indicators. Quality education (SDG 4) is a major concern, with adult digital skills stagnating at a
low level compared to the EU average. Progress on gender equality (SDG 5) has been limited,
with the gender employment gap remaining considerably above the EU average (18.1 pp
compared to 10 pp in the EU in 2024). On the other hand, Romania has shown positive trends in
macroeconomic stability-related goals (SDGs 8, 16, 17), notably increasing GDP per capita.
Despite this, challenges remain regarding institutional trust and perceptions of corruption.
Measures within Romania’s recovery and resilience plan and through cohesion policy target these
shortcomings with investments in education, digitalisation, innovation and clean energy.
physical capital. Net public investment
supported by EU funds surged in recent years,
acting as a catalyst for private investment and
productivity growth across all regions.
Removing
bottlenecks
limiting
productivity growth and competitiveness
can underpin sustained EU convergence.
According to the Worldwide Governance
(
5
) See Daniel Kaufmann and Aart Kraay (2024).
Worldwide Governance Indicators, 2024
Home |
Worldwide Governance Indicators (worldbank.org).
(
6
) See Transparency International. 2025.
Corruption
Perceptions Index 2024. 2024 Corruption Perceptions
Index -
Explore…
- Transparency.org
(
7
) See OECD. 2024.
‘Romania’,
in OECD Economic Surveys,
March 2024. OECD Publishing, Paris.
OECD Economic
Surveys: Romania 2024 | OECD
5
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Shortages of skilled and non-
skilled workers persist
Addressing skilled labour shortages
would boost investment, productivity and
innovation capacity.
Shortages stem from
substantial numbers of people leaving the
country to work abroad, low tertiary education
attainment (22.5%, half the EU average; see
Annex 10), and the mismatch between
education and the needs of the labour market.
Although 30% of higher education students
pursue science, technology, engineering and
mathematics degrees, slightly above the EU
average, the absolute number remains
insufficient, particularly in information and
communication technology. Romanian firms,
especially
small
and
medium-sized
enterprises, continue to identify inadequate
skills as a key barrier to growth. Shortcomings
in the education and training system are
reflected in persistently low levels of basic
skills. Vocational education and training and
higher education programmes are still not
sufficiently relevant to the needs of the labour
market, despite EU cohesion policy funds
supporting skills development (see Annexes 3
and 12).
quarter of total assets), which may crowd out
private credit and limit access to finance. The
capital
markets
remain
relatively
underdeveloped, with listed shares and private
bonds accounting for only 11% of GDP and
0.3% of GDP respectively. To address these
issues,
Romania
has
developed
a
comprehensive 2023-2026 strategy to boost
its capital markets, which is being gradually
implemented.
Accelerated investment in poor
transport infrastructure
Despite recent improvements, investment
in maintaining and improving transport
infrastructure
remains
insufficient.
Romania’s transport network is among the
shortest and least dense in the EU, due to
previously inefficient and insufficient public
investment(
8
). Romania is among the EU
countries that have made the least progress
on building the Trans-European Transport
Network (TEN-T). Key motorway corridors are
still underdeveloped, with only 997 km at end-
2023, accounting for just 5.6% of the total
national road network(
9
). However, progress in
building motorways is expected, with over
400 km to be delivered by 2026 from recovery
and resilience plan and cohesion funding.
Romania’s railway infrastructure (
10
) is
extensive but slow, only partially electrified
(~40%), and relies on ageing track and trains.
This causes significant delays, making trains
less attractive (
11
) than buses and coaches.
Substantial funds are available under cohesion
funding and the recovery and resilience plan
for
railway
projects,
but
progress
implementing them has been modest so far.
Against this background, it remains important
to continue the implementation of planned
priorities, with particular attention to
(
8
) See World Bank 2023.
Romania - Systematic Country
Diagnostic Update
(
9
)
Eurostat 2023 data
(
10
)
OECD ECONOMIC SURVEYS: ROMANIA 2024 © OECD
2024
(
11
)
Eurostat 2022 data
Challenges in accessing finance
Romania’s relatively small banking
sector, underdeveloped capital markets
and weak capitalisation make access to
finance difficult for companies.
More than
half of entrepreneurs perceive bank credit as
expensive and consider the constrained access
to finance as a major barrier to doing business
(see Annex 4). As a result, the largest source
of investment finance for companies is
internal funding (72% of total) (see Annex 5).
Total bank assets in Romania are slightly
above 50% of GDP, much lower than peer
economies in the region and the EU average.
Although small, the banking sector is well
capitalised and highly profitable. However, it
has the highest share of claims on the
government among EU countries (about a
6
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investment in the railway network, including
deployment of the European Rail Traffic
Management, and sustainable urban transport,
and the completion of TEN-T networks, both
rail and road. Addressing these shortcomings
could help reduce commuting times: Romania
ranks fourth-to-last(
12
) among EU countries,
with around 43% of the working-age
population spending more than 30 minutes
commuting each day.
Improving the low levels of
digitalisation and IT skills
Additional digitalisation would speed up
Romania’s advance in innovation and
productivity growth.
At only 27.7%, the
share of population aged 16-74 with basic
digital skills is almost half the EU average.
Business digitalisation has improved, with the
proportion of businesses using at least a basic
level of digital technology rising from 52.5% in
2022 to 69.1% in 2024, just below the EU
average. The adoption of advanced digital
technologies is also growing. The AI adoption
rate more than doubled in 2024 but remains
the lowest in the EU at just over 3% of
businesses (EU average: 13.5%), while cloud
services usage reached 15.5% in 2023 (vs
38.9% in the EU). Further progress will depend
above all on the availability of a digitally
skilled workforce, particularly in the high-tech
and
information
and
communication
technology fields.
raising the share of renewables in electricity
generation to 48%, slightly above the EU
average of 47%. Energy efficiency improved,
with primary and final energy consumption
decreasing by around 3% in 2023. Fossil fuels
remain significant in the energy mix, with oil
and natural gas accounting for over 60% in
2023, and less than one third from non-fossil
sources (20% renewables, including biofuels
and 9% nuclear). Despite efforts to expand
renewables, further integration is held back by
regulatory barriers, permitting issues, grid
limitations, and delayed infrastructure
projects. Concerns over security of energy
supply in Moldova and Ukraine brought
additional challenges. High energy prices
remain a pressing issue; despite a significant
decrease in the first part of the year, prices
averaged 103 EUR/MWh in 2024 (vs
81 EUR/MWh in the EU). These high prices are
driven by factors affecting both consumption
and generation, including reduced hydropower
reserves and lower wind output, which created
a significant shortfall in supply.
Protracted decarbonisation amid
energy affordability issues
Romania has made progress in its green
transition, but decarbonisation continues
to require sustained efforts and
investment.
In 2024, Romania installed
1.7 GW of solar energy and increased its
renewable energy installed capacity by 14%,
(
12
)
Eurostat 2022 data
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Box 2:
Barriers to private and public investment
Romania’s overall investment activity stagnated in 2024, reflecting a challenging economic
environment.
According to the National Institute of Statistics, net investment fell by about 5% year-on-year in
2024. This was due to low investment in construction and equipment and came despite robust public investment,
particularly in infrastructure projects.
Private
investors’ confidence was dampened by
weak
external demand for Romania’s industrial
exports, combined with high energy prices and uncertainty over fiscal policy in the current political
climate.
Firms postponed or scaled down projects amid concerns about cost pressures and volatile market
conditions. These factors compounded longer-standing challenges, including shortages of skilled and unskilled
labour, difficulties accessing finance, inadequate transport infrastructure and lagging digitalisation. Romania’s
financial system also limits investment potential: domestic savings remain comparatively low, capital markets are
underdeveloped, and companies are heavily reliant on internal financing and bank loans. Although the banking
sector is generally stable and plays an important role in financing the economy, it remains relatively small
compared to other EU countries. Taken together, these factors have curbed Romania’s competitiveness,
discouraging businesses from committing to large-scale capital expenditure.
Efficient use of EU funds could further support Romania’s development, although current delays
indicate a need to strengthen investment management.
Romania has access to more than EUR 90 billion in
EU funding across multiple instruments, including approximately EUR 44 billion from structural and cohesion funds
and around EUR 20 billion from the common agricultural policy under the 2021-2027 multiannual financial
framework. This complements EUR 12.1 billion in grants (plus an extra EUR 1.4 billion from REPowerEU), and
EUR 14.9 billion in loans under the recovery and resilience facility. However, the implementation of EU-funded
action is delayed, particularly for infrastructure projects.
The
implementation of Romania’s RRP is significantly delayed.
At present, Romania has fulfilled 14 % of
the milestones and targets in its RRP. In addition to the challenges above, the main bottlenecks to EU funds
implementation are delays in procurement, political instability, ineffective governance and insufficient
administrative capacity.
These inefficiencies heighten the risk of funding shortfalls.
These could force the government to rely more
heavily on the national budget, complicating fiscal consolidation and increasing broader macro-financial risks.
Resource allocation fiscal management and could benefit from better external scrutiny of assumptions and cost
estimates, particularly for large-scale transport infrastructure projects, alongside a more efficient capital
budgeting process.
While Romania has leveraged the Strategic Technologies for Europe Platform to reallocate some Cohesion Policy
resources towards this priority, it still has the opportunity to further support the development or manufacturing of
critical technologies in the areas of digital and deep tech, clean and resource efficient technologies, and
biotechnologies through other instruments, including the Recovery and Resilience Facility.
The mid-term review of cohesion policy programmes in 2025 presents an important opportunity to better address
the strategic priorities of the EU relating to competitiveness, defence, housing, water resilience and energy
transition. Romania is facing challenges in these areas, particularly in relation to education, employment and
social inclusion, as well as boosting regional competitiveness through research and innovation, including by
developing or manufacturing critical technologies, increasing water resilience, especially in the east and south of
the country and the affordability of housing. Therefore, Romania could benefit from reallocation of cohesion
policy funding towards these strategic priority areas, within the mid-term review.
8
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INNOVATION, BUSINESS ENVIRONMENT AND
PRODUCTIVITY
Romania has made steady progress in its
economic development over the past
decades, but there are still opportunities
for further growth and improvement.
Key
improvements that could unlock higher
productivity, competitiveness and economic
expansion include: (i) strengthening the
research and development environment; (ii)
fostering a more dynamic startup culture and
expanding alternative financing sources; (iii)
streamlining
regulatory
processes
for
businesses; and (iv) accelerating digital
transformation.
One key challenge is underinvestment in
research and development.
In 2023,
Romania recorded the lowest R&D intensity in
the EU as a share of GDP, with both public and
private contributions falling short of the EU
average (see Annex 3). Increasing support for
small and medium-sized enterprises (which
currently contribute minimally to national R&D
efforts) while strengthening public-private
partnerships and establishing a dedicated
national innovation agency could play a pivotal
role in increasing R&D investment and
fostering a more dynamic innovation
ecosystem. Romania’s recovery and resilience
plan and measures under the cohesion policy,
including significant investments under the
Strategic Technologies for Europe Platform,
have already initiated steps in this direction,
and further policy measures could build on
these efforts.
Talent availability is another crucial
factor influencing innovation capacity.
The number of researchers employed in the
public sector (1.6 per 1 000 inhabitants) has
been stagnating since 2022 and is less than
half the EU average (See Annex 3). Challenges
such as limited career development
opportunities and working conditions have
contributed to a talent drain. However,
measures under the recovery and resilience
plan, particularly those aimed at attracting
international researchers, are already yielding
positive results. Expanding such initiatives and
improving the governance of the research and
innovation system could increase Romania’s
ability to retain and develop high-skilled
professionals. Additionally, increasing the
percentage of 25-34-year-olds with tertiary
education
–
currently the lowest in the EU
–
would broaden the talent pool and further
strengthen innovation capacity.
Boosting R&D performance
Romania has made little progress
towards the EU average in research and
innovation.
The country is classified as an
‘emerging innovator’ and has the weakest
innovation performance, at 34% of the EU
average, as reported in the 2024 European
Innovation Scoreboard (
13
). This gap is
influenced by several structural factors,
including investment levels, talent retention
and governance frameworks.
So far, Romania’s economic model has
been driven by relatively low labour
costs,
which have attracted investment and
supported economic growth. However, as
income levels rise, this model is becoming less
sustainable, necessitating a shift towards a
more innovation-driven economy. To remain
competitive, it is important to consider
adopting existing technologies, investing in
workforce skills, and strengthening R&D
capabilities to move up the value chain.
(
13
) European Innovation Scoreboard, 2024.
9
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Romania has many companies with the
potential for business innovation (
14
), but
their involvement in innovation activities
remains low.
Between 2020 and 2022, only
8.8% of Romanian firms introduced product
and process innovations (EU average: 51.4%)
(
15
). Addressing barriers such as access to
funding, regulatory complexity and digital
transformation
could
unlock
greater
participation in innovation-led growth. By
creating an environment that supports
business-driven innovation, Romania can make
more of its existing industrial strengths and
accelerate its economic competitiveness within
the EU.
as the amount of listed shares and corporate
bonds remains well below the EU average.
Companies that seek alternative financing
often face challenges in accessing capital due
to limited investor participation and a lack of
financial instruments tailored to their needs.
Additionally, firms are often hesitant to
explore non-traditional financing options,
which further limits their growth potential.
Romania
has
introduced
several
measures to foster a more dynamic
investment environment.
The 2023-2026
national strategy for the development of
capital markets outlines steps to improve the
institutional, legal and regulatory framework
to encourage capital markets development.
Certain key measures in this strategy have
been adopted but not all have fully matured
yet. The recovery and resilience plan also
includes measures to support company listings
on the stock market, although demand has
been relatively low so far.
Additionally,
numerous
financial
instruments under cohesion policy and
initiatives under the recovery and
resilience plan and InvestEU are focused
on improving small and medium-sized
enterprises’
access to finance.
The debt
guarantee scheme for the competitiveness of
small and medium-sized enterprises has been
widely adopted, allowing firms that would
otherwise struggle to secure bank financing to
access much-needed capital. However,
progress in equity-based financial instruments
has been slower, primarily due to the
underdeveloped venture capital market and
startup ecosystem. A newly established
National Development Bank aims to fill this
gap by providing financing to high-risk, high-
potential businesses that lack private-sector
funding opportunities.
Encouraging greater participation from
institutional investors,
including pension
funds, in private equity and venture capital
would also help bridge the financing gap for
innovative companies. One way to achieve this
could be by raising the regulatory investment
limits for pension funds in certain assets.
Expanding firms’ access to finance
In Romania, companies predominantly
rely on internal financing
to support their
investments and operations. Internal sources
accounted for the largest share of investment
finance (73%), with external financing
representing 26%, and the remaining 1%
coming from intra-group funding, namely,
funding from sister or parent companies based
in other countries(
16
).
The heavy reliance on internal funds
constrains business growth, particularly
for small and medium-sized enterprises.
Where external financing is available, it is
primarily in the form of trade credit, which
make up nearly all external debt financing for
Romanian companies (see Annex 5). Despite
the importance of external financing for
business expansion and innovation, Romania’s
capital markets remain underdeveloped.
Market-based finance, including equity and
bond markets, has significant room for growth,
(
14
) According to the European Innovation Scoreboard,
2024, in Romania 27% of firms are non-innovators with
a potential to innovate, compared to the EU average of
17.8%. This means that these enterprises did not
introduce any innovation, and had no ongoing or
abandoned innovation activities but did consider to
innovate.
(
15
)
Community Innovation Survey 2022.
(
16
)
EIB Investment Survey 2024
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Low retail investment and weak financial
literacy hinder the expansion of
Romania’s
capital
markets.
Retail
investment remains modest compared to
other EU countries, as many Romanians prefer
traditional savings methods such as bank
deposits. In 2023, 18.9% of total household
financial assets in Romania were allocated to
equity and investment fund shares (EU
average: 42.2%). Meanwhile, the proportion of
assets held in currency and bank deposits was
significantly higher than the EU average, at
30.4% versus 13.4% (
17
). Improving financial
literacy and introducing policies that attract
new savers and investors will be essential to
broadening access to finance and fostering a
more robust capital market. By addressing
these structural barriers, Romania could create
a more supportive financing environment for
businesses, including start-ups and scale-ups,
enabling them to invest in innovation, expand
operations and become more competitive.
communication, automating repetitive tasks
and enabling businesses to reach and serve
customers worldwide.
Several measures are in place to support
business digitalisation.
Examples include: (i)
an investment under the recovery and
resilience plan to support the take-up of digital
technologies by small and medium-sized
enterprises (implementation is ongoing); (ii)
financial instruments and grants schemes
under cohesion policy funds; and (iii)
the ‘start-
up nation’ and ‘entrepreneur woman’
programmes,
aimed
at
stimulating
entrepreneurship, innovation and digitalisation.
Further strengthening such support measures
for firms to adopt digital technologies would
be useful.
Romania’s digital services have
gradually
improved (
19
), although use by the public
and businesses is still limited
(see Annex 6
for comprehensive statistics on digital public
services). Digital public services make it easier
for the public to access government resources
and information, speed up service delivery and
enable governments to store data more
securely using cloud technology.
Romania is continuing its efforts,
including via cohesion policy and recovery
and resilience plan measures, to increase
digital skills
(both in public and private
environment), further digitalise key national
and regional services, and set up a
governmental cloud and an interoperability
portal and framework. Out of three regional
data clouds programmed under Cohesion
Policy, two are being developed, while sectorial
clouds are planned for key institutions such as
the Ministry of Health and the Ministry of
Finance. Additionally, a growing number of
local public services are being digitalised
across municipalities and counties, aiming to
improve accessibility and administrative
efficiency at the local level.
Boosting the adoption of digital
technologies
Digital technology adoption is improving,
although achieving the targets for
digitalisation of business by 2030 and
implementing the national strategic
digital decade roadmap remain a
challenge.
The share of businesses with at
least a basic level of digital intensity(
18
) has
grown significantly in Romania in recent years,
though it still slightly lags behind the EU
average. While progress has also been made
in adopting advanced digital technologies,
such as AI and cloud services, uptake remains
well below the EU average (see Annex 3 for
comprehensive
statistics
on
business
digitalisation). Maintaining and improving this
positive momentum is important because
digitalisation boosts productivity by facilitating
(
17
) European Commission calculations, based on
Eurostat.
(
18
) The digital intensity index (DII) is a composite indicator,
which measures the use of different technologies by
enterprise, with the aim to assess to which extent EU
enterprises are digitalised.
(
19
)
eGovernment Benchmark 2024 Factsheets.
See Annex
4 for comprehensive statistics on digital public services.
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Reducing the regulatory burden
and improving predictability would
help boost innovation and
productivity
Romanian
companies
experience
constraints due to regulatory burden.
Nearly a quarter of them allocate more than
10% of their staff to regulatory requirements
–
a much higher share than in higher income
EU countries like Finland and even regional
peers such as Bulgaria and Hungary (
20
) (see
also Annex 4).
Companies cite fiscal and legislative
uncertainty as a barrier to investment.
Romania competes globally for foreign direct
investment, yet 90% of Romanian firms cite
uncertainty as the biggest barrier to long-term
investment (
21
). Business associations regularly
point out that public consultation in the
legislative process is merely a perfunctory
formality. For example, consultation periods
run for less than 24 hours, preparation lead
times (which should last six months) are
lacking, government finances lack a medium-
to-long-term dimension, and dialogue and
consultation structures between industries and
government are absent. Under these
conditions,
companies
report
putting
investments on hold (
22
). Ensuring the stability
and predictability of the investment
framework by avoiding rapid policy changes,
and consistently applying existing rules, are
key to fostering firms’ productivity and
competitiveness.
A fair, efficient, simple and transparent
tax system is important to ensure
predictability.
Small and medium-sized
enterprises’
annual tax contribution to the
budget remains low, as qualifying small
businesses are taxed at a preferential rate of
either 1% or 3% of their turnover, depending
(
20
)
EIB Investment Survey 2024.
(
21
)
EIB Investment Survey 2024.
(
22
) Foreign Investors Council Romania website (fic.ro);
Concordia Employers’ Confederation (concordia.ro.
on specific criteria. However, this system has
recently undergone reform. New legislation
has been introduced to reduce the scope of
the special tax regime for micro-enterprises,
bringing clarity to the system and reducing
distortions,
while
also
facilitating
23
compliance ( ).
Access to the single market is an
opportunity that many small and
medium-sized enterprises in Romania
could exploit.
Over the last 20 years, trade in
goods has significantly increased, although
Romania’s trade integration in the single
market is below the EU average (28% of GDP
vs 42% of GDP in 2024(
24
)
–
see Annex 4). The
country’s accession to the Schengen Area, as
of 1 January 2025, is expected to facilitate
foreign investment and improve trade flows
with other EU countries.
Addressing
restrictively
regulated
professions could boost productivity.
Regulatory restrictions in a number of
professions remain stricter in Romania than
the EU average. This creates additional costs,
especially for small and medium-sized
enterprises, while also lowering productivity
and restricting labour mobility within the EU by
making it more difficult for qualified
professionals from other EU countries to work
in Romania. This applies in particular to civil
engineers, architects, accountants, tourist
guides and notaries.
The effects of measures to improve
public procurement performance have yet
to be observed.
The Romanian public
procurement system continues to face
challenges over transparency, efficiency and
compliance with EU standards. Romania is
continuing with reforms (supported by the
Recovery and Resilience Facility) to streamline
procedures and strengthen institutional
(
23
) Government Emergency Ordinance No 156/2024
reduced the eligibility threshold for the special tax
regime for micro-enterprises from EUR 500 000 to
EUR 250 000 as of 1 January 2025, and further to
EUR 100 000 as of 1 January 2026.
(
24
)
‘Trade
integration’ is defined as the average of intra-EU
imports and intra-EU exports..
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capacity by providing specialised training
programmes to civil servants involved in public
procurement. Further improvements would be
beneficial, as those stated in the Public
Procurement National Strategy 2023-2027,
particularly on: (i) professionalisation and
staffing for contracting authorities; (ii)
predictability of calls, giving clear and stable
guidance to companies, sufficient time to
submit quality offers, and proportionality
between the level of requirements and the
size of funding; and (iii) better alignment of
calls with the financing priorities of small and
medium-sized enterprises.
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DECARBONISATION, ENERGY AFFORDABILITY AND
SUSTAINABILITY
Affordable energy for industry
and households
High energy prices pose a significant
challenge to Romania’s competitiveness.
In 2024, Romania’s wholesale electricity prices
averaged approximately EUR 103.5 per
megawatt-hour (MWh). This puts the country
among those with the highest electricity prices
in the EU, surpassed only by Ireland and Italy.
Romania generates electricity from a mix of
natural gas, coal, hydropower, nuclear power
and renewable sources. It has committed to
phasing out coal, although the Ministry of
Energy is currently seeking an extension of
some planned decommissioning steps. These
challenges are further intensified by
congestion in cross-zonal electricity trading
capacities in the Central Eastern Europe and
by increased electricity flows to Ukraine and
Moldova, which are partly supplied from
South-East Europe.
Price caps to lower the cost of energy
bills need to be better targeted.
Since
November 2021, Romania has capped
electricity and gas bills for households, small
businesses, hospitals, schools and public
institutions, covering consumption up to
specified monthly limits. The government
compensates energy suppliers for the
difference. This scheme was set to end at the
end of March 2025, but has recently been
extended (until end of June 2025 for
electricity and until March 2026 for gas). Such
measures should be better targeted to protect
the vulnerable consumers, while providing
incentives for energy savings through
buildings
renovation.
Suppliers
have
repeatedly raised concerns about delays in
government payments, and analysts have
warned that market distortions created by this
scheme will be challenging to address.
Flexible systems are key for preventing
and limiting spikes in electricity price.
Both Romania and the broader south-east
Europe region have faced prolonged periods of
high electricity prices, especially during peak
summer hours in 2024. Heatwaves and
drought have reduced output from domestic
hydroelectric and nuclear plants, further
driving up prices. These problems have been
compounded by limited import capacities,
constraints on flexible energy sources, and
electricity exports to Ukraine and Moldova.
While there often was an oversupply of solar
energy during the day, evening demand often
exceeded the available supply, leading to
expensive generation. Addressing these issues
requires solutions that increase flexibility and
enable
better use of country’s renewable
energy potential. Short-term management
involves improving demand-side response
measures, deploying storage systems (such as
batteries)
and
improving
cross-border
electricity
trade
through
existing
interconnections.
Achieving
long-term
flexibility
requires
investments
in
infrastructure and a larger role for clean
energy in the energy mix to ensure
affordability, reliability and sustainability.
Taxation could be used to reduce
Romania’s relative high electricity prices,
by shifting the burden from electricity to
fossil fuels.
Taxes and levies on electricity
account for nearly 26% of the total electricity
price for households and around 10% for
energy-intensive industries. For gas, taxes and
levies account for 16% for households and
around zero for energy-intensive industries.
These heavier taxes on electricity hinder the
shift to electricity-based heating and industrial
processes, making it more costly. Shifting the
burden from electricity to fossil fuels could
lead to lower energy prices for consumers and
increased competitiveness for industries.
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Energy mix, decarbonisation and
diversification of generation
sources
Romania has a significant level of
macroeconomically relevant fossil fuel
subsidies without a planned phase-out
before 2030.
These represent 0.47% of
Romania’s GDP, similar to the EU weighted
average of 0.49%. Scaling down and phasing
out these subsidies is in line with EU
commitments and can give the government
more flexibility over its spending choices.
Fossil fuel subsidies that do not address
energy poverty in a targeted way, that do not
respond to genuine energy security concerns,
hinder electrification and are not crucial for
industrial competitiveness could be considered
for priority phase-out. These include decisions
to cover the losses incurred by fossil fuel
companies, and support for heating for
households.
Romania has advanced in the green
transition,
also given its commitments in the
recovery and resilience plan and cohesion
policy programmes. Romania’s overall energy
mix is still heavily reliant on fossil fuels,
despite the large potential from renewable
energy sources. Romania’s energy mix includes
36% oil and 25% natural gas, while
renewables (including biofuels) accounted for
20%. Decarbonisation efforts are continuing,
and Romania is making efforts to accelerate
the deployment of renewable energy sources.
Their installed capacity increased by 14% in
2024), but progress is slower than anticipated,
with significant delays on deployment and
connection to the grid, on the development of
storage solutions, and on increased demand-
side flexibility. Combined with security of
supply concerns, these delays risk slowing
down the phasing-out of coal and lignite
generation plants. At the same time, the
potential for deployment of renewable energy
sources is still being slowed down by the
permitting framework. However, simplifying
the licensing and permitting procedures for
renewables investments is planned in 2025
through a reform in the Romanian recovery
and resilience plan.
Electricity generation from renewable
sources represented slightly below half
of all generation in 2024,
slightly above the
EU’s overall share. There has been progress
in
increased installed capacity for solar, wind,
hydropower, and decreased for non-renewable
energy. Based on its updated national energy
and climate plan, Romania aims to ensure that
38.3% of renewable energy forms part of the
gross final consumption of energy by 2030 (up
from the current 20%).
Further decarbonising the energy sector
would provide households and industry
with
low-cost
energy
and
boost
Romania’s competitiveness.
The Romanian
recovery and resilience plan contains
measures to decommission coal and lignite-
fired power plants by the end of 2025, along
with other measures to accelerate the
deployment of renewable energy. These
measures are to be implemented through
reforms to decarbonise the energy system and
facilitate the use of state land for investments
in renewable energy. They are combined with
investments supporting the installation of new
renewable power production capacity, and
investments in electricity storage. The
measures are complemented by significant
investments included in the Just Transition
Fund programme under EU cohesion policy.
Advancing
on
decarbonisation
can
complement security of supply.
Romania
plays a key role in ensuring the security of
energy supply in the region. It recently
supported neighbouring countries Moldova and
Ukraine, exporting increased quantities of
energy to them. It is therefore pivotal that
Romania maximises the use of existing
infrastructure and further develop it. It is also
important that Romania strengthens its energy
systems and increases its flexibility, to ensure
better security of supply and make better use
of its significant renewable energy potential.
The recovery and resilience plan contains
large-scale investments in electricity storage
facilities, which will enable greater flexibility in
the Romanian electricity system and further
integration of renewable energy. However, the
challenges to energy system integration are
significant, with long waiting times for
connecting renewable energy sources to the
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grid.
Romania’s regulatory framework still
presents barriers to the development of
flexible resources, hindering the participation
of demand-side response and other distributed
energy resources.
Progress has been made on the legal
framework for granting permits for
projects on renewables.
Measures were
introduced to make it easier for individuals
and communities to participate in such
projects. This involved a simplified grid
connection procedure for renewable energy
sources for self-consumers, as well as digital
and transparent grid connection processes.
However, the permitting process for renewable
energy projects is not centralised, resulting in
parallel procedures and duplication of
documentation requirements.
Transition towards a clean
industry and water resilience
Romania has scope to support the
decarbonisation of its manufacturing
production.
While production has become
more energy efficient, it is not yet based on
cleaner energy sources. The decarbonisation of
industrial sectors
–
in particular manufacturing
and energy-intensive firms
–
is hampered by
high energy costs. This is because electricity
prices are still largely influenced by fossil fuel
generation capacities, while replacement fuels
(e.g. renewable hydrogen) are not yet fully
developed. The current plans for decarbonising
the industry are based on increasing the use
of renewables, gas and nuclear capacities. The
recovery and resilience plan contains reforms
that will introduce power purchase agreements
and
‘contract
for difference’ mechanisms on
the energy market. This will enable further
development of renewable energy sources and
their uptake by industrial users, ultimately
lowering their electricity costs. Green public
procurement, which could also support
industry decarbonisation on the demand side,
is not yet commonly used (Annex 8).
Romania could speed up its transition to
a circular economy.
Romania’s
industrial
transition towards circularity is only at an early
stage and current investment is inadequate for
eco-design and packaging waste management
initiatives and for digital tools. Under its
recovery and resilience plan, Romania adopted
its first circular economy strategy, but efforts
are needed to implement the actions included
in the plan.
Romania’s circular use of materials
has been slowly declining since 2012 and
stood at 1.3% in 2023, considerably below the
EU average of 11.8%. With EUR 0.34 per kg of
generated material consumed in 2023,
Romania’s resource productivity remains well
below the EU average of EUR 2.23 per kg.
Further measures to boost the transition to a
circular economy and to increase recycling
rates, including for critical raw materials,
would improve resource efficiency while
reducing waste. This has clear potential to
increase competitiveness. More efforts are
also needed to move away from landfilling of
waste, which remains significant (Annex 7).
Romania is at risk of missing both the
municipal waste and the packaging waste
targets for 2025, as well as the 2035 target
for landfilled municipal waste.
The industrial base is transitioning
towards net zero, but significant
challenges remain.
Romania maintains a
strong industrial profile, with industry and
construction contributing around 30% to its
gross value added, positioning it among the
most
industry-rich
EU
counties.
Notwithstanding
the
industrial
policy
objectives in Romania’s 2023-2027
industrial
strategy, the country’s manufacturing capacity
in net-zero technologies remains modest and
fragmented, due to lack of a supporting
innovation ecosystem and skills. There has,
however, been some growth in the battery and
storage sectors. The regulatory environment
poses substantial challenges, with lengthy
licensing processes and insufficient regulatory
stability hampering clean-tech investments.
While Romania has allocated EUR 199 million
in grants through its recovery and resilience
plan for battery and photovoltaic cell projects,
the country continues to face structural
impediments
including
limited
scale,
underdeveloped local supply chains and
persistent skills shortages that hinder the
expansion of its net-zero manufacturing
capabilities (Annex 8). Romania has already
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allocated around EUR 1.4 billion more under
the cohesion policy to Strategic Technologies
for Europe Platform-type investments (micro-
electronics,
green
hydrogen,
critical
technologies in biotech, robotics in healthcare).
Romania faces increasing climate-related
vulnerabilities,
particularly
due
to
extreme weather events such as floods,
droughts and heatwaves.
Despite having
abundant freshwater resources, Romania
faces serious challenges related to water
resilience, water pollution, water stress and
inefficient water management. These are
exacerbated by climate change, ageing
infrastructure, delayed implementation of
flood risk prevention measures and
deforestation. The economic losses due to
weather and climate-related extreme events
are estimated at EUR 19.6 billion for the
period 1980-2023, of which EUR 7.3 billion
can be attributed to extreme flood events. At
the same time, droughts are placing immense
pressure on availability of water resources,
threatening different economic sectors and
affecting energy production and security.
Sustainable water management is further
hampered by persistent underinvestment in
critical infrastructure, increased pollution, low
wastewater treatment compliance and limited
water reuse policies. Moreover, disparities in
access to drinking water and sanitation,
particularly between urban and rural areas,
reinforce regional inequalities and hinder
growth that benefits all of society.
Strengthening
water
resilience
is
essential to supporting sustainable
growth in Romania.
This will require changes
in the legal framework, improving governance
frameworks, scaling up existing solutions, and
investing in key areas such as drinking water
supply, wastewater collection and treatment,
water reuse and the modernisation of water
infrastructure.
To
address
substantial
investment needs and low compliance with EU
water legislation, Romania will need to make
full use of available EU funding, speed up
implementation of existing projects and ensure
a more resilient and sustainable water sector
aligned with EU long-term environmental and
economic goals.
Substantial investment is required to
support the green transition.
Romania
faces significant investment needs to
successfully navigate its green transition and
meet EU environmental targets. The country
requires additional investment for the
transition to a circular economy and for
pollution prevention and control, primarily for
clean air and noise mitigation measures. Given
Romania’s
high fiscal deficit, these investment
needs require efficient use of EU funds
alongside domestic resources to support the
country’s sustainable development objectives.
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SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS
motherhood. Improving coverage and quality
of early childhood education and care,
particularly in rural areas, could help in this
regard.
Higher demand for skilled labour,
combined with a shrinking population,
risks increasing labour shortages and
mismatches.
While job vacancy rates remain
low, Romania is among the Member States
with the highest number of occupations with
staff shortages. At the same time, for other
occupational areas there are too many
workers,
highlighting
labour
market
imbalances (European Labour Authority,
2024). Employers identify the lack of
appropriate skills within the workforce as one
of their main business constraints and SMEs
are particularly affected. As Romania
continues its transition to a services-based,
digital and green economy, high-skilled labour
demand is predicted to increase up to 30% in
the next 10 years (CEDEFOP, 2024). Moreover,
given the projected decline
in Romania’s
working-age population, driven by an ageing
society and outward migration, these
shortages may get worse without reinforced
active labour market, upskilling and talent
retention policies.
Underfunded,
poorly
targeted
and
ineffective
labour
market
policies
coupled with low capacity of the public
employment
services
are
limiting
potential
employment
opportunities.
Romania has one of the lowest levels of
expenditure in the EU dedicated for activation
measures (0.09% of GDP in 2023, see Annex
10). Moreover, spending is predominantly
focused on employment subsidies and only a
fraction goes to reskilling and upskilling,
although this has proven more efficient.
Participation in training programmes by
population groups least present on the labour
market is low, indicating a need for more
tailored measures. While employment support
Labour market challenges persist
Despite an increasing employment rate,
Romania’s
labour
market
faces
significant disparities across population
groups and regions.
The employment rate
has been improving, at 69.5% in 2024 vs
75.5% in the EU, but remains among the
lowest in the EU and below the 2030
employment target of 74.7%. Higher
employment is constrained by the limited
participation on the labour market by women,
young people, the low-skilled, people with
disabilities and people from the Roma
community (see Annex 10). Romania has
among the highest rates of young people not
in education, employment or training (NEETs).
People with a lower level of education are
considerably less present on the labour market
than those with tertiary education. The
employment of people with disabilities has
been improving but remains a challenge. The
rate of Roma people in paid employment
continues to be very low. Participation in the
jobs market also varies markedly from region
to region: the Bucharest-Ilfov region has the
highest employment rate, 18.1 pps higher than
the South-East, the region with the lowest rate
(see Annex 17).
Getting women into the labour market
remains key to achieving higher overall
employment.
Despite a slight improvement in
2024, the Romanian gender employment gap
is one of the highest in the EU. Women’s
participation in the labour market faces
challenges
over
inadequate
activation
measures, (particularly for the low-skilled) and
insufficient access to early childhood
education and care, especially in rural areas. In
2024, only 11.4% of children aged 0-3 were
enrolled in formal childcare, well below the EU
average of 39.2%. Women continue to bear
the bulk of caring responsibilities in addition to
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can contribute to employment outcomes of
low-skilled jobseekers, it has a minimal effect
on qualified workers and falls short of
addressing the country’s skills shortages.
Effectiveness of activation measures is further
hindered by the low capacity of the public
employment services to provide individualised
support pathways and effectively work with
employers. In the 2021-2027 period, the
European Social Fund Plus is investing
EUR 153 million in boosting the capacity of
Romania’s public employment
services through
training and additional staff, and by improving
the relevance, quality and visibility of its
services.
lead to improving competence-based teaching
and higher skills levels.
Inequalities in education are large,
particularly between rural and urban
areas.
Low and declining participation in early
childhood education and care limits early
learning and worsens inequalities, with
participation rates especially low in rural
areas. There is a significant gap in
performance between schools in urban areas
and those in rural areas (see Annex 12), but
also between the capital region and less
developed regions, while half of Roma children
attend
segregated
schools,
widening
educational inequalities. Implementing the
national methodology to identify and combat
school segregation may help address the
challenge. Fragmentation of the school
network, primarily in rural areas, affects
access to and quality of education, including
the efficiency of spending. Small schools in
rural areas often run multi-grade classes due
to the low number of students enrolled, while
teachers in these schools often cover subjects
for which they are not qualified. Early school
leaving is also particularly high in rural areas
(26.5% vs 16.8% at national level in 2024, the
highest rate in the EU) and for the Roma.
Developing a national strategy to reorganise
school and early childhood education and care
networks in line with demographic trends and
to improve participation in the early years
could help increase access to quality education
and improve spending efficiency.
Romania is modernising its vocational
education and training system, but
challenges persist in meeting the needs
of the labour market and fostering
sustainable
competitiveness.
Dual
vocational education and training (i.e.
vocational courses combined with work-based
experience) has recently been introduced in
higher education and the government plans to
transition
all
secondary
vocational
programmes to the dual system by 2029-
2030. With support from the Recovery and
Resilience Facility, vocational schools are being
equipped with practice workshops, including
digital equipment and IT labs, which should
help improve the attractiveness and quality of
training. However, as of 2024, only a fraction
Performing education and training
systems are key for improving
competitiveness
Although reforms are underway, the
education and training system is still not
delivering the skills that the country
needs to improve its competitiveness.
The
2022 PISA test shows that Romania has one
of the highest rates of 15-year-olds in the EU
that lack a basic level of proficiency in
mathematics (48.6% vs EU: 29.5%), reading
(41.7% vs EU: 26.2%) and science (44% vs EU:
24.2%). These figures reflect structural
challenges, linked to issues such as teaching
quality and the teaching profession, school
curriculum and its implementation, and the
considerable impact of socio-economic factors
on educational outcomes (see Annex 12). The
lack of basic skills is especially problematic in
Romania’s shrinking demographic context,
hampering the potential of the population and
the effectiveness of later upskilling and
reskilling. Moreover, 74% of Romanian 14-
year-olds lack the computer and information
literacy skills needed to navigate today’s
digital world (EU in 2023: average: 43%). The
education laws adopted in 2023 and the
recovery and resilience plan seek to address
some of the challenges, but impact is yet to be
seen, with significant delays at times in
implementing its investments and reforms.
Effective implementation of the education
laws could improve teachers’ education, and
19
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of recent graduates had benefited from work-
based learning (7.2% vs 65.3% in the EU), and
their employment rate is lower than the EU
average (66.7% vs 80% in the EU). To make
vocational training more relevant to the labour
market, it is important to: (i) get local firms
more involved in the training provided,
including by offering financial incentives or
support to SMEs and (ii) better translate skills
intelligence
–
now available through the
ReCONECT platform
–
into evidence-based
policymaking and adapted curricula.
Labour market trends call for increasing
the number of STEM professionals,
improving the quality of higher education
and making it more relevant to the needs
of employers.
While Romania has one of the
highest shares of university students in STEM
(science,
technology,
engineering
and
mathematics) (30.1%, vs EU 27.1% in 2023),
the low participation rate in higher education
(23.2% among people aged 25-34, EU: 44.2%
in 2024) means that the absolute number of
professionals trained in STEM is insufficient
(including in information and communication
technology). Increasing the number of STEM
professionals (crucial for competitiveness)
requires improving the level of basic skills
(including the percentages of top-performing
students), while improving curricula and
training methods to focus more on practical
knowledge, skills and application. This in turn
will improve tertiary attainment, which
continues to be held back by low participation
in university programmes. Reasons for low
participation include access challenges for
students from disadvantaged backgrounds,
high early school leaving and a still
considerable number of final year students not
sitting the baccalaureate exam. Furthermore,
drop-out from university programmes is
widespread. Two large-scale programmes
funded by the European Social Fund Plus are
under way to improve access for
disadvantaged students and increase retention
rates.
Improving lifelong learning is vital not
only to create better job opportunities
and boost competitiveness, but also to
prevent inequalities from getting worse.
Participation in lifelong learning has improved
considerably (up from 5.8% in 2016 to 19.1%
in 2022), surpassing the 2030 national target
of
17.4%,
However,
despite
recent
improvements it remains insufficient to
address fast-changing skills needs, and over
72% of adults lack basic digital skills, which
holds
back
the
economy’s
digital
transformation. Moreover, people with low
levels of education or living in rural areas
(already disproportionately affected by
poverty and fewer employment opportunities)
show much lower engagement in upskilling
activities, reinforcing their disadvantage.
Addressing barriers with flexible training
options and financial support can help bridge
the skills gap and promote more inclusive
access to lifelong learning opportunities. As
Romania progresses on implementing new
national strategies in adult learning (largely
supported by the European Social Fund Plus), it
could place more focus on strengthening
cross-governmental coordination and boosting
the private sector’s role in upskilling. This could
involve stricter and better enforced training
requirements, as well as targeted financial
support for companies
Strong social protection and
access to essential services are
crucial for social fairness
Tackling widespread poverty, social
exclusion and inequality remains a
critical challenge.
Despite recent progress,
Romania continues to have one of the highest
rates for adults and children at risk of poverty
or social exclusion in the EU (27.9%, vs an EU
average of 21.0%, see Annex 11). Significant
disparities exist between the capital and the
regions, with a high prevalence of the
phenomenon in rural areas (see Annex 17).
There are increased risks for vulnerable
groups, including people with disabilities,
Roma, the low-educated, part-time workers,
and partially the self-employed. In-work
poverty is nearly double the EU average. With
high depth of poverty and inequality levels, as
well as low adequacy and coverage of the
social protection system, Romania needs
focused efforts to progress in reducing the
20
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number of people at risk of poverty or social
exclusion by 2030. Improving the efficiency of
the social protection system and ensuring
stable funding, effective monitoring and
impact evaluation would limit poverty and
social exclusion, especially in smaller rural
communities. EU-funded programmes provide
considerable support, including through the
establishment of 2 000 integrated community
services in rural areas and the strengthening
of health, educational and social services.
Ensuring effective access to quality
health remains a challenge, particularly
in rural areas and for vulnerable groups.
Romania has high levels of unmet medical
needs, primarily due to high out-of-pocket
costs(
25
) for households, with significant
disparities between income groups and urban-
rural populations. Staffing shortages, mainly
due to the emigration of health professionals,
further restrict care availability, which is
focused on hospitals. The limited involvement
of primary care in disease prevention, early
diagnosis, and treatment leads to a high
number of avoidable hospitalisations. As a
result, premature mortality is among the
highest in the EU. Addressing these challenges
requires sufficient financing and optimised
allocation, shifting the focus towards primary
care and community-based services. Digital
tools would further improve the efficiency of
the system.
Romania’s long-term care services are
underfunded, with public expenditure far
below the EU average.
Only a small
percentage of people over 65 receive home
care. Rural and remote areas face scarce, low-
quality services. A shortage of qualified staff
exacerbates the problem, with most high-
intensity care provided by informal carers.
Affordable, quality community-based care is
crucial to support deinstitutionalisation and
independent living for people with disabilities.
Romania’s 2024 reform of social assistance
services aims to improve financing and service
quality. Its success is contingent on
appropriate governance and implementation
structures. These involve strengthening the
(
25
) On-the-spot payments to healthcare providers.
capacity of local authorities, adopting
secondary legislation and conducting a
comprehensive assessment of staffing needs
to address the increasing demand for qualified
care workers and the development of home
and community-based care services.
Housing
costs
and poor
housing
conditions continue to be problematic.
A
significant
percentage
of
Romanians,
especially those at risk of poverty, spend a
large portion of their income on housing (see
Annex 11). Housing costs are a heavy burden
for almost two out five households. Romania
has one of the highest severe housing
deprivation and overcrowding rates in the EU,
especially in rural areas. Confronting these
challenges requires strategic investments in
housing infrastructure and policies to boost
affordability and availability, especially for the
most vulnerable. The national housing strategy
aims to reduce housing deprivation,
overcrowding and the proportion of people,
especially marginalised communities, living in
informal
settlements.
Accelerating
its
implementation is essential, along with the
2022-2027 strategy for the social inclusion of
the homeless. Cohesion policy funds support
the construction and renovation of energy-
efficient and social housing and help local
authorities regulate informal settlements.
Stronger territorial planning and housing
regulations, particularly adopting inclusive
zoning (requiring a minimum percentage of
affordable and/or social housing units in new
developments), can help alleviate housing
challenges.
Additional
investments
in
affordable and decent housing could be
considered, on top of those in the recovery and
resilience plan (investments in housing for
young people, teachers/health workers) and
funded from cohesion policy funds.
Addressing these challenges will help
Romania
boost
upward
social
convergence.
The second-stage analysis in
line with the Social Convergence Framework
points to challenges for Romania that may
affect social convergence in relation to its
21
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social situation and labour market and to
education and skills(
26
).
(
26
) European Commission,
SWD(2025)95.
The analysis
relies on all the available quantitative and qualitative
evidence and the policy response undertaken and
planned.
22
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KEY FINDINGS
To boost competitiveness, sustainability and
social fairness, Romania would benefit from:
•
urgently
accelerating
the
implementation of the recovery
and resilience plan,
including the
REPowerEU
chapter;
swiftly
implementing
cohesion policy,
taking
advantage of the opportunities under
the mid-term review and making
optimal use of EU instruments,
including
InvestEU
and
STEP,
to
improve competitiveness
pursuing
a
resolute
fiscal
consolidation path
by implementing
the national medium-term fiscal-
structural plan and further supporting
it with additional corrective measures
to rein in the high fiscal and current
account deficits;
strengthening the research and
development
environment,
by
increasing
public
and
private
investment, focusing on talent
retention and supporting business-
driven innovation;
expanding
firms’
access
to
external financing sources,
by
improving access to capital markets,
encouraging greater participation by
institutional investors, and increasing
financial literacy;
accelerating
the
digital
transformation,
by speeding up
digital infrastructure, supporting
firms’
digitalisation, improving digital public
services for citizens and businesses,
and working towards meeting the
digital decade targets;
streamlining regulatory processes
for
businesses,
by
ensuring
legislative
predictability
and
transparency, deregulating certain
professions and improving the
capacity of contracting authorities
dealing with public procurement;
•
making further progress on
decarbonising the energy and
manufacturing sectors,
with a focus
on removing regulatory barriers to
renewable energy deployment and
integration;
shifting the currently high fiscal
burden away from electricity and
onto fossil fuels
to incentivise
electrification and encourage the
deployment of cleaner electricity-
based solutions for heating and
industrial processes;
ensuring energy affordability for
industry and households
without
distorting energy prices formation, by
reducing energy demand through
energy renovation of (residential and
non-residential)
buildings,
by
supporting clean diversified supply
(through renewables and grids) and by
providing targeted support to increase
competitiveness and shield vulnerable
consumers;
taking concrete steps to phase out
fossil fuel subsidies;
supporting the transition towards
a circular economy and net-zero
manufacturing
by
facilitating
investments in these sectors
to
increase resource efficiency and
competitiveness;
to
support
convergence,
upward
social
increasing
the
•
•
•
•
•
•
•
•
•
•
23
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effectiveness and targeting
of
active labour market policies to tackle
persistent gaps in the labour-market
participation of women, young people,
people with disabilities, the low-skilled
and Roma.
•
ensuring equal access to quality
education and improving the level
of basic skills, including digital
skills, across different segments of the
population and geographical areas;
making vocational education and
training more attractive and more
relevant to the needs of the
labour market and promoting
engagement in adult learning
to
tackle
skills
shortages,
by
strengthening
private-sector
involvement and cross-governmental
coordination;
strengthening efforts to reduce
high levels of poverty and
material deprivation
by improving
the efficiency of the social protection
system and access to social services
and affordable housing, especially for
vulnerable population groups such as
the Roma;
ensuring effective access to
quality health and long-term care
services,
particularly in rural areas
and for vulnerable groups, by further
strengthening primary and preventive
healthcare.
•
•
•
24
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ANNEXES
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LIST OF ANNEXES
Fiscal
A1.
A2.
Fiscal surveillance and debt sustainability
Taxation
30
30
40
Productivity
A3.
A4.
A5.
A6.
Innovation to business
Making business easier
Capital markets, financial stability and access to finance
Effective institutional framework
42
42
47
52
60
Sustainability
A7.
A8.
A9.
Clean industry and climate mitigation
Affordable energy transition
Climate adaptation, preparedness and environment
65
65
71
78
Fairness
A10. Labour market
A11. Social policies
A12. Education and skills
A13. Social Scoreboard
A14. Health and health systems
84
84
89
94
98
99
Horizontal
A15. Sustainable development goals
A16. CSR progress and EU funds implementation
A17. Competitive regions
102
102
104
111
LIST OF TABLES
A1.1.
A1.2.
A1.3.
A1.4.
A1.5.
A1.6.
A1.7.
A1.8.
A1.9.
General government balance and debt
Net expenditure growth
Net expenditure (outturn and forecasts), annual and cumulated deviations vis-à-vis the recommendation
Defence expenditure
Macroeconomic developments and forecasts
General government budgetary position
Debt developments
Implementation of reforms and investment underpinning the extension
Projected change in age-related expenditure in 2024-2040 and 2024-2070
31
31
32
32
32
33
33
35
38
27
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A1.10.
A3.1.
A4.1.
A5.1.
A6.1.
A6.2.
A7.1.
A8.1.
A9.1.
A13.1.
A14.1.
A16.1.
A16.2.
A17.1.
Fiscal Governance Database Indicators
Key innovation indicators
Making Business Easier: indicators.
Financial indicators
Romania. Selected indicators on administrative burden reduction and simplification
Digital Decade targets monitored through the Digital Economy and Society Index
Key clean industry and climate mitigation indicators: Romania
Key Energy Indicators
Key indicators tracking progress on climate adaptation, resilience and environment
Social Scoreboard for Romania
Key health indicators
Selected EU funds with adopted allocations - summary data (million EUR)
Summary table on 2019-2024 CSRs
Selection of indicators at regional level in Romania
39
46
51
59
60
62
70
77
83
98
100
107
108
112
LIST OF GRAPHS
A2.1.
A2.2.
A3.1.
A3.2.
A3.3.
A4.1.
A5.1.
A5.2.
A5.3.
A5.4.
A5.5.
A6.1.
A6.2.
A6.3.
A7.1.
A7.2.
A7.3.
A8.1.
A8.2.
A8.3.
A9.1.
A9.2.
A10.1.
A10.2.
A11.1.
A11.2.
A12.1.
A14.1.
A14.2.
A15.1.
A16.1.
A16.2.
A17.1.
Tax revenue shares in 2023
Tax wedge for single and second earners, % of total labour costs, 2024
R&D intensity (GERD as a percentage of GDP)
Proportion of high-growth enterprises
Share of enterprises with innovation activities
Making Business Easier: selected indicators.
Net savings-investment balance
International investment position
Capital markets and financial intermediaries
Composition of NFC funding as a % of GDP
Composition of HH financial assets per capita and as a % of GDP
Trust in justice, regional / local authorities and in government
Indicators of Regulatory Policy and Governance (iREG)
Participation rate of 25-64 year olds in adult learning (%) by occupation
GHG emission intensity of manufacturing and energy-intensive sectors, 2022
Manufacturing industry production: total and selected sectors, index (2021 = 100), 2017-2023
Greenhouse gas emissions in the effort sharing sectors, 2005 and 2023
Retail energy price components for household and non-household consumers, 2024
Monthly average day-ahead wholesale electricity prices and European benchmark natural gas prices (Dutch TTF)
Romania's installed renewable capacity (left) and electricity generation mix (right)
Direct dependency(1) on ecosystem services(2) of the gross value added generated by economic sector in 2022
Investment needs and gaps in EUR million, at 2022 constant prices
Key labour market indicators
Employment rate by educational attainment, ALMP expenditure and skills mismatch
Percentage of people at risk of poverty or social exclusion (AROPE) and its components
Housing cost overburden and overcrowding rate (%)
Early leavers from education and training by degree of urbanisation
Life expectancy at birth, years
Treatable mortality
Progress towards the SDGs in Romania
Distribution of RRF funding in Romania by policy field
Distribution of cohesion policy funding across policy objectives in Romania
Labour productivity per hour
40
40
42
43
43
47
52
53
53
55
56
60
60
63
66
67
68
71
71
74
80
81
84
87
89
93
94
99
99
102
104
105
112
LIST OF MAPS
A17.1.
A17.2.
A17.3.
Regional Competitiveness Index 2.0, 2022 edition
House prices relative to income, 2019
Climate change impact on GDP
111
113
115
28
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FISCAL
ANNEX 1: FISCAL SURVEILLANCE AND DEBT SUSTAINABILITY
This Annex contains a series of tables relevant for the assessment of the fiscal situation in Romania,
including how Romania is responding to Council recommendations issued under the reformed Economic
Governance Framework.
The reformed framework, which entered into force on 30 April 2024(
27
), aims to strengthen debt
sustainability and promote sustainable and inclusive growth through growth-enhancing reforms and
priority investments. The medium-term fiscal-structural plans (hereinafter, MTPs or plans) constitute the
cornerstone of the framework, setting the budgetary commitment of Member States over the medium
term. The latter is defined in terms of net expenditure growth, which is the single operational indicator for
fiscal surveillance.
Romania submitted its plan on 25 October 2024. The plan covers the period until 2031, and presents an
extended fiscal adjustment over seven years, which is underpinned by a set of reforms and investments
to which Romania committed with the aim of improving potential growth and fiscal sustainability. On 21
January 2025, the
Council adopted the Recommendation endorsing Romania’s plan(
28
). On 21 January
2025, the Council also adopted the Recommendation to correct the excessive deficit in Romania (
29
). The
corrective net expenditure path recommended by the Council under the excessive deficit procedure is
consistent with the path set out in the plan.
Romania did not yet submit an Annual Progress Report. The assessment of the implementation of the
Council
Recommendations to correct the excessive deficit and endorsing Romania’s plan is carried out on
the basis of outturn data from Eurostat, the Commission Spring 2025 Forecast and other information
available to the Commission.
The Annex is organised as follows. First, developments in
government deficit and debt
are presented
based on the figures reported in table A1.1. Then, the assessment of the
implementation of the
Council Recommendation to correct the excessive deficit and of the Council Recommendation
endorsing the plan
follows, based on the relevant figures presented in Tables A1.2 to A1.7, including
data on defence expenditure. Further on, the progress made in the
implementation of the set of
reforms and investments
underpinning the extension of the fiscal adjustment period(
30
) is assessed
taking into account the information presented in Table A1.8.
The Annex also provides information on the
cost of ageing
and the
national fiscal framework.
Fiscal
sustainability risks are discussed in the Debt Sustainability Monitor 2024.(
31
)
(
27
) Regulation (EU) 2024/1263 of the European Parliament and of the Council (EU) on the effective coordination of economic policies
and on multilateral budgetary surveillance, together with the amended Regulation (EC) No 1467/97 on the implementation of the
excessive deficit procedure, and the amended Council Directive 2011/85/EU on the budgetary frameworks of Member States are the
core elements of the reformed EU economic governance framework.
(
28
) OJ C, C/2025/647,. 10.2.2025, ELI:
http://data.europa.eu/eli/C/2025/647/oj
(
29
) Council Recommendation with a view to bringing an end to the situation of an excessive deficit in Romania, C/2025/5038.
(
30
) According to the Regulation., the required fiscal adjustment (in particular to put or keep the government debt ratio on a plausible
downward path by the end of the adjustment period or keep it at prudent levels below 60% of GDP; and to bring or maintain the
deficit below 3% of GDP over the medium term) should be completed in four years but may be extended over a period to up seven
years if the Member State commits to a relevant set of reforms and investments. The adjustment period of Romaniahas been
extended to seven years based on the set of reforms and investments laid out in detail in Annex II of the Council recommendation
endorsing the plan of Romania
(
31
)
European Commission (2025) ‘Debt Sustainability Monitor 2024,’
European Economy-Institutional Papers
306.
29
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Developments in government deficit and debt
Table A1.1:
General government balance and debt
Variables
1
2
2024
% GDP
% GDP
Outturn
-9.3
54.8
APR
n.a.
n.a.
2025
COM
-8.6
59.4
APR
n.a.
n.a.
2026
COM
-8.4
63.3
General government balance
General government gross debt
Source:
Commission Spring 2025 Forecast (COM)
Romania’s government deficit amounted to 9.3% of GDP in 2024. Based on the Commission’s Spring
2025 Forecast, it is projected to decrease to 8.6% of GDP in 2025. The government debt-to-GDP ratio
amounted to 54.8% of GDP at the end of 2024 and, according to the Commission, it is projected to
increase to 59.4% of GDP end-2025.
Although Romania’s public debt remains relatively moderate
compared to the EU average, it has seen in recent years a very steep increase, due to persistent large
deficits driven by discretionary spending, including high wage and pension hikes in 2023 and 2024,
elevated domestically financed public investment, and higher financing costs. The debt ratio is projected
to increase further in 2025.
Developments in net expenditure
The net expenditure(
32
) growth of Romania in 2025 is forecast by the Commission(
33
) to be above the
recommended maximum, corresponding to a deviation of 0.1% of GDP. Considering 2024 and 2025
together, the cumulative growth rate of net expenditure is also projected to be above the recommended
maximum cumulative growth rate, corresponding to a deviation of 1.7% of GDP. This high net expenditure
growth is due to high growth in government current expenditure in 2024 (+18.7% relative to 2023), in
particular on the public sector wage bill (+21.5% relative to 2023) and social transfers including pensions
(+19.5% relative to 2023). The cumulative deviation in 2024 and 2025 is above the 0.6% of GDP
threshold.
Table A1.2:
Net expenditure growth
Annual
REC
2024
2025
2026
Cumulative*
COM
REC
Growth rates
19.9%
n.a.
5.4%
20.2%
8.1%
26.0%
APR
n.a.
n.a.
n.a.
COM
n.a.
26.4%
36.6%
APR
n.a.
n.a.
n.a.
n.a.
5.1%
4.9%
Source:
Council Recommendation to correct the excessive deficit in Romania, Commission's calculation based on Commission
Spring 2025 Forecast (COM)
(
32
) Net expenditure is defined in Article 2(2) of Regulation (EU) 2024/1263 as government expenditure net of (i) interest expenditure,
(ii) discretionary revenue measures, (iii) expenditure on programmes of the Union fully matched by revenue from Union funds, (iv)
national expenditure on co-financing of programmes funded by the Union, (v) cyclical elements of unemployment benefit
expenditure, and (vi) one-off and other temporary measures.
(
33
) European Commission Spring 2025 Forecast,
European Economy-Institutional paper 318,
May 2025.
30
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General government defence expenditure amounted to 1.9% of GDP in 2021, 1.8% of GDP in 2022 and
1.7% of GDP in 2023. According to the Commission 2025 Spring Forecast, expenditure on defence is
projected to amount to 1.7% of GDP in 2024 and remain at the same level in 2025.
Table A1.3:
Net expenditure (outturn and forecasts), annual and cumulated deviations vis-à-vis the
recommendation
Variables
Total expenditure
Interest expenditure
3
Cyclical unemployment expenditure
4
Expenditure funded by transfers from the EU
5
National co-financing of EU programmes
6
One-off expenditure (levels, excl. EU funded)
Net nationally financed primary expenditure (before
7=1-2-3-4-5-6
discretionary revenue measures, DRM)
8
Change in net nationally financed primary expenditure (before DRM)
9
DRM (excl. one-off revenue, incremental impact)
Change in net nationally financed primary expenditure
10=8-9
(after DRM)
11
Outturn / forecast net expenditure growth
12
Recommended net expenditure growth*
13=(11-12) x 7
Annual deviation
14 (cumulated from 13)
Cumulated deviation
15=13/17
Annual balance
16=14/17
Cumulated balance
17
p.m. Nominal GDP
1
2
bn NAC
bn NAC
bn NAC
bn NAC
bn NAC
bn NAC
bn NAC
bn NAC
bn NAC
bn NAC
% change
% change
bn NAC
bn NAC
% GDP
% GDP
bn NAC
2023
Outturn
652.0
30.6
0.0
54.4
8.1
0.0
558.8
2024
Outturn
764.8
41.1
0.0
28.9
8.8
0.0
686.0
127.2
16.1
111.1
19.88%
14.3%
31.2
31.2
1.8
1.8
1760.1
2025
COM
819.9
48.5
0.0
31.0
6.2
0.0
734.3
48.3
11.3
37.0
5.4%
5.1%
2.0
33.2
0.1
1.7
1900.0
2026
COM
881.4
57.2
0.0
33.2
6.2
0.0
784.9
50.6
-9.0
59.6
8.1%
4.9%
23.6
56.8
1.1
2.8
2054.7
1604.6
* The growth rate for 2024 is not a recommendation but serves to anchor the base, as the latest year with outturn data when
setting the net expenditure path is year 2023.
Source:
Commission Spring 2025 Forecast and Commission's calculation
Table A1.4:
Defence expenditure
1
2
Total defence expenditure
of which: gross fixed capital formation
% GDP
% GDP
2021
1.9
0.4
2022
1.8
0.4
2023
1.7
0.3
2024
1.7
0.3
2025
1.7
0.3
2026
1.7
0.3
Source:
Eurostat (COFOG), Commission Spring 2025 Forecast and Commission's calculation
31
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Table A1.5:
Macroeconomic developments and forecasts
Variables
Real GDP
2
Private consumption
3
Government consumption expenditure
4
Gross fixed capital formation
5
Exports of goods and services
6
Imports of goods and services
Contributions to real GDP growth
7
- Final domestic demand
8
- Change in inventories
9
- Net exports
10
Output gap
11
Employment
12
Unemployment rate
13
Labour productivity
14
HICP
15
GDP deflator
16
Compensation of employees per head
Net lending/borrowing vis-à-vis the rest of the
17
world
Source:
Commission Spring 2025 Forecast (COM)
1=7+8+9
2024
% change
% change
% change
% change
% change
% change
pps
pps
pps
% pot GDP
% change
%
% change
% change
% change
% change
% GDP
Outturn
0.8
6.0
0.7
-3.3
-3.1
3.8
2.9
0.8
-2.9
-1.7
1.8
5.4
-1.0
5.8
8.8
16.6
-7.2
APR
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2025
COM
1.4
2.0
0.6
2.3
1.8
2.9
2.0
0.0
-0.6
-2.0
0.6
5.3
0.8
5.1
6.5
8.9
-6.5
APR
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2026
COM
2.2
2.3
1.0
3.6
2.8
3.2
2.6
0.0
-0.3
-1.5
0.7
5.2
1.5
3.9
5.8
6.9
-5.5
Table A1.6:
General government budgetary position
Variables (% GDP)
1=2+3+4+5
2
3
4
5
8=9+16
9
10
11
12
13
14
15
16
18=1-8
19=1-9
20
21
22=20-21
23=22+16
2024
Outturn
34.1
11.0
6.0
11.8
5.4
43.5
41.1
11.2
6.2
13.6
0.8
5.7
3.5
2.3
-9.3
-7.0
-8.8
0.0
-8.8
-6.4
APR
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2025
COM
34.6
11.1
6.1
12.0
5.4
43.2
40.6
10.8
6.1
13.5
0.8
6.1
3.4
2.6
-8.6
-6.0
-7.9
0.0
-7.9
-5.4
APR
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2026
COM
34.5
11.0
6.2
12.0
5.2
42.9
40.1
10.5
6.0
13.1
0.8
6.5
3.3
2.8
-8.4
-5.6
-7.9
0.0
-7.9
-5.1
Revenue
of which:
- Taxes on production and imports
- Current taxes on income, wealth, etc.
- Social contributions
- Other (residual)
Expenditure
of which:
- Primary expenditure
of which:
- Compensation of employees
- Intermediate consumption
- Social payments
- Subsidies
- Gross fixed capital formation
- Other
- Interest expenditure
General government balance
Primary balance
Cyclically adjusted balance
One-offs
Structural balance
Structural primary balance
Source:
Commission Spring 2025 Forecast (COM)
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Table A1.7:
Debt developments
Variables
1
2=3+4+8
3
4≈5+6+7
5
6
7
8
Gross debt ratio* (% of GDP)
Change in the ratio (pps. of GDP)
Contributions**
Primary balance
'Snow-ball' effect
of which:
- Interest expenditure
- Real growth effect
- Inflation effect
'Stock-flow' adjustment
2024
Outturn
54.8
5.9
7.0
-2.0
2.3
-0.4
-4.0
0.9
2025
APR
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
COM
59.4
4.6
6.0
-1.5
2.6
-0.7
-3.3
0.1
APR
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2026
COM
63.3
3.9
5.6
-1.7
2.8
-1.2
-3.2
0.0
* End of period.
** The 'snow-ball' effect captures the impact of interest expenditure on accumulated general government debt, as well as the
impact of real GDP growth and inflation on the general government debt-to-GDP ratio (through the denominator). The stock-flow
adjustment includes differences in cash and accrual accounting (including leads and lags in Recovery and Resilience Facility grant
disbursements), accumulation of financial assets, and valuation and other residual effects.
Source:
Commission Spring 2025 Forecast and Commission's calculation (COM)
Implementation of the set of reforms and investments underpinning the
extension of the adjustment period
Table A1.8 includes information on progress towards implementation of the set of reforms and
investments underpinning the extension of the adjustment period that Romania committed to deliver in its
medium-term fiscal-structural plan as endorsed by the Council.
Among the reforms and investments underpinning an extension that were due by the 30 April 2025, some
were not implemented such as the key reform of the review of the tax system. (for details, see Table
A1.8).
The set of reforms and investments underpinning the extension of the adjustment period is composed
primarily of commitments from the RRP, supplemented by a few new measures. The special pension
reform, anchored in RRP milestone 215, aims to realign special pensions with the contributory principle by
tightening eligibility, recalculating benefits based on contributions and seniority and taxing the non-
contributory portion of large pensions. The tax framework review builds on RRP commitments to overhaul
corporate income tax, personal income tax, social contributions, value added tax, excise duties and
property taxation with the objective of delivering at least 1.3% of GDP in additional revenue in 2025 and
a permanent impact of 1.7% of GDP once fully in force by the end Q1 2025. The microenterprise tax
reform, aligned with NRRP milestone 206, gradually reduces the turnover threshold for microenterprises
from EUR 500 000 at end-2024 to EUR 250 000 and then to EUR 100 000 from 1 January 2026. The tax
administration reform is designed to raise 0.5% of GDP by 2026 through rollout of an early warning tool
to detect VAT fraud in intra-community, transit and domestic transactions and strengthened oversight of
tax planning mechanisms for large taxpayers.
While the RRP milestone on the special pension reform was initially deemed as satisfactorily fulfilled after
an October 2023 reform (which entered into force on 1 January 2024), the Romanian Constitutional Court
struck down a key provision on progressive taxation of high special pensions on 19 December 2024. As a
result, Milestone 215 remains unfulfilled. The authorities did not submit the preparatory report on the tax
reform and this reform is delayed relative to the timeline included in the MTFSP. Likewise, Romania has
not reported on two measures linked to the tax administration reform that were due in Q1 2025, namely
an early‐warning tool to detect VAT fraud in intra-community, transit and domestic transactions, and
strengthen oversight of the tax planning mechanism for large taxpayers. The amendment to the
33
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microenterprise tax regime did enter into force at end-December 2024, lowering the annual turnover
threshold from EUR 500 000 to EUR 250 000 and paving the way for a further cut to EUR 100 000 from
1 January 2026.
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Table A1.8:
Implementation of reforms and investment underpinning the extension
Measure
Key steps
Recommended implementation
date
Q3 2024
Status
Pension reform (Existing RRP
measure: C8.R,0.M214)
The normative act reforming the general pension
system entered into force on 1 st September 2024.
Completed*
Entry into force of a normative act revising
Special pension reform (Existing
specialpensions to align them with the
RRP measure: C8.R6,0.M215)
contributory principle
Minimum wage reform (Adding to
RRP milestone C13.R5,0.M392)
Q3 2024
Not completed
1
Entry into force of the act regulating the new minimum
Q1 2025
wage setting system.
Completed**
Step 1: Adoption and entry into force of the new legal
framework for the remuneration of public officials,
ensuring the public wage bill remains, as a share of
GDP, in line or below that included in the projections of
Public sector wage reform (Adding
When the government deficit is below
the medium-term fiscal plan.
to RRP milestone C14.R4,0.M420)
5 % of GDP:
Step 2: Rigorous adherence to the projections of the
MTFSP regarding the public wage bill as a share of GDP,
for all the years covered by the plan.
Preparation and entry into force by the end of Q1-2025
Microenterprise tax reform (Adding
of a law amending the taxation regime of
to RRP milestone and target
Q1 2025
microenterprises, to bring it in line with milestone 206
C8.R4,0.M206)
of the RRP.
Step 1: Preparation of a Report, building on the World
Bank report on taxation (prepared under RRP milestone
205) establishing two scenarios for the tax reform, with Q1 2025
fully specified measures. Measures should cover all
areas of taxation and social contributions.
Step 2: Government adoption of memorandum including
specific tax measures based on the above-mentioned
report. Measures should be in line with milestones 207, Q1 2025
208, and 237 of the RRP, and objective 1 of the tax
reform.
Step 3: Government organises a public debate on the
Q1 2025
amendments to the Fiscal Code.
Step 4: Implementation and entry into force of the
Q1 2025
measures on 1 April 2025 at the latest.
Step 5: As referenced in milestone 237 of the RRP,
developing an IT system to implement the automated
property assessment model for real estate taxation,
supporting the new market value-based approach, and
operationalising a specialized department with
respon sibilities in the field of property taxation.
Step 1: Implementation of an early detection
mechanism for VAT fraud associated with intra-
community purchases, transits, and domestic
transactions.*
Step 2: Implementation of anti-fraud modules for
analysing and identifying transactions suspected of
carousel fraud (CARUSEL, INDFISC, TRANSPRISC,
COMRISC, and RORISC).
Completed*
Not completed
Not completed
Review of the tax framework
(Adding to RRP milestones and
targets C8.R4,0.M207,
C8.R4,0.M208, C8.I7,0.M237)
Not completed
Not completed
Q4 2025
Q1 2025
Q2 2025
Step 3: Completion of 7 digitalisation projects,
including e-Invoice, SAF-T, e-AMEF, e-DU, e-VAT,
DAC-7, and CESOP.
Tax administration reform [Adding
to RRP milestones and targets
Step 4: Strengthen oversight of the tax planning
C8.I2,0.M225 C8.I2,0.M226,
mechanism for large taxpayers and the extension of
C8.I2,0.M226a
this mechanism to medium-sized taxpayers after the
C8.I3,0.M227]
implementation of APIC.
Q2 2025
Q1 2025
(Continued on the next page)
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Table (continued)
Tax administration reform [Adding
to RRP milestones and targets
C8.I2,0.M225 C8.I2,0.M226,
C8.I2,0.M226a
C8.I3,0.M227]
Step 5: Integrating and consolidating internal
data bases; developing a new system based on the
360-degree profiling concept of taxpayers; ensuring
interoperability with the information systems of state
institutions.
Q4 2025
Step 6: Implementation of a modern collection
mechanism that provides taxpayers with the option
to choose recurring payment of declared tax liabilities.
Step 7: Establishment and operationalisation of
a specialised structure comprised of experts in IT,
econometrics, and financial analysis to quantification
risks and tax gaps.
Step 1: Create a database and establish a control
mechanism for increases exceeding 20 % compared to
the average costs of public institutions.
Q4 2026
Q4 2025
Q4 2025
Step 2: Conduct yearly thematic expenditure reviews
and apply conclusions and recommendations in the
budget planning process, in line with the established
annual schedule
Yearly
Step 3: Expand the categories of goods and services
that will be procured centrally, focusing on priority
Restructuring the Public Spending sectors with high expenditure levels. Increase the share
System/ Spending Reviews (Adding of procurement procedures awarded by ONAC, relative Gradually from Q4 2024 to Q2 2030
to RRP milestones C8.R3.M202, to all procurement procedures awarded by all
C8.I5,0.M234, C13. R5,0.M392, and con tracting authorities in Romania, by an average of
C14.R1,0.T403
0,25 % per year over the next seven years.
Step 4: Operationalise the specialised structure within
the Ministry of Finance to monitor public expenditure
systems using performance indicators and participate in Q4 2025
specialised training courses organised with the support
of the World Bank
Step 5: Establish a legal framework for implementing
performance indicators at the level of central and local Q4 2025
public authorities.
Business Financing Reform
Reform of the Institutional Framework for Allocating
Funds to Support the Business Environment-Private
Equity Investment Fund for SME Support.
Q2 2026
Step 1: Conducting a diagnostic analysis of the
operational expenditure system, the revenue system,
and the mechanisms for updating fees, as well as the
subsidy system for economic operators.
Reform of the Expenditure System
for State-Owned Enterprises
Step 2: Establishing the regulatory framework to
enhance the operational expenditure system, improve
the management of public assets, introduce
expendi ture rules, and reduce dependence on the
general government budget by Q4 2025.
Q3 2025
Q4 2025
The progress of each backward-looking key step (i.e., those scheduled for completion by 30 April 2025) is classified as either
‘completed’ or ‘not completed’. The status of forward-looking
key steps not yet completed remains blank, as these will be
assessed by the Commission in future APRs.
* These measures are included
in Romania’s RRP and have been assessed as fulfilled as part of a payment request under the RRF.
** This measure corresponds to milestone 392 of Romania’s RRP, whose assessment is still pending in the context of the fourth
payment request under the RRF and the table does not prejudge its assessment.
(1) This measure corresponds to milestone 215 of Romania’s RRP, which was initially deemed as satisfactorily fulfilled, but
subsequently reversed.
Source:
Council Recommendation endorsing the plan of Romania
and Commission’s assessment.
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Cost of ageing
Total age-related spending in Romania is projected to rise from about 17% of GDP in 2024 to
around 18% in 2040 and to decline to 16% in 2070 (see Table
A1.9). Age-related expenditure
would be the second lowest in the EU in 2070, at nearly 10 pps below the average spending level. The
small overall decline by 2070 is due to changes in pension expenditure, with spending on healthcare and
long-term care expected to rise.
Public pension spending is projected to be broadly stable after an initial increase and to
eventually decline as of the 2060s.
Because of an expected increase in future years, pension
expenditure would be 1 pp of GDP higher in 2040 compared to 2024. In the longer term, spending would
start declining, though, decreasing by 1.6 pps of GDP by 2070 as compared with the 2024 level.
Public healthcare expenditure is projected at 4.5% of GDP in 2024 (below the EU average of
6.6%) and is expected to increase by 0.5 pps by 2040 and by a further 0.2 pps by 2070 (
34
).
Public expenditure on long-term care is projected at 0.4% of GDP in 2024 (well below the EU average of
1.7%) and is expected to increase by 0.2 pps of GDP by 2040 and by a further 0.2 pps of GDP by 2070.
The projected increase is due to an ageing population but is relatively low due to underdeveloped long-
term care services (
35
).
Table A1.9:
Projected change in age-related expenditure in 2024-2040 and 2024-2070
age-related
expenditure
2024 (% GDP)
RO
EU
16.6
24.3
age-related
expenditure
2024 (% GDP)
RO
EU
16.6
24.3
change in 2024-2040 (pps GDP) due to:
pensions
1.0
0.5
healthcare
0.5
0.3
long-term care
0.2
0.4
education
0.0
-0.3
total
1.7
0.9
age-related
expenditure
2040 (%GDP)
18.3
25.2
age-related
expenditure
2070 (%GDP)
-0.5
1.3
16.0
25.6
RO
EU
RO
EU
change in 2024-2070 (pps GDP) due to:
pensions
-1.6
0.2
healthcare
0.7
0.6
long-term care
0.4
0.8
education
0.0
-0.4
total
Source:
2024 Ageing Report (EC/EPC).
National fiscal framework
The Romanian Fiscal Council (RFC) is a medium-sized independent fiscal institution with a
fairly broad mandate but reports difficulties in recruiting staff.
Its members have long mandates
of 9 years with no staggering, increasing the demands on a non-partisan nomination procedure. At the
Secretariat, less than half of the 20 available positions have been filled, indicating severe recruitment
problems, possibly linked to relatively low pay level. Its autonomy is further restricted by the requirement
that staff must be Romanian citizens and that payments have to be approved by another institution. It
reports high visibility in media, despite having given no press conferences or having participated in no
parliamentary hearings in 2022. The policy dialogue with the government could also be further developed.
Despite ongoing efforts, including through the recovery and resilience plan, the management
of public investment in Romania remains weak across the entire investment cycle.
Long-term
investment planning is carried out mainly by line ministries with limited coordination across sectors and
(
34
) Key performance characteristics, recent reforms and investments of the Romanian healthcare system are discussed in Annex 14
‘Health and health systems’.
(
35
) The adequacy and quality of the Romanian long-term care system are covered in Annex 11
‘Social policies’.
37
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limited involvement by the Ministry of Finance. A long-term
development strategy (‘Romania 2030’)
was
produced in 2018. Although it identifies key objectives at the national level, it is insufficiently aligned with
sectoral strategies and EU-financed priorities which represent a significant portion of public investment.
Yet, in 2022, a new management tool for developing, monitoring and reporting budget programs across
line ministries was introduced, as well as improvements to the prioritisation of large investment projects
(
36
). At the same time, mechanisms to support funding availability beyond the annual budget year, such as
a mechanism for appropriations beyond the budget year and restrictions in diverting funds to other
purposes, are missing. Ex-post reviews on the effectiveness and efficiency of investment projects are rare
and not systematically integrated into future planning.
The Romanian Ministry of Finance has integrated an analysis of the potential macro-fiscal
impacts of a set of future natural catastrophes in its 2022-2024 Fiscal Budgetary Strategy.
This analysis presents findings from model-based simulations of the potential economic and fiscal impact
of these future events, including possible effects on the budget deficit and public debt. This assessment
constitutes a positive step towards incorporating climate risks into fiscal planning.
Table A1.10:Fiscal
Governance Database Indicators
2023
Country Fiscal Rule Strength Index (C-FRSI)
Medium-Term Budgetary Framework Index (MTBFI)
Romania
19.01
0.80
EU Average
14.52
0.73
The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level based
on i) the legal base, ii) how binding the rule is, iii) monitoring bodies, iv) correction mechanisms, and v) resilience to shocks. The
Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on i) coverage of the
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength.
Source:
Fiscal Governance Database
(
36
) In the Recovery and Resilience Plan, measures R.3 [200]: Government Decision no. 467 as published in the Official Journal no. 368
of April 14 2022 and, respectively, measure R.3 [199]: the Emergency Government Decision no. 187/2022 as published in the
Official Journal no. 1271/29.12.2022.
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ANNEX 2: TAXATION
This annex provides an indicator-based
overview of Romania’s tax system.
It includes
information on: (i) the tax mix; (ii) competitiveness
and fairness aspects of the tax system; and (iii)
tax collection and compliance.
Romania collects relatively low tax revenues
as a percentage of GDP across the board.
Romania’s total tax revenue as a percentage of
GDP (26.2%) was significantly below the EU
average (39%), continuing a trend from previous
years. This is particularly true for labour and
capital taxes, while the figure for consumption
taxes is closer to the EU average. Romania has a
high fiscal deficit (6.6% of GDP in 2023), which
highlights the need for a combination of
expenditure cuts and revenue increases that
support growth. Recurrent property tax revenue as
a percentage of GDP (0.4%) is more than 50%
below the EU average (0.9%). Therefore, there is
scope to increase revenue from recurrent property
taxation, which is one of the least detrimental to
economic growth. Revenue from personal income
taxes as a percentage of GDP is only 27% of the
EU average and presents an opportunity for
greater use, given the fiscal and budgetary
situation. Environmental tax revenues were slightly
above the EU average, at 2.2% of GDP in 2023,
compared with 2.0%. This figure relies heavily on
energy taxation., while resource and pollution
taxes are underused, and transport taxes are well
below the EU average. Romania applies emission
charges (mainly on air and water quality), user
charges (on hunting and fishing and mineral
extraction) and a volumetric charge on water
abstraction and disposal.
Graph A2.1:
Tax revenue shares in 2023
Tax revenue shares in 2023, Romania (outer ring)
and EU (inner ring)
18.3
Romania has low taxation of corporate
income and offers special tax arrangements
and incentives for businesses.
Corporate
income tax is taxed at a flat rate of 16%, which is
lower than the EU average, with the effective tax
rate consistently remaining at 16.3% from 2021
to 2023. In addition, Romania offers a special tax
scheme for microenterprises, which has recently
been reformed to reduce its scope in 2025 and
2026 in line with the recovery and resilience plan
(RRP)). Tax exemptions for corporations are
available in six trade zones to help attract
investment. Romania also offers tax incentives for
R&D activities such as deductions of additional
qualifying expenses from taxable income,
accelerated depreciation, tax credits (up to 20%)
and exemptions (for up to 10 years) from
corporate income tax on profits from R&D
activities like patents. There are also green tax
incentives for investment in renewable energy
sources. Despite these incentives, Romania had the
lowest R&D intensity in the EU in 2023 (0.52% of
GDP).
Graph A2.2:
Tax wedge for single and second
earners, % of total labour costs, 2024
Tax wedge, % of total labour costs
50
45
40
35
30
25
37.4
38.3
38.3
38.3
38.3
20
50
100
150
Earnings as % of the average wage
Single earner - RO
Second earner - RO
Single earner - EU average
Second earner - EU average
The tax wedge for second earners assumes a first earner at
100% of the average wage and no children. For the full
methodology, see OECD, 2016, Taxing Wages 2014-2015.
Source:
European Commission
21.9
51.2
26.9
37.3
44.4
Taxes on labour
Taxes on consumption
Taxes on capital
In 2024, the labour tax wedge in Romania is
higher than the EU average for low-income
workers, and lower than the EU average for
high-income workers.
This high tax wedge for
low-income earners provides fewer incentives for
lower-skilled workers to participate in the labour
force (
37
). The Gini-coefficient reduction after taxes
Source:
Taxation Trends Data, DG TAXUD
(
37
) The tax wedge is defined as the sum of personal income
taxes and employee and employer social-security
contributions net of family allowances, expressed as a
39
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and social transfers in Romania in 2023 was 6.3
points, below the EU average (7.7 points),
indicating that the flat rate system is relatively
ineffective in terms of its redistributive capacity
and reducing income inequality. (
38
) The relatively
lower tax wedge on higher incomes favoured a
rapid convergence of GDP growth rates, resulting
from higher labour force participation and better
incentives to improve levels of education in the
middle class. (
39
) There are no gift, inheritance
(except in very specific circumstances) or wealth
taxes levied in Romania. However, in a positive
step towards reducing Romania’s fiscal deficit,
sectoral personal income tax exemptions in the IT,
construction, agriculture and food sectors have
also been removed with effect from January
2025. EUROMOD simulations (
40
) estimate that
this will raise EUR 5 billion in revenue. It is
estimated that these reforms will have negligible
effects on progressivity.
The VAT gap in Romania has consistently
been the highest in the EU, standing at
33.7%
in
2023.
This
highlights
the
administration’s ineffectiveness
in addressing
compliance issues and the informal economy.
However, through digitalisation measures outlined
in the RRP, Romania aims to reduce the VAT gap
by 5% by 2026. There is still an opportunity to use
EU funding to invest in real-time VAT reporting
tools to further reduce the VAT gap. It is clear that
the measures implemented as part of the reform
of the tax administration through digitalisation
have already contributed to a reduction in
outstanding tax arrears from 2021 to 2022 (6.1%)
Another indicator of the effectiveness of the
tax administration is how it handles dispute
percentage of total labour costs (the sum of the gross wage
and social-security contributions paid by the employer).
(
38
) EUROMOD simulations suggests that increasing the
progressivity of the PIT system by introducing three tax rates
(6% up for incomes up to 33% of the average taxable
income, 12% for incomes up to the average taxable income
and 18% for incomes above) would generate almost EUR 12
billion of additional tax revenue. From a distributional point
of view such a reform is progressive, with richer households
mostly paying for this reform.
(
39
)
Sistemul fiscal din România: prosperitate, convergență și
sustenabilitate fiscal-bugetară” at
Studiul „Sistemul fiscal
din România: prosperitate, convergență și sustenabilitate
fiscal-bugetară” -
Confederația Patronală Concordia
(
40
) Estimations were performed by the European Commission,
Joint Research Centre, with the
EUROMOD
tax-benefit
microsimulation model.
resolution and its compliance with standards
for the exchange of information between tax
administrations.
One way in which tax
administrations resolve disputes is by participating
in mutual agreement procedures (MAPs). The
number of MAPs conducted in a Member State is
linked to the size and structure of its economy, but
it may also serve as indicator of the efficiency of
its tax system. Romania had no open MAP cases at
the end of 2023 but reported rejecting 25 cases
during the year, which is an unusually high
number. What is more, in the context of
information exchanges between tax authorities,
Romania
has
received
significant
recommendations from the OECD peer review
process on the effectiveness of its Directive on
Administrative Cooperation 2/Common Reporting
Standard exchanges of financial account
information, including ensuring compliance by
reporting financial institutions. The review also
called on Romania to ensure better/sufficient
compliance with data security standards in
taxation.
The reform of the National Agency for Fiscal
Administration through digitalisation is
essential for improving the fiscal situation.
Several key RRP milestones remain to be achieved
in 2025. The launch of a fully operational
electronic risk register and e-invoicing system and
the improvement of the information exchange
platform should contribute to better performance
of the tax administration.
40
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PRODUCTIVITY
ANNEX 3: INNOVATION TO BUSINESS
Romania’s
research
and
innovation
performance remains weak, and the gap with
the EU is widening due to significant
underinvestment, skills shortages and
governance deficiencies.
Romania is classified
as an ‘emerging innovator’ and has the weakest
innovation performance in the European Union, at
34% of the EU average according to the 2024
European Innovation Scoreboard (
41
). Its innovation
rate is also below the average for emerging
innovators. In 2023, Romania’s R&D intensity
stood at just 0.52% of GDP compared to the EU
average of 2.24%, the lowest in the EU and far
behind Romania’s own target of reaching 2% of
GDP by 2027 (
42
). Poor overall R&I performance
exacerbates existing regional disparities (see
also
Annex 17: Competitive regions),
and the system
suffers from governance deficiencies with no
single agency responsible for the overall
management or coordination of innovation policy.
Romania’s digitalisation of businesses has
improved considerably over the past year but
remains, on most indicators, below the EU
average. Its contribution to the Digital Decade
targets can be further improved.
made some progress towards enhancing the
quality of its research system, as evidenced by a
strong 33.8 percentage point increase in the
number of scientific publications among the top
10% most cited since 2017, yet the country
remains at the bottom of the EU classification (
44
).
Substantial underfunding, coupled with a lack of
multiannual budgeting and an inadequately
developed system for performance-based funding,
has created challenging conditions for research
and innovation.
Graph A3.1:
R&D intensity (GERD as a percentage
of GDP)
3
% of GDP
2
1
0
2010
2015
2017
2019
2020
2022
2023
EU
RO
Source:
Eurostat, 2024
Science and innovative ecosystems
Despite some improvement, Romania’s public
research base remains underdeveloped due
to underinvestment and a fragmented
funding system.
Public R&D expenditure has
been declining, with 2023 figures showing it at
only 0.2% of GDP, merely a quarter of the EU
average of 0.72%. This situation, exacerbated by a
fragmented public research system, has resulted
in a weak foundation for public science (
43
).
Notwithstanding these challenges, Romania has
(
41
) 2024 European Innovation Scoreboard, country profile:
Romania
https://ec.europa.eu/assets/rtd/eis/2024/ec_rtd_eis-
country-profile-ro.pdf.
eThe scoreboard provides a
comparative analysis of innovation performance in EU
countries, including the relative strengths and weaknesses of
their national innovation systems (also compared to the EU
average).
( )
Government of Romania (2022), Strategia Națională de
Cercetare, Inovare
și Specializare Inteligentă 2022-2027.
42
The
government’s renewed commitment to
increase public R&D expenditure to 1% of GDP by
2027(
45
) is a positive development towards
remedying the situation, as are plans to introduce
a biannual funding mechanism that includes
regular evaluation. The implementation of these
measures will require close monitoring.
Business innovation
Innovation performance is weak due to low
private investment, inefficient public support
policies and limited collaboration between
science and business. It is crucial to address
these weaknesses to sustain current strong
economic growth, driven mainly by foreign
direct investments (
46
).
Business enterprise
(
44
) Science, Research and Innovation Performance of the EU,
2024.
(
45
) National strategy for research, innovation and intelligent
specialisation 2022-2027 and National RDI plan 2022-
2027- PNCDI IV.
(
46
) ROINNOVATE: Building Blocks for an Innovation Agency in
Romania, World Bank, 2024.
(
43
) European Commission (2022): PSF Country review of the
Romanian Research and Innovation System.
41
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3035442_0043.png
expenditure on R&D (BERD) has stagnated in
recent years; in 2023 it stood at only 0.32% of
GDP, approximately one fifth of the EU average of
1.49%. The situation is particularly critical for
SMEs, which invest very little on R&D (0.05% in
2021 vs the EU average of 0.38%). At the same
time, foreign-controlled enterprises contribute
significantly to value added (20.5% vs 13.3% for
the EU), and net foreign direct investment flows
into Romania largely exceed the EU average (3.1%
compared to 1.9%). As a result of low private
investment and inefficient public support policies,
Romanian enterprises innovate less and grow
more slowly than their competitors in other EU
countries, and the number of high-growth
enterprises is low and decreasing (
47
).
Graph A3.2:
Proportion of high-growth enterprises
14
12
targeting firm innovation, amounting to
EUR 74 million in total (
50
). To address this,
Romania plans to spend around EUR 476.3 million
annually on private-sector innovation and public-
private collaboration from 2023 to 2028 (
51
). In
addition, Romania recently amended its R&D tax
allowance scheme to make it more effective,
although the use of tax incentives remains
negligible (0.008% of GDP compared to 0.102 in
the EU in 2020) (
52
).
Low business R&D translates into a low
innovation output level, exacerbated by weak
collaboration between science and industry
and ineffective technology transfer and
commercialisation programmes.
Patenting
activity remains very low and has stagnated over
the years (
53
). In 2021, Romania submitted
2.79 patent applications to the European Patent
Office (EPO) per million inhabitants
–
the lowest in
the EU. The EU average was 147.
Graph A3.3:
Share of enterprises with innovation
activities
10
%
8
6
4
2
0
Bulgaria Croatia Hungary Poland Romania Slovakia
2018
2019
2020
EU27
90
70
50
%
30
Source:
Community Innovation Survey, 2022
Romania has by far the lowest share of innovative
enterprises in the EU. From 2020 to 2022, only
8.8% of Romanian firms submitted product and
process innovations compared to the EU average
of 51.4% (
48
). Romania has a large pool of
companies capable of innovation but not currently
engaging in it, as evidenced by a high percentage
of non-innovators with a potential to innovate, at
27% compared to the EU average of 17.8% (
49
).
A low level of private investment is
exacerbated by the lack of robust
government support.
Business expenditure on
R&D (BERD) financed by the public sector as a
percentage of GDP has stagnated and is one of
the lowest in the EU. In its 2014-2020 policy mix,
Romania had only four instruments specifically
(
47
) Eurostat, 2024, High-growth enterprises and related
employment by NACE Rev. 2 activity,
Statistics | Eurostat.
(
48
) Community Innovation Survey 2022,
https://ec.europa.eu/eurostat/statistics-
explained/index.php?title=Community_Innovation_Survey_20
22_-_key_indicators.
(
49
) European Innovation Scoreboard, 2024.
10
-10
Small
Medium
Large
Source:
Community Innovation Survey, 2022
While public-private co-publications as a
percentage of total publications have risen over
the past decade, they remain at the lower end in
the EU and below the EU average, at 6.2%
(
50
) Increasing Competitive Funding at the System Level and
Predictability of Funding Streams at the Institutional Level,
Functional Analysis with Research Support Instruments, and
Methodology for Assessing the Policy Mix and Functional
Analysis, World Bank, 2023.
(
51
) ROINNOVATE: Building Blocks for an Innovation Agency in
Romania, World Bank, 2024.
(
52
) R&D tax incentives in Romania, OECD 2024,
https://stip.oecd.org/innotax/countries/Romania.
(
53
) Patent applications filed under the PCT per billion GDP (in
PPS
€) stood at 0.17 in 2020 (EU average
2.8), compared to
0.2 in 2012.
42
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3035442_0044.png
compared
to
7.7%
in
2023.
This
underperformance
can
be
attributed
to
deficiencies in the public science system, a lack of
incentives for public research institutions to
engage with industry, and limited capacity within
the business sector to exploit the knowledge
generated by scientific research. Few or no
national statistics are collected on licensing
activities and the creation of spin-offs from
Romanian universities and research institutes.
Data from the Community Innovation Survey
indicate that very few Romanian enterprises are
licensing in or purchasing intellectual property
rights, and Romania ranks last amongst the
surveyed countries. The main reasons for this are
underdeveloped support for technology transfer
offices and bureaucratic and regulatory obstacles
complicating the transfer of intellectual property
rights for researchers and entrepreneurs (
54
).
Although the recovery and resilience plan includes
measures to improve the regulatory framework for
incentivising collaboration, Romania must further
encourage universities and research institutes to
engage in entrepreneurial initiatives and foster
technology and knowledge transfer activities. By
joining the unitary patent system in September
2024, Romania took a significant step towards
increased patenting activity, allowing innovative
companies to more easily protect their inventions
and innovations across Europe.
Romania stands out as one of the few EU
countries that have yet to establish an
innovation agency to facilitate innovation,
support business creation and growth and
stimulate private R&D.
Efforts to bridge the gap
between research and business have been
hindered by a lack of innovation instruments,
underscoring the need for targeted measures to
foster innovative firm growth (
55
). In addition, there
are still significant regional and sub-regional
innovation performance disparities in Romania
(see
also Annex 17: Competitive regions).
Regional
development agencies responsible for regional
innovation policies and investment lack the
necessary skills and report a disconnect between
national-level innovation priorities and specific
(
54
) Strategic evaluation of the technology transfer and IPR
protection systems of Bulgaria, Croatia and Romania and
recommendations for their enhancement, Kaymaktchiyski, S.,
Battiston, A. and Jiménez, V.M. editor(s), Publications Office
of the European Union, 2024.
(
55
) Idem.
innovation opportunities and challenges prioritised
at the regional level (
56
). This disconnect is a
further barrier to achieving effective strategic
coordination of innovation support. To address
these challenges and promote a more coordinated
and effective approach to innovation support,
Romania is preparing to establish a national
innovation agency. The agency’s effectiveness in
driving
innovation
and
integrating
new
stakeholders into the Romanian research and
innovation system will be a key area of focus for
evaluation and assessment in the future.
Basic
digital
technology
uptake
is
progressing but remains below the EU
average, meaning further efforts will be
needed.
The percentage of enterprises with at
least a basic level of digital intensity has increased
considerably in Romania, jumping from 52.5% in
2022 to 69.1% in 2024, not far below the EU
average of 72.9%. The uptake of advanced digital
technologies also increased significantly. The AI
adoption rate more than doubled from 2023 to
2024 to just over 3%, which is still the lowest in
the EU and far below the EU average of 13.5%.
The adoption of cloud services has also increased
recently, reaching 15.5% in 2023, but remains well
below the EU average of 38.9%. Other indicators
confirm the need to sustain and intensify efforts in
this area, despite the positive trend.
Romania has put in place several measures
to support the digitalisation of enterprises.
Examples of ongoing measures include a
EUR 347.5 million investment under the recovery
and resilience plan to support the take-up of
digital technologies by SMEs by developing two
operational public platforms on legislative
transparency, de-bureaucratisation and procedural
simplification for business; financial instruments
and grants schemes under cohesion policy funds;
and the ‘start-up nation’ and ‘entrepreneur
woman’
programmes
to
stimulate
entrepreneurship, innovation and digitalisation.
Moreover, seven European Digital Innovation Hubs
are now operational and are actively supporting
SMEs in different regions, with the aim of
strengthening, coordinating and optimising digital
transformation efforts.
(
56
) Enhancing Strategic Planning and Innovation Services:
Supporting Romanian Regional Development Agencies,
OECD, 2023.
43
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Financing innovation
Romania’s local venture and growth capital
market remains underdeveloped, and funds
are not sufficient to meet the overall
financing needs of innovative companies.
Currently, private equity stands at just 0.04% of
GDP and venture capital at 0.01% of GDP, well
below the EU average. This gap implies limited
availability of investment for start-ups and high-
growth companies. Overall, Romania has an
insufficiently developed venture capital ecosystem.
This is partly due to the relatively small size of
institutional investors and their investment
allocation (see also annex 5 on access to finance).
Further development and optimisation of
business support infrastructures, including
incubators, accelerators, clusters, and
technological and industrial parks, remains a
necessity.
The availability and efficient use of
these resources are important for supporting the
growth and resilience of startups, and creating a
competitive business environment that is
sustainable in the long term.
Romania’s recovery and resilience plan outlines
various reform and investment measures aimed at
improving the governance of the R&I system,
enhancing the appeal of research careers,
attracting international talent to the sector and
creating centres of excellence. A new law on the
status of staff working in the areas of research,
development and innovation was adopted in 2024,
aiming to create a better environment for human
resources in the public research system and to
increase the attractiveness of research careers (
58
).
While entrepreneurship education is an emerging
field in Romania, the strategic planning is missing,
and there is room for improved access in higher
education and better opportunities for practical
learning.
Innovative talent
The shortage of skilled workers negatively
affects Romania’s innovation and research
capacity.
The number of researchers employed in
the public sector in Romania (measured in full-
time equivalents) has remained stagnant at 1.6
per 1 000 population since 2022, considerably
below the EU average of 4.2 and the poorest
result of all EU Member States. Additionally,
Romania has seen a 23.2 percentage point decline
in new doctorate graduates since 2017, and the
number of new graduates in science and
engineering has stagnated, negatively impacting
the nation’s innovation potential. This is
compounded by the lowest percentage in the EU of
population aged 25-34 who have completed
tertiary education. Furthermore, researchers in
Romania are hindered by subpar working
conditions and limited career advancement
opportunities that contribute to a brain drain (
57
).
(
57
) See also Annex 12: Education and skills.
(
58
)
https://legislatie.just.ro/Public/DetaliiDocument/283972.
44
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Table A3.1:
Key innovation indicators
Romania
Headline indicator
R&D intensity (gross domestic expenditure on R&D as % of GDP)
Science and innovative ecosystems
Public expenditure on R&D as % of GDP
Scientific publications of the country within the top 10% most cited publications
worldwide as % of total publications of the country
Researchers (FTE) employed by public sector (Gov+HEI) per thousand active
population
International co-publications as % of total number of publications
R&D investment & researchers employed in businesses
Business enterprise expenditure on R&D (BERD) as % of GDP
Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP
Researchers employed by business per thousand active population
Innovation outputs
Patent applications filed under the Patent Cooperation Treaty per billion GDP (in
PPS €)
Employment share of high-growth enterprises measured in employment (%)
Digitalisation of businesses
SMEs with at least a basic level of digital intensity
% SMEs (EU Digital Decade target by 2030: 90%)
Data analytics adoption
% enterprises (EU Digital Decade target by 2030: 75%)
Cloud adoption
% enterprises (EU Digital Decade target by 2030: 75%)
Artificial intelligence adoption
% enterprises (EU Digital Decade target by 2030: 75%)
Academia-business collaboration
Public-private scientific co-publications as % of total number of publications
Public expenditure on R&D financed by business enterprise (national) as % of
GDP
Public support for business innovation
Total public sector support for BERD as % of GDP
R&D tax incentives: foregone revenues as % of GDP
BERD financed by the public sector (national and abroad) as % of GDP
Financing innovation
Venture capital (market statistics) as % of GDP, total (calculated as a 3-year
moving average)
Seed stage funding share (% of total venture capital)
Start-up stage funding share (% of total venture capital)
Later stage funding share (% of total venture capital)
Innovative talent
New graduates in science and engineering per thousand population aged 25-34
Graduates in the field of computing per thousand population aged 25-34
17.6
0.6
11.2
2.6
12.0
3.6
12.6
3.6
12.3
3.9
:
:
:
:
17.6
3.6
:
:
0.003
:
32.9
67.1
0.001
7.4
54.3
38.3
0.005
9.3
78.1
12.6
0.007
20.1
68.2
11.7
0.008
36.8
51.6
11.6
0.008
37.2
50.2
12.7
:
:
:
:
0.078
7.29
44.02
48.69
:
:
:
:
0.049
:
0.049
0.031
:
0.031
0.029
0.008
0.021
:
:
0.025
:
:
0.030
:
:
:
:
:
:
0.204
0.102
0.100
0.251
0.141
0.110
4.0
0.04
5.6
0.025
6.1
0.024
6.1
0.026
6.4
0.020
6.2
:
:
:
7.7
0.05
8.9
0.02
:
:
:
:
:
:
:
:
:
:
:
:
:
:
11.33
1.38
52.49
:
:
:
:
21.87
15.52
1.51
69.1
:
:
3.07
72.91
33.17
38.86
13.48
:
:
:
:
0.22
6.09
0.2
7.65
0.17
5.21
0.14
:
0.13
:
:
:
:
:
2.8
12.51
:
:
0.18
0.11
0.6
0.29
0.06
0.6
0.27
0.03
0.6
0.29
0.05
0.8
0.29
0.04
0.7
0.32
:
0.9
:
:
:
1.49
0.4
5.7
:
2.7
0.3
0.28
3.4
1.6
29.5
0.22
4.3
1.6
33.5
0.19
5.9
1.6
38.1
0.18
6.2
1.5
37.5
0.17
:
1.6
40.6
0.2
:
:
41.3
:
:
:
:
0.72
9.6
4.1
55.9
0.64
12.3
:
39.3
0.46
0.51
0.47
0.47
0.46
0.52
:
2.24
3.45
2012
2017
2020
2021
2022
2023
2024
EU average
(1)
USA
(1) EU average for the last available year or the year with the largest number of country data.
Source:
Eurostat, DG JRC, OECD, Science-Metrix (Scopus database), Invest Europe, European Innovation Scoreboard
45
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ANNEX 4: MAKING BUSINESS EASIER
The improvement in Romania's business
environment stagnated for a few years and
has recently deteriorated. Key rules changed
frequently, without proper planning and
consultation.
Over-regulation imposes significant
burdens on companies, including for the accession
of EU funds. Top political decision makers change
frequently, together with strategic planning and
priorities. Price controls are increasingly publicly
proposed as a panacea to quell inflation.
lower than in 2022. Foreign investment continued
its downward trend in 2024, with a 15% decrease
compared to 2023 (
61
).
Graph A4.1:
Making Business Easier: selected
indicators.
(1) Regulatory
burden
Regulation as a major
obstacle to investment
24.5
31
(2) Single
Market
41.6
Economic framework conditions
The solid performance of the economy in the
last 20 years wiped out part of the
performance gap with the EU.
Real GDP per
capita in PPP is now almost 80% of the EU
average, up from 30% in 2004. The size of the
middle class has seen one of the fastest increases
of any of the 27 Member States (
59
). Net average
wages have doubled in the last 10 years to reach
EUR 1000.
The improvement in business environment
has stagnated.
Romania ranks 50th out of 67
economies in the 2024 edition of the World
Competitiveness Index, the same place it occupied
in 2020. The low cost of living (21st place),
attractive tax policy (36th overall, but 9th for
corporate tax and seventh for social security taxes
for employers) and skilled workforce have been
the strong points of the business environment. At
the same time, the country ranks very low in terms
of employment (60th), labour market (61st),
access to finance (61st). Taxation remains one of
the key pillars of the business environment’s
appeal and fast capital formation. Other studies
highlight low taxation, large market size, and
skilled labour force as key strengths (
60
).
Foreign direct investment (FDI) is falling.
The
net flow of FDI in 2023 and 2024 indicate a
hesitant foreign investment appetite. FDI reached
EUR 6.75 billion in 2023, more than one third
(
59
) Alpha Bank, Inegalitatea de venituri (Income Inequality),
2024.
(
60
) Economist Intelligence Unit, Business Environment
–
Romania, 2024.
.
EU Trade Integration
28.0
(3) Shortages
Material shortages as a
factor limiting production
10
3.6
16.6
(4) Late payments
from public entities
29.8
47.9
from private entities
44.9
0
10
20
30
40
Share (%)
50
60
EU27
RO
Share of (1) enterprises, (2) average intra-EU exports and
imports in GDP, (3) firms, (4) SMEs.
Sources:
(1) EIB IS, (2) Eurostat, (3) ECFIN BCS, (4) SAFE
survey.
Regulatory and administrative
barriers
Firms signal the lack of predictability as a
key weakness of the business environment,
affecting investment.
Investment is a long-term
business and needs, as a key ingredient, fiscal and
legislative predictability. The country is competing
on a global level for FDI but 90% of Romanian
companies rank uncertainty as the top barrier to
long-term investment (11 percentage points more
than the EU average) (
62
). The new fiscal code has
been changed 554 times in 83 months since its
(
61
) National Bank of Romania (NBR).
(
62
) EIB Investment Survey 2024.
46
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adoption in 2015 (
63
). Business associations
regularly point out that public consultation in the
legislative process is merely a perfunctory
formality (e.g. consultation periods of less than 24
hours); preparation lead times (six months) are
removed; fiscal policies lack a medium-long term
dimension; dialogue and consultation structures
between industries and government are only
formally used while their opinions and outcomes
do not properly feed into the decision-making
process (
64
). Companies report putting investments
on hold. The attractiveness of projects in Romania
compared to similar locations has decreased (44%
in October, compared to 53% in March 2024). This
is also true about FDI (as mentioned above). The
leading causes for this deterioration in investors’
perceptions remain the legislative ambiguities and
uncertainties (80%) and taxation (70%) (
65
).
The business environment seems over-
regulated.
The share of firms with a relatively
large proportion of their employees working on
regulatory assessment and compliance is high in
Romania with 23% of firms dedicating more than
10% of staff to regulatory requirements,
compared to just 4% in Finland. Peers such as
Bulgaria (8%) and Hungary (10%) also score
better than Romania (
66
). Accessing EU funding,
which is a very valuable resource for two thirds of
Romania’s
entrepreneurs,
is
burdensome.
Excessive bureaucracy, instability of regulations
and documentation are the major obstacles
reported (
67
). Key interest areas for SMEs are
missing from the EU financing priorities (e.g.
energy efficiency of production technologies),
while other, outdated priorities (e.g. job creation in
a country of labour shortages) are still in place.
Fiscal imbalances are the origin of many,
unexpected changes.
The fiscal consolidation
(
63
) The Tax Institute,
Modificările
noului cod fiscal, 2023.
(
64
) Foreign Investors Council (FIC) Romania website (fic.ro);
Concordia Employers’ Confederation (concordia.ro).
(
65
) FIC, Business Sentiment Index, Fall 2024. Only 36% of
respondents (6% less than in the March 2024 edition), have
planned investment increases for the next 12 months
(lowest level recorded since 2020). The December 2024
fiscal package has clearly not improved the situation on that
count.
(
66
) EIB Investment Survey 2024.
(
67
) IMM România (SME United
– Romania), Carta albă a IMM-
urilor (White Book of SMEs), 2024. Over 70% of companies
reported excessive bureaucracy as a barrier. The restrictive
eligibility criteria come second, with 60%.
measures adopted at the end of 2023 and end of
2024 had a significant impact on businesses large
and small but lacked proper planning and
consultation. The legal obligation to leave six
months of preparation before a tax measure
enters into force was disregarded. In December
2024, there were only three days between the
proposal's launch and its entry into force. The
complexity and frequency of tax law amendments
make it difficult for taxpayers to keep up and
comply
effectively.
A
detailed
business
environment study shows uncertainty and poor
administration of taxation as the key problematic
area for Romania (
68
); indeed, taxation is the area
with the lowest overall score for the country. Tax
clarity and transparency come out as particularly
problematic (11 points out of 40), with red areas
in public consultation and preparing and publishing
future tax plans (both with 0 out of 10 points).
Beginning with COVID-19, government
spending rose from around 36% of GDP, as it
had been during the previous decade, to a
post-communist record of 43% in 2024
(election year).
From a business environment
perspective, if the higher tax route to fiscal
consolidation is preferred, an important ingredient
of economic success and business dynamism will
be affected. Performance will then depend on
improvements in areas where Romania has not
excelled until now. The self-financing of small
companies, for example, will not be available at
the same high level. More government spending
has not yet been enough to provide better quality
across large areas of under-performing public
services (education, health, etc.).
Many rules are not applied.
The administration
tends to ignore many existing rules. This is the
case with the SME test, on the books since 2017
and recently reinforced as part of the national RRP.
The once-only principle, the fiscal compact, the
appointment of managers in state-owned
enterprises, the six-month preparation time for
fiscal measures, are other examples. For permits,
including for green investments, the application of
rules at local level is unequal (
69
).
(
68
) World Bank, Business Ready
–
Romania, 2024.
(
69
) Relevant studies by the Competition Council can be
consulted on their website, http://www.consiliulconcurentei.ro.
World Bank, Subnational Business Ready 2024-Romania.
47
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Frequent change is the norm at the political
level.
This comes with changes in strategic
planning and priorities. Ministers and prime
ministers change frequently in Romania. The
situation improved somewhat with the ‘grand
coalition’ of the last three years, but risks persist
with the significant challenges ahead, a more
diverse governing coalition and presidential
elections.
Price controls are regularly floated in the
public sphere.
Price controls (in energy, retail) are
a recent temptation that should be avoided, as
Romania, more than any EU country, remembers
the bitter experience it had with such populist
measures before 1990. In October 2024, the
government announced it will introduce price
controls at the retail level on products of
Romanian origin. Intense public pressure led to the
plan being discarded. A similar measure adopted
by another EU Member State is under an
infringement procedure. The recent fiscal package
was accompanied by a statement made by the
prime minister advising companies to freeze prices
as a ‘solidarity measure’. In addition, Romanian
authorities imposed a ban on nutri-score-labelled
products
–
which affects the functioning of the EU
supply chains
–
as well as other restrictive rules on
the displays and product ranges in shops.
High inflation, minimum wage increases, high
social contributions and difficult access to
finance are other factors making the
business environment challenging.
Romania
had the highest inflation rate in the EU in 2024.
The minimum wage grew rapidly in recent years,
far above productivity growth. Those facts were
reported as the top concerns of entrepreneurs (
70
).
The significant increase in the minimum wage has
made several industries unprofitable: textiles,
shoes, cables, food (
71
). Self-financing and trade
credit are very popular. Trade credit is 16 times
larger than short-term loans from banks. Romania
is top of the charts in the EU for this metric (
72
).
(
70
) SME Romania. Inflation is the top concern for businesses
(53% of business owners) while the wage increases come
third (40%). The second is unfair competition.
(
71
) See the analysis by the business association Concordia
(https://concordia.ro/resurse/documente-de-pozitie/studiul-
politica-salariului-minim-in-romania/).
World Bank’s Business
Ready - Romania shows that no process for updating the
minimum wage and no social consultation exist.
(
72
)
NBR, Raport asupra stabilității financiare, December 2024,
p. 41-42.
More than half of entrepreneurs perceive bank
loans as expensive and the main barrier to
access (
73
). The labour tax wedge for Romania was
the second highest in the EU for low-income
earners.
Romania’s transport and 5G infrastructure
are lagging far behind.
Despite more than 15
years of EU membership and rising income levels,
transport infrastructure gaps remain wide,
constraining private investment and productivity in
key sectors. The biggest gap behind the EU
average is very clearly perceived as being in
transport
infrastructure
(+20
percentage
74
points) ( ). Romania continues to rank among EU
leaders in terms of fixed connectivity. 5G coverage
is improving, but still severely lagging behind (33%
of populated areas vs 89.3% in the EU).
Public procurement
The effects of measures to improve public
procurement performance have yet to be
observed.
The 2023 data set shows high levels of
single bids (45%, EU average 38%); negotiated
procedures without prior publication of an award
notice (23%, the second highest level in the EU, EU
average 6%); unsuccessful bids (48%, the highest
rate in EU); and price-only award criteria (83%, EU
average 56%)(
75
). The key areas for improvement
are:
professionalisation;
staffing;
uneven
implementation
of
legislation;
legislative
instability.
Romania has made progress in using public
procurement as a strategic tool.
In 2024,
Romania’s National Agency for Public Procurement
(ANAP) undertook several initiatives to advance
strategic public procurement, focusing on
sustainability, innovation, and inclusivity. Actions
focused on enhancing transparency and
stakeholder engagement by promoting openness,
creating an environment of trust, and conducting
stakeholder analysis and management. The
initiatives laid the groundwork for improving
strategic public procurement in Romania. However,
(
73
)
SME Romania, Carta Albă.
(
74
) EIB IS 2024.
(
75
) Provisional data for 2024 put single bids for Romania at
46%.
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progress in inclusive and innovative procurement
remains stagnant, with no significant advances
observed in 2023 and no clear trends visible for
2024.
Single Market
Acting on restrictively regulated professions
may boost productivity.
Regulatory restrictions
in a number of professions remain stricter in
Romania than the EU average, creating additional
costs, especially for SMEs, while lowering
productivity. This applies in particular to civil
engineers, architects, accountants, tourist guides,
and notaries. Lawyers are also subject to legal
form, incompatibility rules and multidisciplinary
restrictions, all of which affect the potential of the
legal sector for innovation. The fragmented
system regulating civil engineers and their
activities seems to be a barrier to their free
movement and hampers the efficiency of service
provision.
Romania performs well in transposing Single
Market legislation.
Romania has a transposition
deficit of 0.8% (same as the EU average) though
its performance is less impressive than last year.
The percentage of Single Market directives
incorrectly transposed (conformity deficit) is at
0.2% (second best performance among the
Member States). The number of pending Single
Market infringement cases in Romania is above
the EU average but their average duration is better
than the EU average. Concerning SOLVIT, Romania
resolved 92.3% of all SOLVIT cases it handled as
lead centre (EU average of 84.9% in 2024).
Access to the Single Market is an opportunity
that many SMEs in Romania could better
exploit.
Romania’s trade integration into the
Single Market is below the EU average (28% of
GDP vs 42% of GDP). Over the last 20 years, trade
in goods has increased by 10% per year. The bulk
of intra-EU exports in value terms (60%) came
from large companies, which indicates that SMEs
may improve their presence on the single market.
Accession to the Schengen area should make trade
and attracting foreign investment easier.
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Table A4.1:
Making Business Easier: indicators.
Romania
POLICY AREA
INDICATOR NAME
2020
Investment climate
Material shortage, firms facing constraints, %
1
Shortages
Labour shortage, firms facing constraints, %
1
Vacancy rate, vacant posts as a % of all
available ones (vacant + occupied)
2
Transport infrastructure as an obstacle to
investment, % of firms reporting it as a major
obstacle
3
Infrastructure
VHCN coverage, %
4
FTTP coverage, %
4
5G coverage, %
4
3.5
8.4
0.6
6.5
9.8
0.8
6.8
11.6
0.9
3.4
10.1
0.8
3.6
9.0
0.7
10.0
20.2
2.3
2021
2022
2023
2024
EU-27
average
29.2
-
-
-
21.6
87.1
87.1
24.9
29.7
95.6
95.6
26.8
25.6
95.0
95.0
32.8
21.7
-
-
-
13.4
78.8
64.0
89.3
Reduction of regulatory and administrative barriers
Impact of regulation on long-term investment,
Regulatory environment
% firms reporting business regulation as a
29.1
16.8
22.7
3
major obstacle
Payment gap - corporates B2B, difference in
13.3
11.7
12.2
days between offered and actual payment
5
Payment gap - public sector, difference in days
13.5
9.2
15.4
between offered and actual payment
5
Late payments
Share of SMEs
experiencing late
payments, %*
6
from public or private
entities in the last 6
months
from private entities
in the previous or
current quarter
from public entities in
the previous or
current quarter
30.1
31.0
24.5
14.5
16.4
49.4
-
15.6
15.1
-
-
52.0
52.6
45.2
-
-
-
-
-
44.9
47.9
-
-
-
-
29.8
16.6
Integration
Single Market
EU trade integration, % (Average intra-EU
28.6
imports + average intra EU exports)/GDP
2
EEA Services Trade Restrictiveness Index
7
Transposition deficit, % of all directives not
transposed
8
Conformity deficit, % of all directives
transposed incorrectly
8
SOLVIT, % resolution rate per country
8
Number of pending infringement proceedings
8
-
1.1
1.3
88.4
37.0
31.5
-
2.9
0.9
86.9
30.0
33.5
-
0.3
1.0
93.2
32.0
30.1
-
0.2
1.2
91.0
32.0
28.0
-
0.8
0.2
92.3
28.0
41.6
0.050
0.8
0.9
84.9
24.4
Compliance
Public procurement
Single bids, % of total contractors**
8
Competition and
transparency in public
procurement
Direct awards, %**
8
41
22
33
17
42
23
45
23
46
-
-
7.0
*Change in methodology in 2024: reporting late payments from public and private entities separately.
**The 2024 data on single bids is provisional and subject to revision. Please note that approximately 24% of the total data is
currently missing, which may impact the accuracy and completeness of the information. Due to missing data, the EU average of
direct awards data is calculated without Romania.
Sources:
(1) ECFIN BCS, (2) Eurostat, (3) EIB IS, (4) Digital Decade Country reports, (5) Intrum Payment Report, (6) SAFE survey,
(7) OECD, (8) up to 2023: Single Market and Competitiveness Scoreboard, 2024: Public procurement data space (PPDS).
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ANNEX 5: CAPITAL MARKETS, FINANCIAL STABILITY AND ACCESS TO FINANCE
The Romanian economy is characterised by
comparatively
low
domestic
savings,
significant foreign inflows, still developing
capital markets and small banking and non-
banking financial sectors.
Romania’s capital
markets are underdeveloped, with companies
heavily reliant on internal financing and bank
loans. The banking sector, while important and
generally stable, remains relatively small
compared to other EU countries. 17.6% of firms
face financial constraints, the highest level in the
EU While the green bond market shows potential,
financial literacy remains a major barrier,
restricting investor participation and companies’
access to alternative funding. Institutional
investors have the lowest asset-to-GDP ratio
among their EU peers. To address these
challenges, Romania introduced the national
strategy for the development of the capital
markets 2023-2026.
Graph A5.1:
Net savings-investment balance
30 % of GDP
25
20
15
10
5
0
2017
2018
2019
2020
2021
2022
2023
Private investment, net
Private saving, net
Borrowing from the rest of the world
Lending to the government
Private saving, gross
Source:
AMECO.
Availability and use of domestic
savings
The Romanian economy invests its net
savings domestically and also sources
funding from abroad.
From 2014 until 2023, the
private savings ratio, net of fixed capital
consumption, stood on average at 6.1% of GDP
(below the EU average of 8.5% of GDP), peaking at
8.8% in 2020 (see Graph A5.1). The net private
investment ratio, which denotes the net
contribution of the private sector to capital
accumulation in the economy, recorded an average
of 4.4% of GDP during the reference ten-year
period and reached 10.6% in 2023. At the same
time, during the same period the government has
been running sizable budgetary deficits, which
during 2014-2023 on average amounted to a
budgetary deficit of 4.3%. These recurrent general
government budgetary deficits, combined with
only a small positive difference between net
domestic savings and net investment, resulted in
structural net borrowing by Romania from foreign
economies that averaged 2.6% of GDP, with a
peak of 7.5% in 2022. Thus, the net savings in
Romania have been invested domestically (to
finance private investment or borrowing by the
government), while also complemented by a
substantial share of financing from abroad.
As a net borrower from the rest of the world,
the Romanian economy has been recording a
negative net international investment
position.
As of Q3 2024, total assets on
foreigners stood at around 39% of GDP, while
liabilities to foreigners amounted to just above
83% of GDP, resulting in a net international
investment position (NIIP) equivalent to 41.5% of
GDP (see Graph A5.2). The only factor with a
positive contribution to the NIIP was the significant
stock of official foreign reserve assets (at 20.8%
of GDP), which reflects the central bank’s focus on
a relatively steady exchange rate of the leu,
particularly against the euro. The incoming net
foreign direct investment (-33.1% of GDP as of Q3
2024) accounted for most of the NIIP, so that the
net external debt position is fairly low. The net
portfolio investments, which are directly affected
by the price volatility of equity valuations, have
also been negative (at -20.4% of GDP as of Q3
2024), similarly to the net stock of other
investments (al almost 9% of GDP). Thus, the
Romanian economy seems well integrated in
international capital flows as a recipient of foreign
capital, remaining a net capital importer, notably in
terms of direct investments.
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Graph A5.2:
International investment position
60
% of GDP
40
20
0
-20
-40
-60
-80
-100
2017
2018
2019
2020
2021
2022
2023
2024-Q3
Foreign Direct Investment, Assets
Other investment, Assets
Foreign Direct Investment, Liabilities
Other investment, Liabilities
Portfolio Investment, Assets
Official reserve assets
Portfolio Investment, Liabilities
NIIP
Source:
ECB.
Structure of the capital markets and
size of the financial sector
The Romanian economy stands out with one
of the most underdeveloped domestic capital
markets in Europe.
The market capitalisation of
listed equity reached 13.4% of GDP at the end of
2023 (see Graph A5.3), which is well below the EU
average of 67% of GDP. At the same time, non-
financial corporations (NFCs) accounted for 84%
of that capitalisation, which implies that the stock
market in Romania is predominantly to a large
extent geared towards funding the non-financial
segment of the real economy. The outstanding
volume of debt securities reached almost 41% of
GDP at end-2023, which is significantly below the
EU average. Bonds issued by the government
accounted for 95% of the total.
Graph A5.3:
Capital markets and financial
intermediaries
MFIs
While the financial sector in Romania
remains dominated by banks, non-bank
financial intermediaries also play an
important role.
Starting from 56% of GDP in
2020, the size of the banking sector declined
slightly to 53% of GDP in 2023 (with the EU
average at 257%) and 52% in 2024, which
constituted the lowest ratio in the EU and is
considerably below the peer economies in the
region. The overall low degree of financial
intermediation in Romania could be explained by:
(i) the large share of non-bankable NFCs that
continue to have significant capitalisation
weaknesses, and therefore have less access to
finance; (ii) weak payment discipline in the
economy; (iii) companies’ reliance mainly on loans
from suppliers and shareholders, rather than loans
from financial institutions; and (iv) the modest
degree of financial literacy. Foreign presence is
predominant and accounts for almost 66% in
terms of bank assets. The consolidation in the
banking sector has been ongoing in recent years
through the acquisition of smaller, less profitable
banks with weaker capital positions by larger
credit institutions. Currently, banking concentration
appears to be slightly higher than on average in
the EU, with the top five MFIs representing around
63% of total bank assets. The insurance and
pension funds sectors, as well as investment funds
(with total assets of almost 1.9% of GDP and
2.3% of GDP at end-2023), play a very limited role
in the financial intermediation (see section on
institutional investors).
Resilience of the banking sector
The banking sector in Romania is well-
capitalised and exhibits good resilience to
risks.
The system-wide capital ratio stood at
23.1% in Q3 2024, well above the EU average. In
Q3 2024, the Romanian banking sector reported a
consolidated common equity tier 1 (CET1) ratio of
20% (well above the EU average of 16.6%), as
Romanian banks hold a significant capital buffer
and thus ensure a good capacity to absorb
potential unexpected losses in the event of
macroeconomic shocks. Banks have been strongly
advised by the National Bank of Romania to retain
earnings rather than distribute dividends, so the
banking sector's profitability in recent years has
supported solvency, underpinned by high profit
retention rates. The most recent stress test results
60
50
40
30
20
% of GDP
Government
Insurance and pension funds
Non-financial corporations
Non-financial corporations
Insurance corporations
​
Financial corporations
0
Listed equity
MFIs
10
Bonds
Other financials
Assets by sector
Source:
ECB, EIOPA, AMECO.
Investment funds
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(for 2024-2026) showed that even under adverse
conditions, the banking sector would be well
positioned to cope with micro-financial shocks.
Banking groups in Romania have issued securities
eligible for the Minimum Requirement for own
funds and Eligible Liabilities (MREL). As of the end
of the transition period (end-2023) all credit
institutions in Romania have complied with the
final MREL requirement plus the combined buffer
requirement (
76
). In the medium term, the
transposition of the latest provisions of the Basel
III regulatory framework at EU level could result in
an increase in capital requirements for the group
of small and medium-sized European banks,
including banks in Romania, by the date of full
implementation in 2028.
Despite a slight deterioration, banks’ balance
sheets show robust asset quality.
With an
aggregate non-performing loan (NPL) ratio of
2.7% in Q3 2024, which is above the EU average
of 1.9%, credit quality remains adequate. The
corporate NPL ratio increased to 3.9% in Q4 2024
(from 3.7% in 2023) but stood only slightly above
the EU average (at 3.5%). At the same time, banks’
aggregate coverage ratio of NPLs by existing
provisions has slightly declined to 62.5% but
remains adequate and is well above the EU
average (at 42.1%).
Romanian banks maintain very strong
liquidity positions.
Banks are exposed to a very
low liquidity funding risk. Overall, the Romanian
banking sector has proven an adequate capacity to
manage liquidity, although excess liquidity could
also be highlighting the lack of opportunities for
banks to provide loans or make investments, as
well as a low risk appetite. The sovereign-bank
nexus has strengthened in recent years due to
both the sizeable share of government bonds in
the balance sheet and the state guarantees for
loans. Even if government bonds are a profitable
option for banks to use their large liquidity, they
generate exposure to the potential occurrence of
sovereign risk. The large share of government
securities in total assets generates a concentration
risk and amplifies the interest rate risk. Moreover,
investment in government bonds may crowd out
lending to the private sector.
Resilience of the non-bank financial
intermediaries
The Romanian insurance sector is relatively
small and is characterised by a high degree
of concentration.
Romanian insurance sector
ranks last in the EU in terms of assets in
percentage of GDP (1.9% in 2023, compared to
55.3% on average at the EU). The market is
characterised by a high degree of concentration,
both in terms of the types of insurance offered
(mainly car insurance) and in terms of the
significant market shares held by a relatively small
number of insurance companies. The market is
dominated by non-life insurance, which made up
84% of total gross premiums written in 2023,
mainly on account of the mandatory nature of
motor third-party liability and, to a lesser extent,
natural disaster insurance policies. In 2023,
eligible funds were sufficient to cover solvency
capital requirements (167.8%), but the level was
far below the EU average (258.6%). Romanian
insurance companies invest predominantly in fixed
income financial instruments and have high
exposure to government bonds, most of them
domestic. By contrast, exposures to complex
financial instruments or alternative assets are very
low. Romania is one of the most exposed countries
in EU to nature-related risks, such as earthquakes
and floods and having low insurance coverage in
these areas (below 50%) (
77
).
Sources of business funding and the
role of banks.
The Romanian corporate sector is heavily
reliant on internal financing.
For firms in
Romania, internal sources accounted for the
largest share of investment finance (73%),
followed by external finance (26%), with the
remainder (1%) coming from intra-group
financing (
78
). On average, in the EU, internal
financing accounted for 66% of investment
finance, followed by external finance (25%) and
intra-group financing (9%). Trade credit and
(
77
)
See EIOPA’s
Dashboard on the insurance-protection gap for
natural catastrophes.
(
78
) See
EIB Investment Survey 2024.
(
76
) For additional information, see the European Banking
Authority’s
MREL Dashboard - Q4 2023.
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advances represent an important part of non-
financial sector liabilities, which creates systemic
risk in the economy by creating interlinkages
between companies, and exposure to the risk of
non-payment by customers. One of the reasons
behind this type of financing is the large share of
non-financial corporations (NFCs) that have
significant
capitalisation
weaknesses,
and
therefore have less access to external finance.
Payment discipline in the economy remains weak.
Romanian firms also rely on bank loans,
which represent 99% of Romanian companies’
external debt financing. However, Romania has a
relatively small banking sector, with an overall low
degree of financial intermediation, which, in
addition, is on a downtrend. The ratio of banks’
total assets to GDP reached 52.8% in 2023 (see
Table A5.1), which was the lowest ratio in the EU
(with the EU average at 256.9%) and is
considerably below the country’s peer economies
in the region.
The banking sector in Romania, which, to a
large extent, is foreign-owned, continues to
exhibit
robust
capitalisation,
and
profitability metrics remain exceptionally
strong.
Asset quality indicators remain solid,
despite a marginal increase in the non-performing
loan (NPL) ratio to 2.7% in Q3 2024. The
interconnection between Romania’s banking sector
and the government sector has strengthened,
reaching the highest level among EU countries:
The share of banking sector claims on the
government, including loans and securities,
accounted for 25% of total assets as of
September 2024. While this enhances solvency
and liquidity, it also increases concentration and
interest rate risks.
Market-based
finance is low as Romania’s
capital
markets
are
still
relatively
underdeveloped and have significant room
for growth.
More specifically, at the end of 2023,
listed shares were equivalent to only 11% of GDP
and bond stood at 0.3%, compared to 44% and
10.8% in the EU (see Graph A5.4).
Graph A5.4:
Composition of NFC funding as a % of
GDP
250
200
% of GDP
150
100
50
0
RO
Loans
Trade credit and advances
EU
Bonds
Listed shares
Unlisted shares
Other equity
The sum of NFC liabilities only reflects the total for the NFC
liabilities considered. Reference period 2023.
Source:
Eurostat.
Romania stands out as the EU country with
the highest proportion of companies using
subsidies or grants for investment activities.
Despite this, the share of firms experiencing
financial constraints stands at 17.6%, the highest
level recorded in the EU. This suggests that there
is a substantial financing gap relative to
investment demand. This gap may be even larger
for firms with limited capacity for internal funding,
such as innovative start-ups.
In recent years, bank lending has grown at a
strong pace, driven by, among other factors,
government programmes such as state
guarantees.
After reaching a peak in early 2023,
interest rates on loans to households and NFCs
–
most of which are tied to floating rates
–
began to
decline. In 2024, bank lending to the non-financial
sector maintained a high growth rate of 9.8%,
though this was slower than the 12.8% rate in
2023. During the third quarter of 2024, Romanian
credit institutions reported a tightening of credit
standards for loans and credit lines to NFCs,
following four quarters of unchanged standards.
Bank lending to households also saw positive
growth, reaching 11.4% in 2024. Credit standards
for loans related to house and land purchases
remained steady, while banks eased credit
standards for consumer loans once again in
Q3 2024.
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Retail investors in capital markets
Romania’s capital markets have significant
room for growth.
The Romanian stock market
–
the Bucharest Stock Exchange (BVB)
–
is
characterised by a lack of dynamism, low
capitalisation and low levels of liquidity, driven by
a large number of inactive shares and low levels
of companies’ free-float
(
79
). Moreover, Romania
does not yet have its own fully operational
domestic central clearing counterparty (CCP). The
underdeveloped stock market is partly a reflection
of the Romanian corporate sector, with many
companies showing low financial strength and
negative equity. Despite these structural
characteristics, the trend in recent years has been
very positive. Bucharest’s BET stock index was
among the world’s best performers in 2024. This
was mainly driven by the successful initial public
offering (IPO) of Hidroelectrica in 2023, which
revived the interest of domestic and foreign
investors in the stock exchange. This IPO could be
followed by the listing of other state-owned
companies.
The corporate bond market remains
underdeveloped.
Although the domestic equities
market is somewhat more advanced and active,
the corporate bond market is among the least
liquid in the region, with a relatively small number
of
outstanding
bond
issues.
This
underperformance has not only significantly
limited access to financing for large segments of
the Romanian corporate sector, it has also
increased institutional investors’ reliance on
Romanian government securities.
Romania has developed a comprehensive
strategy to boost its capital markets: the
national strategy for the development of the
capital markets 2023-2026.
This strategy sets
out a series of recommendations that focus on
improving the institutional, legal and regulatory
framework, to enhance opportunities to develop
the domestic market. Certain key measures in this
strategy have been adopted but not all have fully
matured yet.
Graph A5.5:
Composition of HH financial assets per
capita and as a % of GDP
90
80
70
60
50
40
200
150
100
250
30
20
10
0
RO
EU
RO
EU
per capita (000 EUR) (lhs)
% of GDP GDP (rhs)
50
0
Currency and deposits
Investment funds
Listed shares
Other equity
Insurance and pension funds
Bonds
Unlisted shares
HH Debt (liability)
The sum of HH assets only reflects the total for the HH assets
considered. Reference period 2023.
Source:
Eurostat.
One of the main obstacles to the expansion
of Romania’s capital markets is the limited
levels of household savings and their low
allocation to capital products.
Retail
investment remains relatively modest compared to
other EU countries, partly due to limited disposable
income and a cultural preference for traditional
savings methods, such as bank deposits (see
Graph A5.5). One of the objectives of the national
strategy is precisely to increase the participation
of individual investors. Financial inclusion in
Romania is still lagging behind that of its EU peers.
The role of domestic institutional
investors
The assets of Romanian institutional
investors, when expressed as a percentage
of GDP, are the lowest in the EU.
Within
institutional investors, the largest category of
assets is pension funds, including mandatory and
voluntary funds, followed by. investment funds,
with insurance corporations ranking last.
Since its creation in 2007, the private
pension sector has complemented the public
system and become a major investor in
government bonds and shares listed on the
BVB.
The accumulated assets of Romanian private
pension funds amounted to RON 131.5 billion in
2023 (about EUR 26.5 billion), equivalent to 8.48%
of GDP. Investments are highly concentrated in
local issuers (93.1% of investments are in
(
79
) See
Capital Market Review of Romania: Towards a National
Strategy,
2022, OECD.
55
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3035442_0057.png
Romanian assets). Moreover, the private pension
sector is one of the state’s major creditors, holding
more than 10% of the public debt issued. Apart
from sovereign bonds, pension funds are also
major investors in BVB-listed shares. The
sluggishness of the capital markets prevents
pension funds from diversifying their portfolios
towards a more efficient balance between risk and
return. Another challenge stems from the fact that
pension funds in Romania face regulations limiting
investments in certain assets. Lastly, although
pension funds are important institutional investors,
their buy-and-hold policies mean that they are not
major providers of liquidity.
The collective investment undertakings
market in Romania is less developed than in
other EU countries,
due to factors such as lower
financial literacy, a less mature financial market
and lower overall wealth. Nearly half of equity
investments come from Fondul Proprietatea,
created to compensate those whose assets were
expropriated during the communist regime. The
investment fund industry is centred around large
banking groups, with 15 fund managers operating
in the country, most of which belong to banking
groups. These groups also dominate depositary
services.
The Romanian insurance sector is relatively
small and ranks last in the EU in terms of
assets as a percentage of GDP
(1.9%
compared to the EU average of 55.3%). The
market is characterised by a high degree of
concentration, both in terms of the types of
insurance offered (mainly car insurance) and in
terms of the significant market shares held by a
relatively small number of insurance companies. In
2023, 71% of total gross written premiums were
made by five insurance companies. The sector has
experienced a tumultuous period, with several
insurance companies failing in recent years. The
total value of insurance companies’ investments
(including assets held for unit-linked products)
amounted to EUR 5.8 billion in Q1 2024. Romanian
insurance companies invest mainly in fixed-income
financial instruments and have high exposure to
government bonds (63%), most of them
Romanian. Collective investment undertakings are
the second largest category, representing 16% of
assets in 2023, most of them being cross-border
funds. Insurance companies in Romania only
allocate 5% of their assets to corporate bonds.
The depth of available venture and
growth capital
Romania’s domestic venture and growth
capital market remains underdeveloped and
insufficient to meet the financing needs of
innovative companies.
At present, private equity
equates to only 0.04% of GDP and venture capital
to just 0.01% of GDP, well below the EU average.
This gap highlights the limited availability of
investment for start-ups and high-growth
companies. Romania has an insufficiently
developed venture capital ecosystem. This is partly
due to the relatively small scale of institutional
investors and their investment allocation.
Complicated and typically very low investment
limits for pension funds invested in venture capital
and private equity can also contribute to this
gap (
80
). Romania also has the lowest level of
research and development (R&D) expenditure as a
percentage of GDP in the EU, which probably
contributes to the low level of venture capital
activity. The lack of strong R&D investment limits
the creation of innovative and technological
companies, which further stifles capital market
development. In recognition of these challenges,
one of the key objectives of the national strategy
is to stimulate the growth and maturation of the
private equity and venture capital markets,
fostering an ecosystem that can better support the
country’s innovative
and high-potential companies
and connect them with investors.
Financing the green transition
The green bond market in Romania has
developed slowly, but recent private sector
issuances indicate a positive trend and
growing interest.
Notable efforts have been
made, particularly within the banking sector, as it
has been gradually exploring and issuing green
bonds. There is considerable potential for further
development in the near future as demand for
sustainable investments rises.
(
80
)
See
2024 Survey of Investment Regulation of Pension
Providers.
56
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3035442_0058.png
In 2023, the Ministry of Finance revised its
funding strategy to incorporate green, social
and sustainability bonds, and developed a
green bond framework.
In February 2024,
Romania issued a EUR 2 billion sovereign green
bond, marking the largest green euro-denominated
bond ever issued by an emerging market. Building
on the success of its previous transaction, in
October 2024 Romania issued a JPY 33 billion
(approximately EUR 200 million) Samurai green
bond on the Japanese market.
Romania has been implementing policy
actions to facilitate the financing of the
green transition.
The national strategy for the
development of the capital markets aims to raise
awareness among potential investors of the
opportunities offered by investments in products
that promote environmental and/or social or
sustainable projects, while also raising awareness
among issuers of the importance of facilitating
sustainable investment. The recovery and
resilience plan (RRP) also includes several
measures in this area, such as the recovery
venture capital fund to facilitate the green
transition.
first step of which is to assess the current level of
financial literacy among entrepreneurs. The first
round of this financial literacy assessment was
included in the June 2023 survey on the access to
finance of NFCs in Romania. In addition, the
National Bank of Romania launched the TOP
Entrepreneurship project in October 2023, aimed
at enhancing entrepreneurs’ financial knowledge,
improving financial behaviour and increasing
financial inclusion. This project also focuses on
digitalising financial and business activities, with
plans to organise events in collaboration with
academia, the banking sector and the private
sector, and to develop applications and platforms
to improve the digital literacy of Romanian
businesses.
Financial literacy
Romania ranks the lowest in the EU on
financial literacy.
This lack of financial
knowledge is a barrier to increasing retail-investor
participation in capital markets and to helping
companies explore alternatives to traditional bank
financing. According to the 2023 Eurobarometer
survey, only 13% of Romanians have a high level
of financial literacy, 57% have a medium level,
and the remaining 30% possess a low level. In
contrast, the EU average is 26% for high literacy,
50% for medium, and 24% for low.
Several recent initiatives aim to promote the
financial literacy of entrepreneurs.
The
National Committee for Macroprudential Oversight
has recommended initiatives to improve
entrepreneurs’ financial education. These include
collaboration with academia and the financial
system to raise awareness about the potentially
higher costs of funding through trade credits and
shareholder loans (compared to borrowing from
financial institutions or using capital market-based
funding). An action plan has been developed, the
57
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Table A5.1:
Financial indicators
2017
Total assets of MFIs (% of GDP)
Common Equity Tier 1 ratio
Total capital adequacy ratio
Overall NPL ratio (% of all loans)
NPL (% loans to NFC-Non financial corporations)
NPL (% loans to HH-Households)
NPL-Non performing loans coverage ratio
Return on Equity1
Loans to NFCs (% of GDP)
Loans to HHs (% of GDP)
NFC credit annual % growth
HH credit annual % growth
Stock market capitalisation (% of GDP)
Initial public offerings (% of GDP)
Market funding ratio
53.0
17.4
19.4
6.6
12.0
5.9
58.5
11.7
12.0
14.0
5.1
8.5
-
0.00
29.7
0.27
0.00
-
1.4
2.9
5.6
12.0
2.3
25-27
2018
50.6
17.7
19.7
5.0
8.8
5.1
60.3
13.6
11.5
13.8
9.3
10.9
-
0.00
27.5
0.17
0.00
-
1.8
2.4
4.3
12.6
2.1
2019
49.7
19.0
21.0
4.3
7.3
4.4
62.1
12.3
11.0
13.3
6.0
7.0
-
0.00
27.3
0.18
0.01
-
1.9
2.2
4.4
13.7
2.1
2020
56.4
21.8
23.5
3.9
6.6
4.5
62.3
9.0
11.5
13.9
6.7
4.7
8.4
0.00
27.9
0.03
0.00
-
2.2
2.0
3.3
13.7
2.2
2021
57.9
19.9
22.2
3.4
5.5
4.0
64.9
13.1
12.4
13.7
20.0
9.7
11.4
0.00
25.4
0.05
0.01
-
1.8
3.7
3.4
14.0
2.0
2022
54.7
19.2
22.4
2.8
4.1
3.7
63.9
15.7
12.7
12.4
19.1
6.0
9.0
0.00
23.6
0.03
0.01
-
2.0
3.0
2.3
13.3
1.9
2023
52.8
19.5
22.7
2.5
3.7
3.8
63.5
16.8
12.1
10.8
12.8
3.9
13.4
0.00
24.7
0.04
0.01
47.5
2.4
3.4
2.1
15.1
1.9
-
2024-Q3
49.3
20.0
23.1
2.7
3.9
3.7
62.5
19.8
11.6
10.6
10.2
10.5
13.1
-
-
-
-
-
-
-
-
-
2.0
-
EU
248.4
16.6
20.1
1.9
3.5
2.2
42.1
10.0
30.0
44.5
0.8
0.7
69.3
0.05
49.6
0.41
0.05
45.5
2.7
4.8
10.0
27.8
54.8
23.4
Banking sector
Non-banks sector
Private equity (% of GDP)
Venture capital (% of GDP)
Financial literacy (composite)
Bonds (as % of HH financial assets)
Listed shares (as % of HH financial assets)
Investment funds (as % of HH financial assets)
Insurance/pension funds (as % of HH financial assets)
Total assets of all insurers (% of GDP)
Pension funds assets (% of GDP)
11-17
1-3
4-10
18-24
-
-
-
-
-
-
Colours indicate performance ranking among 27 EU Member States.
(1) Annualised data.
Credit growth and pension funds EU data refers to the EA average.
Source:
ECB, ESTAT, EIOPA,
DG FISMA CMU Dashboard,
AMECO.
58
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ANNEX 6: EFFECTIVE INSTITUTIONAL FRAMEWORK
Romania’s
institutional
framework
influences its competitiveness.
Overall, the
perceived quality of government ranks below
average among the EU Member States. There is
scope for improvement in quality of legislation,
regulatory simplification, and ensuring a skilled
and motivated workforce in the public
administration, and businesses’ perception of
corruption. Romania is making progress in
digitalisation of public services. However further
efforts are needed to achieve the Digital Decade
targets.
Graph A6.1:
Trust in justice, regional / local
authorities and in government
0.7
0.6
0.5
0.4
average (
82
). Against this backdrop, public
administration reform priorities under Romania’s
recovery and resilience plan include: (i) improving
the capacity for strategic coordination at the
centre of government within the General
Secretariat of Government; (ii) reducing
administrative burden for citizens and businesses;
(iii) digital transformation of public administration;
and (iv) civil service reform and strengthening
administrative capacity.
Quality of legislation and regulatory
simplification
Performance in developing legislation is
above the EU average.
It is stronger for
stakeholder engagement and ex-ante impact
assessments than for ex post evaluation of
legislation. The latter shows a visible gap with
respect to the EU average on account of weaker
requirements
governing
the
methodology,
systematic adoption, transparency, oversight and
quality control of ex post evaluation of both
primary and subordinate legislation (Graph A6.2).
Graph A6.2:
Indicators of Regulatory Policy and
Governance (iREG)
4.0
3.5
3.0
2.5
2.0
0.3
0.2
0.1
Autumn
Spring
Autumn
Autumn
Autumn
Autumn
Autumn
Autumn
Summer
Summer
Autumn
Winter
Spring
Spring
Spring
Spring
Winter
Spring
Spring
0
2014 2015
2016
2017
2018
2019 2020 2022
2023
2024
Justice, legal system EU27
Justice, legal system RO
Regional or local public authorities EU27
Regional or local public authorities RO
Government EU27
Government RO
(1) EU-27 from 2019; EU-28 before
Source:
Standard Eurobarometer surveys
Public perceptions
Trust in public institutions is in general below
the EU average but has improved in recent
years.
Within the national institutions the biggest
gap is between trust in the justice institutions and
central government (Graph A6.1). Key aspects that
can increase trust in Romania’s public
administration are less bureaucracy, more
communication
with
citizens
and
more
transparency in decision-making and use of public
money (
81
). The perceived quality of government
has improved slightly but remains below the EU
(
81
)
Understanding Europeans’ views on reform needs
- April
2023 - - Eurobarometer survey,
Country Fact Sheet.
1.5
1.0
0.5
0.0
Primary laws Subordinate Primary laws Subordinate Primary laws Subordinate
regulations
regulations
regulations
RO_Stakeholder
engagement
RO_Regulatory Impact
Assessment
RO_Ex-post evaluation of
legislation
Methodology
Transparency
2021
Systematic adoption
Oversight and quality control
EU-27
Source:
OECD (2025), Regulatory Policy Outlook 2025 and
Better Regulation across the European Union 2025
(forthcoming).
(
82
)
Inforegio
–
European Quality of Government Index
59
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3035442_0061.png
Table A6.1:
Romania. Selected indicators on administrative burden reduction and simplification
Ex ante impact assessment of legislation
When developing new legislation, regulators are
required to …
Ex post evaluation of legislation
Is required to consider the consistency of regulations
and address areas of duplication.
Is required to contain an assessment of administrative
burdens.
Is required to contain an assessment of substantive
compliance costs.
Compares the impact of the existing regulation to
alternative options.
Periodic ex post evaluation of existing regulations is
mandatory.
Government uses stock-flow linkage rules when
introducing new regulations (e.g., one-in one-out).
A standing body has published an in-depth review of
specific regulatory areas in the last 3 years.
In the last 5 years, public stocktakes have invited
businesses and citizens to assess the effectiveness,
efficiency, and burdens of legislation.
Identify and assess the impacts of the baseline or
‘do nothing’ option.
Identify and assess the impacts of alternative non-
regulatory options.
Quantify administrative burdens of new
regulations.
Quantify substantial costs of compliance of new
regulations.
Assess macroeconomic costs of new regulations.
Assess the level of compliance.
Identify and assess potential enforcement
mechanisms.
Yes / For all primary laws
For major primary laws
For some primary laws
No / Never
This table presents a subset of iREG indicators focusing on regulatory costs. The indicators refer to primary legislation.
Source:
OECD (2025), Regulatory Policy Outlook 2025 [https://doi.org/10.1787/56b60e39-en] and Better Regulation across the
European Union 2025 (forthcoming).t
Romania’s recovery and resilience plan
includes a measure, aiming to improve the
process
of
public
consultation
and
involvement of stakeholders.
The target is a
20% increase in the number of draft legislative
acts subject to public consultation and the
involvement of stakeholders at central level.
The
use
of
government
emergency
ordinances has been rising,
particularly in
recent years (156 in 2024, 131 in 2023, 192 in
2022, compared to 89 in 2019) (
83
).
There is scope to further strengthen the
mechanisms for simplifying regulation and
identifying administrative burdens.
For
example, regulators are not required to identify
substantial costs of compliance with new
regulations. Ex post evaluations of legislation do
not have to contain an assessment of those and
an evaluation of administrative burdens either.
Moreover, periodic ex post evaluation of primary
legislation is mandatory for some (not all) primary
laws, nor has the government conducted recently
in-depth reviews of specific regulatory areas and
public stocktakes of legislation (see table A6.1).
(
83
)
Legislative Council database.
Efficiency of selected administrative
procedures
Selected indicators point to
Romania’s public
administration taking longer than other
Member States to complete procedures.
For
example, the B-READY indicators (
84
) show that
there is much potential for cutting the time
needed to register new domestic and foreign
firms, obtain a building permit, draft and file tax
returns, obtain a VAT refund and receive payment
from a government contract.
Moreover, according to a report monitoring the
implementation
of
the
Commission
Recommendation and Guidance on speeding up
permit-granting procedures for renewable energy
and related infrastructure projects (
85
), there is
(
84
) World Bank. 2024. Business Ready 2024. Washington, DC:
World Bank. doi:10.1596/978-1-4648-2021-2
(
85
) European Commission: Directorate-General for
Energy,
Monitoring the implementation of the Commission
recommendation and guidance on speeding up permit-
granting procedures for renewable energy and related
60
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Table A6.2:
Digital Decade targets monitored through the Digital Economy and Society Index
Romania
2022
Digitalisation of public services
Digital public services for citizens
1
Score (0 to 100)
EU-27
2024
52
2023
2023
48
2022
2024
79
2023
Digital Decade
target by 2030
EU-27
100
2030
100
2030
100
2030
44
2021
2
3
Digital public services for businesses
Score (0 to 100)
42
2021
45
2022
50
2023
85
2023
79
2023
Access to e-health records
Score (0 to 100)
na
2021
57
2022
59
2023
Source:
State of the Digital Decade report 2024
scope for further aligning national practices in
Romania with the guidance, to support faster and
shorter procedures for the licensing of renewable
energy projects. Unlike 19 other EU Member
States, Romania lacks a dedicated institution to
promote pro-productivity policies.
Digital public services
Romania
made
steady
progress
in
digitalisation of public services
(Table A6.2).
Yet, with scores of 52.2 and 50 respectively
Romania significantly lags behind with the EU
averages of 79.4 and 85.4 respectively is still
quite significant. However, growth rates of 10-
12% indicate strong progress, suggesting potential
convergence with the EU average and the
possibility of reaching targets before 2030. Efforts
to digitalize key national and regional services,
establish a governmental cloud, and create an
interoperability portal and framework are crucial.
Additionally, Romania has scope to improve access
to e-health records to meet the digital decade
target.
In September 2024, Romania notified the
Commission of one eID scheme
with a
substantial level of assurance, ROeID. While the
use of ROeID is growing fast, just 1.6% of
individuals in Romania have used their eID to
access services provided by public authorities or
public services in their country in the previous 12
months, compared to an EU average of 35.8%.
Romania has also not yet set up and notified eID
schemes for legal persons under the eIDAS
Regulation (
87
). This means that Romanian
businesses cannot authenticate themselves to
access public services provided by other Member
States, including those enabled by the Once-Only
Social dialogue
Social dialogue in Romania continues to face
challenges.
Social partners have limited
opportunities for timely and meaningful
involvement in policymaking and reform
implementation. Despite improvements, the
collective bargaining coverage remains low,
particularly at sectoral level. Romania adopted a
new Social Dialogue Law in December 2022, a
reform supported by its RRP, which aims to
address deficiencies with the social dialogue
process and to increase collective bargaining
coverage. The ESF+ is allocating EUR 85 million in
the 2021-2027 programming period to boost
capacity of social partners and civil society
organisations to engage in social dialogue and
develop partnerships (
86
).
infrastructure projects
–
Final report,
Publications Office of
the European Union, 2025, available at
link.
(
86
) For an analysis of the involvement of
Romania’s
social
partners at national level in the European Semester and the
Recovery and Resilience Facility, see Eurofound (2025),
National-level social governance of the European Semester
and the Recovery and Resilience Facility.
(
87
) European Commission,
eIDAS Dashboard.
61
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Technical System, part of the EU Single Digital
Gateway (
88
).
Romania is developing the necessary
infrastructure for seamless, automated
exchange of authentic documents and data
across the EU.
There are still additional steps to
be taken by Romania to become technically ready
to connect to the Once-Only Technical System (
89
).
Graph A6.3:
Participation rate of 25-64 year olds
in adult learning (%) by occupation
20
18
16
14
12
10
8
6
4
2
0
RO
EU-27
RO
EU-27
RO
EU-27
RO
EU-27
2021
2022
2023
2024
positions was significant at 51.0 %, above the EU
average of 45.4 % (
91
).
The management of the public administration
workforce is undermined by a lack of
integration and coherence, despite national
efforts to improve.
The regulatory framework
for a national electronic system with data on
public sector employees on organizational
structure, functional classification, salary and
other employment aspects was adopted (
92
).
Measures targeting the development of IT
platforms for managing human resources
processes are included in the RRP.
Integrity
Businesses consider corruption to be
widespread.
In Romania, 94% of companies
consider that corruption is widespread (EU average
64%) and 71% consider that corruption is a
problem when doing business (EU average 36%)
(
93
). Moreover, 34% of companies believe that
people and businesses caught for bribing a senior
official are appropriately punished (EU average
31%) (
94
). The authorities maintain a positive track
record in combating corruption, including as
regards high level corruption cases. However,
following rulings by the High Court of Cassation
and Justice on the statute of limitations, Courts
have closed many corruption cases and annulled
convictions (
95
). Romania adopted the Law no.
319/2014 to widen the scope of bribery of foreign
public officials and to increase the currently low
sanctions for legal persons (
96
). Furthermore, public
procurement remains a sector with a high risk of
corruption in Romania. 24% of companies (EU
average 27%) think that corruption has prevented
them from winning a public tender or a public
procurement contract in practice in the last three
(
91
) European Institute for Gender Equality (EIGE) -
Gender
Statistics Database
(
92
)
Government decision No. 833 of 11 July 2024.
(
93
)
Flash Eurobarometer 543 on Businesses’ attitudes towards
corruption in the EU (2024).
(
94
) Ibid.
(
95
) See the 2024 country-specific chapter for Romania of the
Rule of Law Report, pp. 13-14.
(
96
) Ibid, p. 12.
Public administration and defence; compulsory social security
High-skilled occupations
Unskilled occupations
Medium-skilled occupations
Armed forces
Total economy
Source:
ew European Commission, based on the Labour Force
Survey
Civil service
Romania has a relatively young civil service,
with a higher ratio of staff aged 49 or below
compared to those aged 50 or above than the EU
average (
90
). The main challenge facing Romania is
improving the attractiveness of public sector
employment
for
skilled
managers
and
professionals who perceive the public sector to be
unattractive. Moreover, the share of civil servants
in Romania who participate in adult learning is
below that of the EU-27, albeit increasing (Graph
A6.3). The share of women in senior administrative
(
88
) European Commission,
The Once Only Principle System: A
breakthrough for the EU’s Digital Single Market
(
89
) European Commission,
Once-Only Technical System
Acceleratormeter
(
90
) Eurostat. Labour Force Survey. Employment by sex, age and
economic activity.
62
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years (
97
). With the support of the EU’s Technical
Support Instrument, Romania aims to identify
which areas and procedures of public procurement
are most prone to corruption (
98
).
Romania remains without a lobby register for
contacts with Members of Parliament.
The
engagement of Members of Parliament with
lobbyists and other third parties seeking to
influence the legislative process therefore remains
unregulated and there are also no clear rules on
gifts, hospitality, favours and other benefits (
99
).
Increased transparency may help preserve a level
playing field for businesses.
Justice
The justice system performs efficiently
overall.
The average length at first instance in
civil and commercial cases is decreasing (204
days in 2023 compared to 209 in 2022). The
average length at first instance in administrative
cases increased (387 days in 2023, compared to
321 in 2022). The high rate of vacancies for
magistrates remains a concern (
100
). The quality of
the justice system is good overall. Continuous
efforts are being made to improve digitalisation
within the justice system. However, with regard to
procedural rules enabling digital technologies in
courts, the use of digital technologies in the
prosecution service, access to electronic files of
ongoing cases, and digital solutions to conduct and
follow criminal case proceedings, Romania is still
below EU average. Progress was made to
safeguard the independence of the judiciary with
the adoption of the Justice Laws in 2022 and the
Ministry of Justice is considering evaluating their
implementation, which stakeholders, including
from the magistracy and civil society, would
welcome. (
101
)
(
97
)
Flash Eurobarometer 543 on Businesses’ attitudes towards
corruption in the EU (2024).
(
98
) See the 2024 country-specific chapter for Romania of the
Rule of Law Report, p. 19.
(
99
) Ibid., pp. 17-18.
(
100
) Ibid., pp. 7-8.
(
101
) For more detailed analysis see the upcoming 2025 EU
Justice Scoreboard and the 2024 Rule of Law Report.
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SUSTAINABILITY
ANNEX 7: CLEAN INDUSTRY AND CLIMATE MITIGATION
Romania
faces
significant
challenges
regarding its clean industry transition and
climate mitigation:
While efforts to increase
manufacturing capacity in net zero technologies
are underway, progress is hindered by fragmented
ecosystems, skills shortages, and a lack of
targeted regulatory measures. Although the
country is less dependent on imports for critical
raw materials, its low circular material use rate
highlights an urgent need for enhanced recycling
and circularity strategies. Romania's high
greenhouse gas emissions intensity and slow
transition toward renewable energy sources
necessitate a broader portfolio of decarbonization
instruments, as well as improved waste
management and increased investments in
sustainable practices. This annex reviews the areas
in need of urgent attention in Romania’s clean
industry transition and climate mitigation, looking
at different dimensions.
License Office in charge of the rationalisation,
simplification and digitisation of the specific
procedures to grant a single industrial license.
Incentives schemes supporting investment
and skills in net zero technologies have been
put in place.
In terms of investment, the National
Plan for Recovery and Resilience (Planul Național
de Redresare și Reziliență) allocates EUR 199
million in grants for projects involving batteries
and solar cells/panels. The plan aims to promote
investment in production, assembly, and recycling
capacities for batteries (at least 2 GW) and
photovoltaic cells/panels (at least 200 MW), with a
maximum annual budget of EUR 150 million.
Various skills programmes are also available,
including Romania’s recovery and resilience plan
(RRP) and REPowerEU.
Transforming the car industry
The automotive industry is a crucial sector
for Romania.
Automotive is the top industrial
sector with 13-14% of GDP and 1/3 of exports. It
accounts for as much as half of manufacturing.
With more than half a million cars a year, Romania
ranks 6
th
to 8
th
among the biggest producers in the
EU, on a par with Hungary and Italy. The sector has
moved up the value-added chain. 70% of
everything for Dacia is made locally (everything
except design).
The external economic environment creates
significant challenges for the future.
40% of
manufactured exports go to Germany. The
weakening of the German economy is affecting
the automotive sector as well as Romanian
industry in general.
The transition to e-vehicles is lagging behind
EU averages.
In 2022, Romania’s motorisation
rate (the number of passenger cars per thousand
inhabitants) was 482, one of the lowest in the EU
(EU average: 659). The average age of cars was
14.9 years, above the EU average (12.3 years). At
40%, the share of new electric cars registered was
the fifth highest in the EU in 2023(
103
).
(
103
)
European Automobile Manufacturers’ Association (ACEA). The
Automobile Industry Pocket Guide 2024/2025 (2024);
European Environment Agency, New Registrations of Electric
Vehicles in Europe, 2024.
Strategic autonomy and technology
for the green transition
Net zero industry
Although Romania’s manufacturing capacity
in net zero technologies is modest and
fragmented, it appears to be ramping up its
capacity in the battery and storage
industry(
102
).
It lacks scale as well as established
ecosystems supporting local supply chains and
innovation. Combined with a prevailing skills
shortage, this is a serious hurdle that Romania
needs to overcome to scale up its net-zero
manufacturing capabilities.
Romania’s regulatory framework related to
net zero manufacturing is focusing on high-
-level industrial policy, without targeted
measures.
Romania's 2023-2027 Industrial
Strategy focuses on the digital and green
transitions and expanding domestic production in
strategic and high-tech sectors. Progress was
made with the introduction of the Industrial
(
102
) European Commission: Directorate-General for Energy,
The
net-zero manufacturing industry landscape across the
Member States 2025.
64
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Critical raw materials
Romanian manufacturing’s dependence on
imports of critical raw materials is low.
With
8.1% of material inputs stemming from imports in
2023 (EU average: 22% (
104
)), Romania is the least
vulnerable to supply chain disruptions of all EU
Member States. Its index of strategic dependencies
on raw materials in 2023 was one of the lowest in
the EU, suggesting that its sources of supply are
well diversified.
Romania addresses critical raw materials
(CRMs) and CRM-rich products in several
national laws and initiatives.
The “National
Strategy for Non-Energy Mineral Resources,
Horizon 2035” was adopted at the end of 2024. It
will tackle the circularity of CRMs and other
CRM-relevant
aspects. Romania’s efforts to
moderate the expected rise in demand for CRMs
also include increased investment in R&D and
education via its national Circular Economy Action
Plan. Planned measures include training activities
on the circular economy.
Romania can help reduce the EU’s strategic
dependencies.
The country may be a source of
critical raw materials for the green transition, but
certification and exploitation for these materials
remain difficult. Permitting for CRM works well in
Romania (60 days, well below the EU target of 27
months).
Romania has a very low circular use of
materials.
This has been slowly declining since
2012 and stood at 1.3% in 2023. This is the
lowest rate in the EU, considerably below the EU
average of 11.8% (
105
).
recent years saw only modest reductions.
At
18%, the share of manufacturing in Romania’s
total greenhouse gas emissions is below the EU
average of 21% (
106
).
Romania’s manufacturing
sector emits 520 g of CO2eq of greenhouse gases
per euro of GVA, almost twice the EU average of
270 g/€. The GHG emissions intensity of
manufacturing declined by 6% between 2017 and
2022, much less than in the EU overall (20%).
Among Romania’s greenhouse emissions from
manufacturing activity, 57% are related to energy
and the remainder comes from industrial
processes and product use
–
the same shares as in
the EU overall.
Graph A7.1:
GHG emission intensity of
manufacturing and energy-intensive sectors,
2022
6
5
KG CO
2
eq / €
4
3
2
1
0
C-C19
C17
Romania
C20
EU-27
C23
C24
Source:
Eurostat.
Romania’s manufacturing has become more
energy efficient, but its GHG emissions
intensity from industry processes and
product use is still high.
Between 2017 and
2022, the energy-related greenhouse gas
emissions intensity of Romania’s manufacturing
output
decreased by 20%, to 124 g CO2eq/€ (93%
of the EU average), while in the EU overall it
decreased by 16% (
107
). At the same time,
(
106
)
In 2023. Manufacturing includes all divisions of the “C”
section of the NACE Rev. 2 statistical classification of
economic activities. In the remainder of this section, unless
indicated otherwise, data on manufacturing refer to the
divisions of the NACE section C excluding division C19
(manufacture of coke and refined petroleum products), and
the year 2022. The source of all data in this section is
Eurostat; data following the UNFCCC Common Reporting
Framework (CRF) are from the European Environment Agency
(EEA), republished by Eurostat.
(
107
) For the GHG emissions intensity of GVA related to energy use
and industrial processes and product use respectively, GHG
emissions are from inventory data in line with the UNFCCC
Common Reporting Format (CRF), notably referring to the
source sectors CRF1.A.2
–
fuel combustion in manufacturing
industries and construction and CRF2
–
industrial processes
and product use. The CRF1.A.2 data broadly correspond to
Climate mitigation
Industry decarbonisation
Romania's manufacturing industry has a high
intensity of greenhouse gas emissions, and
(
104
)
Statistics | Eurostat
(
105
)
Source:,
Eurostat, ‘Circular material use rate’,
last updated
13.11.24.
65
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concerning industrial processes and product use,
the GHG emissions intensity from these sources of
manufacturing in Romania decreased by 15%, to
208 g/€ (still over twice the EU average of 99 g/€).
The EU-wide reduction was 23% in the same
period. In the meantime, the share of renewables
and electricity in manufacturing’s final energy
consumption decreased by 3 percentage points to
32%, the third lowest in the EU. The
energy-intensity characteristics of manufacturing
have improved though, with the final energy
consumption by the sector decreasing by 8 per
cent
–
by 1.9 GWh in 2017 per euro of GVA
–
to a
figure of 1.8 GWh/€.
Graph A7.2:
Manufacturing industry production:
total and selected sectors, index (2021 = 100),
2017-2023
kg, 3.1 kg, and 5.4 kg CO2eq respectively per euro
of GVA, the manufacture of paper and paper
products, chemicals, and non-metallic minerals in
Romania had emissions intensity among the third
to fifth highest EU-wide in 2022.
The GDP share of energy intensive industries
dropped significantly following the increase
in energy prices.
In recent years, Romania has
seen an increase in energy prices, with electricity
prices for large consumers ranking fifth highest in
the EU in 2023 (
109
). Except for the paper products
industry, production in Romania’s
energy-intensive
sectors has declined since 2021, by up to around
30% in metal processing and more than 20% in
the chemicals sector. If the share of energy
intensive industry hovered around 4-5% in 2018-
2021, it declined steeply to 2.8% by 2023.
Romania has scope to broaden its toolkit to
support decarbonisation of manufacturing
production
The current plans for decarbonising
industry are based on increasing the use of
renewables, gas and nuclear capacities. Romania
has a national circular economy strategy and
action plan. Adding further instruments such as
contracts for difference and the increased use of
power purchase agreements, is under way, with
RRP support. This could step up support to industry
to help it modernise and decarbonise. Green public
procurement could also support industry
decarbonisation on the demand side but has only
been used little so far.
Reduction of emissions in the effort sharing
sectors
Romania is projected to reach its 2030 effort
sharing target if it adopts and implements
the planned additional climate mitigation
measures (
110
).
In 2023, greenhouse gas
emissions from Romania’s effort sharing sectors
are expected to have been 3.8% below those of
2005. By 2030, current policies are projected to
reduce these emissions by 8.9% relative to 2005
levels. Additional policies considered in
Romania’s
(
109
) For a detailed analysis of energy prices, see Annex 8 on the
affordable energy transition.
(
110
)
The national greenhouse gas emission reduction target is set
110
105
100
95
90
85
80
75
70
2017
2018
2019
2020
2021
2022
2023
Manufacturing
Manufacture of paper and paper products
Manufacture of chemicals and chemical products
Manufacture of other non-metallic mineral products
Manufacture of basic metals
Source:
Eurostat.
Romania’s
energy-intensive
industries have
high levels of greenhouse gas emissions
intensity by EU standards.
Energy-intensive
industries (
108
)
account for 11% of Romania’s total
manufacturing gross value added (2022). With 1.2
the NACE C and E sectors, excluding C-19. GVA data (in the
denominator for both intensities) are aligned with this
sectoral coverage. Therefore, they are not fully consistent
with the data referred to in other part of this section
(
108
) Notably, the manufacture of paper and paper products
(NACE division C17), of chemicals and chemical products
(C20), “other” non-metallic
mineral products (C23; this
division includes manufacturing activities related to a single
substance of mineral origin, such as glass, ceramic products,
tiles, and cement and plaster), and basic metals (C24). To
date, these industries are energy-intensive
–
i.e. consuming
much energy both on site and/or in the form of purchased
electricity
–
and greenhouse gas emissions intensive, in
various combinations.
out in Regulation (EU) 2023/857 (the Effort Sharing
Regulation). It applies jointly to buildings (heating and
cooling); road transport, agriculture; waste; and small industry
(known as the effort sharing sectors).
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final updated energy and climate plan (NECP) are
projected to involve reductions of a further 6.4
percentage points. Hence Romania is projected to
overachieve its effort sharing target, a 12.7%
reduction, by 2.6 percentage points (
111
), once it
has adopted and implemented those measures.
Graph A7.3:
Greenhouse gas emissions in the
effort sharing sectors, 2005 and 2023
90
80
70
60
MtCO2e
50
40
30
20
10
0
average and the lowest in the EU. Romania’s
resource productivity, too, was below the EU
average in 2023, with EUR 0.34 per kg of material
consumed. It has been constantly stagnating and
below the EU average over the past decade; this
has negative environmental impacts and increases
dependence on volatile raw material markets. In
2023 Romania adopted its national Action Plan
promoting the Circular Economy, as part of its
2022 National Strategy for the Circular Economy.
The Action Plan sets a general direction for
accelerating the transition from a linear to a
circular economy model in Romania.
Despite generating less waste than the EU
average, Romania continues to face
challenges with waste management.
It saw a
decrease in the total amount of waste generation
between 2010 and 2022. However,
Romania’s
municipal waste generation has slightly increased
in recent years. In 2022, the country generated
303 kg/cap of municipal waste. With a recycling
rate of 12%, which has stagnated since 2010, it is
one of the worst performers. The landfill rate was
74% in 2022, with no progress made since 2010.
In 2021, at 32%, its recycling rate for plastic
packaging was below the EU average (
112
). In 2022,
52.1% of construction and demolition waste was
recycled, excluding backfilling, far below the EU
average of 79.8%. At the same time, the material
footprint of 33.2 tonnes per capita is more than
double the EU average (14 tonnes per person) and
the second highest value in the EU. Because
Romania missed the 2020 municipal waste
targets, the packaging and waste targets and the
waste electrical and electronic equipment target,
the Commission initiated legal proceedings.
Romania is at risk of missing both the 2025
municipal waste and the packaging waste targets
and may also not meet the 2035 target of
maximum 10% of municipal waste landfilled.
Although Romania has made some progress on
closing substandard and illegal landfills, progress
has been too slow and it is paying the resultant
financial penalties (
113
).
2005
Domestic transport (excl. aviation)
Agriculture
Waste
2023
Buildings (under ESR)
Small industry
Source:
European Environment Agency
Swift action on decarbonising transport and
buildings appears particularly necessary in
Romania.
Between 2005 and 2023, greenhouse
gas emissions from road transport increased by
65% in Romania, while they decreased by 5% in
the EU overall. From buildings, they decreased by
6%, much less than the 33% seen in the EU
overall. Speeding up climate mitigation in these
sectors would help protect households, businesses
and transport users in Romania from the impact of
the forthcoming carbon price.
Sustainable industry
Circular economy transition
Romania is still lagging behind on its
circularity transition.
Its circular use of
materials has been slowly declining since 2012.
With 1.3% in 2023, the rate is below the EU
(
111
)
The effort sharing emissions for 2023 are based on
approximated inventory data. The final data will be
established in 2027 after a comprehensive review.
Projections on the impact
of current policies (“with existing
measures”, WEM) and additional policies (“with additional
measures”, WAM), as per Romania’s final updated NECP.
(
112
) The latest available data for packaging waste is for year
2021.
(
113
) In case (INFR(2008)2012), to date, 29 landfills remain open,
with Romania paying the resultant penalties. In a different
case, more than half of the landfills subject to the case
(INFR(2017)2024) have already closed.
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Current investment in the circularity
transition has been insufficient.
Romania is
estimated to need additional investment worth at
least EUR 426 million per year, with an additional
EUR 108 million for waste management.
Combined, this amounts to EUR 534 million a year,
representing 0.19% of Romania’s GDP. Of
the
circular economy gap, EUR 112 million relates to
recent initiatives, such as eco-design for
sustainable products, packaging and packaging
waste, labelling and digital tools, critical raw
materials recycling and measures proposed under
the amended Waste Framework Directive. EUR
314 million constitutes further investment needed
to
unlock
Romania’s
circular
economy
114
potential ( ).
Zero pollution industry
Romania has been making progress in
reducing air pollution, which is now
decoupled from GDP growth, but several
shortcomings are still to be addressed.
The
2020-2029 emissions reduction commitments
under the National Emissions Reduction
Commitments Directive have been met, except for
NO
x
and PM
2.5
. Romania projects to meet the
stricter emissions reduction commitments for
2030 and onwards. In 2023, air quality limit
values for nitrogen dioxide (NO
2
) set by the
Ambient Air Quality (AAQ) Directive were breached
in one air quality zone, and for PM
10
in four air
quality zones. Shortcomings have been identified
in air quality monitoring for some time now.
Romania has made some progress, as some
monitoring stations have been added to the
network, but gaps remain concerning the
appropriate number and type of air quality
sampling points and data quality objectives.
Romania’s industry still releases large
amounts of air and water pollutants.
Although
it has the 10th highest damage in the EU, it comes
6th for emissions intensity, above the EU average
of 27.5 EUR/thousand EUR GVA. The main
contributors to emissions to air are the energy
sector as well as the mineral industry for NO
X
emissions; the waste management and chemical
industry for dust emissions; and the energy sector,
metals sector and mineral sector for SO
2
and
(
114
) European Commission, DG Environment,
Environmental
investment needs & gaps assessment programme,
2025
update. Expressed in 2022 prices.
heavy metals. Romania has the 14th highest
amount of emissions of heavy metals to water
and is in 13th position for emissions intensity
(below the EU average intensity of 0.864 kg/billion
EUR GVA). The main contributors of emissions to
water in Romania are the mineral extracting
industry for heavy metals, refineries for
phosphorus and chemicals for total organic
carbon.
The costs of pollution remain far higher than
the investment in pollution prevention and
control.
For 2022, about 17 900 deaths were
attributed to fine particulate matter (PM
2.5
), 3 600
deaths to nitrogen dioxide (NO
2
) and 2 800 deaths
each to ozone. To meet its environmental
objectives concerning pollution prevention and
control (towards zero pollution), Romania needs to
provide an additional EUR 805 million per year
(0.28% of GDP), mostly related to clean air and
noise. The current investment levels supporting
pollution prevention and control reach an
estimated EUR 1.3 billion per year in Romania in
2021–2027. Most of the financing concerns clean
air (EUR 1.2 billion per year). Protection from
environmental noise receives around EUR 0.6
billion per year, with a further EUR 47 million for
site remediation. EUR 2.1 billion per year is needed
for pollution prevention and control (
115
).
(
115
) European Commission, DG Environment,
Environmental
investment needs & gaps assessment programme,
2025
update. Expressed in 2022 prices.
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Table A7.1:
Key clean industry and climate mitigation indicators: Romania
Strategic autonomy and technology for the green transition
Net zero industry
Operational manufacturing capacity 2023
- Solar PV (c: cell, w: wafer, m: module), MW
- Wind (b: blade, t: turbine, n: nacelle), MW
Automotive industry transformation
Motorisation rate (passenger cars per 1000 inhabitants), %
New zero-emission vehicles, electricity motor, %
Critical raw materials
Material import dependency, %
Climate mitigation
Industry decarbonisation
GHG emissions intensity of manufacturing production, kg/€
Share of energy-related emissions in industrial GHG emissions
Energy-related GHG emissions intensity of manufacturing
and construction, kg/€
Share of electricity and renewables in final energy consumption
in manufacturing, %
Energy intensity of manufacturing, GWh/€
Share of energy-intensive industries in manufacturing production
GHG emissions intensity of production in sector [...], kg/€
- paper and paper products (NACE C-17)
- chemicals and chemical products (NACE C20)
- other non-metallic mineral products (NACE C23)
- basic metals (NACE C24)
Reduction of effort sharing emissions
GHG emission reductions relative to base year, %
- domestic road transport
- buildings
2005
Effort sharing: GHG emissions, Mt; target, gap, %
Sustainable industry
Circular economy transition
Material footprint, tonnes per person
Circular material use rate, %
Resource productivity, €/kg
Zero pollution industry
Years of life lost due to PM2.5, per 100,000 inhabitants
Air pollution damage cost intensity, per thousand € of GVA
Water pollution intensity, kg weighted by human factors per bn € GVA
1,329
1,091
1,175
1,122
47.3
0.7
1,423
-
702
571
27.5
0.9
2018
23.4
1.6
0.5
78.2
Romania
2019
28.0
1.4
0.4
2020
29.4
1.5
0.4
2021
30.5
1.5
0.4
2022
30.4
1.5
0.5
2023
33.2
1.3
0.5
1.04
4.09
4.01
3.92
0.88
4.58
4.27
4.29
2018
47.3
-0.8
0.94
4.62
4.70
4.57
2019
51.0
-0.7
0.79
5.33
5.54
6.36
2020
47.2
0.9
0.99
4.37
4.74
4.49
2021
5.9
56.6
14.9
2021
82.8
2017
0.56
48.7
258.4
34.7
1.94
2018
0.55
48.6
264.6
33.6
1.89
Romania
EU-27
100-250 (m)
-
2017
307
0.22
2017
2018
332
0.46
2018
10.7
2019
357
0.93
2019
9.5
- Electrolyzer, MW
- battery, MWh
2020
379
2.25
2020
9.3
2021
400
5.23
2021
10.1
2022
413
9.00
2022
9.9
-
0-200
2023
425
10.63
2023
8.1
Trend
2018
539
1.03
2018
24.2
2021
561
8.96
2021
22.6
Romania
2019
0.55
47.9
256.2
32.9
1.91
2020
0.64
48.5
294.8
31.1
2.02
2021
0.61
46.8
286.6
30.4
2.02
2022
0.52
46.4
273.0
32.1
1.79
10.1
1.24
3.09
5.37
3.68
2022
4.0
69.0
6.6
2022
81.4
1.24
3.19
5.52
2.63
2023
3.8
64.8
-6.0
2023
81.2
2023
0.48
43.3
-
34.0
1.52
EU-27
2017
0.34
44.8
158.4
43.3
1.29
2022
0.27
42.5
132.9
44.2
1.09
7.3
-
-
-
-
0.73
1.25
2.53
2.79
2018
1.4
21.4
0.68
1.26
2.24
3.49
2023
5.2
32.9
WAM
2.6
Target
-12.7
Trend
WEM
-3.8
EU-27
2018
14.7
11.6
2.1
2021
15.0
11.1
2.3
Source:
Net zero industry:
European Commission:
The net-zero manufacturing industry landscape across Member States: final
report,
2025.
Automotive industry transformation:
Eurostat.
Critical raw materials:
Eurostat.
Climate mitigation:
See
footnotes in the "climate mitigation" section; reduction of effort sharing emissions:
EEA greenhouse gases data viewer;
European
Commission,
Climate Action Progress Report,
2024.
Sustainable industry:
Years of life lost due to PM2.5: Eurostat and EEA,
Harm to human health from air pollution in Europe: burden of disease status,
2024. Air pollution damage: EEA,
EU large industry
air pollution damage costs intensity,
2024. Emissions covered: As, benzene, Cd, Cr, Hg, NH3, Ni, NMVOC, NOX, Pb, dioxins, PM10,
PAH, SOX. Water pollution intensity: EEA,
EU large industry water pollution intensity,
2024. Releases into water covered from
cadmium, lead, mercury, nickel. Other indicators: Eurostat.
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ANNEX 8: AFFORDABLE ENERGY TRANSITION
This annex outlines the progress made and
the ongoing challenges faced in enhancing
energy competitiveness and affordability,
while advancing the transition to net zero.
It
examines the measures and targets proposed in
the final (draft) updates to the national energy
and climate plans (NECPs) for 2030.
Romania has a good situation in terms of
security of energy supply,
and contributes to
the stability of the region.
Energy efficiency has
continued to progress well,
and compared to
previous years in 2024 there was a more
significant deployment of renewable energy.
However, Romania is facing a number of
challenges related to the affordable energy
transition,
in particular structural bottlenecks in
storage solutions, weak consumer empowerment,
limited cross-border trade, long permit-granting
procedures for renewable energy that are slowing
down their deployment, limited development of
power purchase agreement (PPAs), and a high
fiscal burden on electricity, distorting energy price
signals for electrification.
Romania’s retails energy prices dropped in
2024 with the exception of gas prices for
household
consumers
and
remained
considerably below EU average.
Retail
electricity prices for households were around 35%
lower than the EU average with slightly higher
share of network costs (35.1% of the final
electricity prices for an EU average of 27.2%),
while for non-household consumers, prices were
just below EU average with the shares of all
components (energy and supply, network costs,
taxes and levies) broadly following EU trends.
Retail gas prices for households and non-
household consumers were the third least
expensive in the EU, but with slightly higher share
of network costs and considerably lower taxes and
levies than EU average. The various measures
adopted by the Romanian authorities and in force
throughout 2024, meant to cap the electricity and
gas prices, also played a role in this evolution.
Graph A8.2:
Monthly average day-ahead wholesale
electricity prices and European benchmark
natural gas prices (Dutch TTF)
Energy prices and costs
Graph A8.1:
Retail energy price components for
household and non-household consumers, 2024
(i) For household consumers, consumption band is DC for
electricity and D2 for gas. Taxes and levies are shown
including VAT.
(ii) For non-household consumers, consumption band is ID for
electricity and I4 for gas. Taxes and levies are shown
excluding VAT and recoverable charges, as these are typically
recovered by businesses.
Source:
Eurostat
(i) the Title Transfer Facility (TTF) is a virtual trading point for
natural gas in the Netherlands. It serves as the primary
benchmark for European natural gas prices.
(ii) CEE and CWE respectively provide average prices in the
central-western European (Belgium, France, Germany,
Luxembourg, the Netherlands and Austria) and central-
eastern European (Poland, Czechia, Slovakia, Hungary,
Slovenia and Romania) markets.
Source:
S&P Platts and ENTSO-E
With an average of 103 EUR/MWh in
2024(
116
),
Romania had the EU’s fourth
highest wholesale electricity prices
–
and
while prices in Romania declined early in the
(
116
) Fraunhofer (ENTSO-E data).
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year amid falling natural gas costs, they
surged during the spring/summer and again
in the winter, diverging from central eastern
European (CEE) markets.
This decorrelation was
driven by factors affecting both consumption and
generation. Prolonged and warmer summer
heatwaves and a colder winter in the region led to
higher consumption. The supply-demand gap was
exacerbated by reduced hydropower reserves and
reduced wind output due to meteorological
conditions (-11%(
117
) and -15% in 2024),
diminished nuclear generation due to malfunctions
(-4%), lower coal output (-15%) due to rising CO
2
costs and limited non-fossil flexibility. This gap
was mainly covered by higher imports, particularly
from Hungary and Serbia(
118
), as well as increased
costly natural-gas-fired generation (+8% in 2024)
in the summer, especially during peak demand
hours. These conditions drove concentrated price
spikes in the evening hours (18h-21h), when solar
output declined and demand increased, especially
during the summer. On the other hand, average
daytime hourly prices were lower compared to
2023, likely owing to the increased solar output in
Romania (+88% in 2024)(
119
).
Romania has several projects of common
interest in electricity transmission that also
have a priority status under the CESEC High-
Level Group.
These are: (i) internal lines
Cernavoda-Stalpu, and Gutinas-Smardan as part
of the Black Sea corridor with Bulgaria, (ii) internal
lines Portile de Fier-Resita, Resita-Timisoara/
Sacalaz and Arad-Timisoara/ Sacalaz and lastly
(iii) cross-border interconnections such as the
Resita-Pancevo line as part of the mid-continental
east corridor with Serbia. The completion of the
infrastructure is also supporting the integration of
Moldova’s power system into the European
electricity market and its security of supply by
realising two electricity transmission lines:
Isaccea- Vulcanesti- Chisinau and Suceava– Balti.
The national framework for the permitting of
energy infrastructure projects is well
structured.
However, there is room for
improvement in terms of coordination among
various public authorities across different levels.
The administrative procedures involved in energy
infrastructure development are very complex.
Moreover, the permitting framework does not yet
take the hydrogen and CO
2
infrastructure into
account. There is scope for improvements in terms
of streamlining environmental assessments and
the duration of procedures.
The challenges to energy system integration
are significant, with the waiting times for
connecting renewable energy sources (RES)
to the grid remaining long.
Grid connection
tends to be cumbersome due to limited availability
in specific areas. The burden of high costs
associated with grid reinforcement and expansion
continues to fall on investors, while some
construction deadlines have been delayed by the
transport system operator (TSO) and district
system operator (DSO) by up to two years.
The Romanian recovery and resilience plan
includes measures to accelerate the
deployment of renewable energy.
These are
reforms that aim to decarbonise the energy
system, facilitate the use of state land as
acceleration areas for RES investments, and
investments supporting the installation of new
renewable power production capacity (wind and
solar), as well as electricity storage.
Flexibility and electricity grids
Romania is part of the Core(
120
)
and south-
east Europe(
121
)
capacity calculation regions
(CCRs)(
122
). Member States should ensure that a
minimum of 70% of technical cross-border
capacity is available for trading. In the Core region,
Romania is not fulfilling this target, and has a
derogation in place that limits the cross-zonal
capacity available for trading. In the south-east
Europe CCR, electricity flows are heavily influenced
by exchanges in nearby bidding zone borders,
including the western Balkan countries.
(
117
) ENTSO-E.
(
118
)Both increasing natural gas-fired generation in 2024.
(
119
)Yearly electricity data, Ember (generation and consumption
data throughout the paragraph).
120
( )Core is the CCR which covers central European countries
namely Austria, Belgium, Czechia, Germany, France, Croatia,
Hungary, the Netherlands, Poland, Romania, Slovenia,
Slovakia and, once connected, Ireland.
121
( )South-east Europe is the CCR to which Romania, Bulgaria
and Greece belong.
(
122
)A CCR is a group of countries which calculate the cross-
border electricity trade flows together.
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In 2023 there were
32 occurrences of negative
electricity prices
in Romania(
123
). RES
curtailment and the associated costs do not seem
to be monitored in Romania (this is flagged by
ACER as a weakness in Romania’s country sheet
2023)(
124
).
Romania’s electricity storage capacity
reported in the draft updated NECP is around
16.2 MW. Romania has already taken steps to
promote the installation of electricity storage, in
particular power battery storage, with a target of
at least 1 200 MW by 2030 (800 MW of which
from pumped storage hydroelectric power plants),
around 2 000 MW by 2035 and 4 500 MW by
2040.
Romania’s
regulatory
framework
still
presents barriers to the development of
flexible resources, hindering the participation
of demand-side response (DSR) and other
distributed energy resources.
Romania allows
DSR and storage to sell and buy electricity in the
day-ahead and intraday markets, although
participation is limited. DSR and storage are also
allowed to participate in ancillary services and are
also eligible to provide congestion management
services to TSOs. Aggregators, including
independent aggregators, are allowed to
participate in the above-mentioned markets and
services, but their involvement is restricted by
regulatory and market barriers, such as the limited
deployment of smart meters or the lack of a
proper legal framework.
Despite progress regarding self energy
consumption,
consumer
empowerment
remains limited.
The number of prosumers is
steadily increasing. In 2024, 194 903 prosumers
were registered. However, no noticeable progress
has been made regarding the participation of
individuals in energy communities(
125
). While
initiatives exist for energy communities, the legal
framework in not always sufficiently clear and the
current procedures for setting up energy
communities are often viewed by the interested
parties as very complex. Romania has introduced
measures to protect vulnerable consumers of
energy by maintaining regulated prices and
(
123
) ACER.
(
124
) ACER
Country_Sheets_MMR_Retail_2024.pdf.
(
125
)The latest report from ACER mentioned only two energy
communities for Romania.
providing state support schemes for energy
efficiency and access to renewable energy (see
Annex 11).
Romania lacks explicit legislation for energy
sharing
despite efforts to redefine prosumers and
promote direct energy sales. In addition, the
country is
experiencing some delays in its plan
to develop smart meters:
Romania has legal
plans to reach an 80% target, but is still far from
this target (in 2023 the smart meter roll-out stood
at only 23%)(
126
).
In 2023, electricity accounted for 15.3% of
Romania’s final energy consumption, below
the EU average of 22.9%, and this share has
remained largely stagnant in the last
decade(
127
),
partly due to an unfavourable
electricity-to-gas
price
ratio
that
disincentivizes electrification and cost-
effective decarbonization.
When it comes to
households, electricity accounts for 15.0% of final
energy consumption, while in industry it represents
29.0% (see also Annex 7). For the transport sector,
this share remains negligible at 1.0%. Further
progress in electrification across sectors is
required for cost effectively decarbonising the
economy and bringing the benefits of affordable
renewable generation to consumers.
In 2024’s
second semester, Romania had one of the highest
electricity-to-gas price ratios in the EU, due to a
fiscal burden skewed towards electricity. Excluding
taxes and levies, this ratio was 3.1. for households
and 3.5 for energy-intensive industries, rising to
3.4 and 3;9, respectively, after taxes and levies.
For households, taxes and levies accounted for
~25,7% of the final electricity price, compared to
~16% for gas. For energy-intensive industries,
non-recoverable taxes and levies made up ~11%
of the electricity price, while gas was nearly tax-
exempt (~1%), making it more costly to shift to
electricity-based
heating
and
industrial
processes.(
128
)
(
126
) ACER report.
(
127
)CAGR (compound annual growth rate) of -0.5% between
2013 and 2023 and minimum/maximum share of 15.3%
and 17.1%, respectively. Source: Final energy balances,
Eurostat.
128
( )Analysis based on Eurostat data for the second semester of
2024. For household consumers, consumption band is DC for
electricity and D2 for gas, which refer to medium-sized
consumers and provide an insight into affordability. For non-
household consumers, consumption band is ID for electricity
and I4 for gas, referring to large-sized consumers, providing
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Renewables and long-term contracts
Renewable energy sources represented 48%
of electricity generation in Romania in 2024,
compared to the EU’s overall RES share of
47%(
129
). In 2024 the renewable energy installed
capacity increased by 14%, marking a clear
progress after several years of almost stagnation.
This was due mostly to the significant increase (by
57%) of solar. In 2024, Romania installed 1.7 GW
of solar energy. No significant increases were
observed for the other renewable energy
sources.(
130
)
Graph A8.3:
Romania's installed renewable
capacity (left) and electricity generation mix
(right)
establishment of regulatory sandboxes, as well as
introducing legal clarity on energy communities.
Based on its updated NECP, Romania aims to
ensure that 38.3% of renewable energy
forms part of the gross final consumption of
energy by 2030.
This applies to all forms of
renewables, from which 15% come from wind
power capacity and 11% from solar power
capacity. While increased compared to the draft
updated NECP, this target remains below the
contribution calculated based on the EU
Legislation (which is 41%).
So far, Romania does not have a market for
power purchase agreements (PPAs).
Beyond
possible regulatory barriers, the pipeline of
renewable energy projects is too constrained to
allow for sufficient supply to feed a PPA market.
In 2024, Romania launched a contract for
difference
(CfD)
mechanism
for
the
construction of renewable energy installations and
opened the first auction for 1.5 GW of renewable
energy generation capacities
–
500 MW of solar
photovoltaics (PV) and 1 GW of onshore wind.
“Other” includes renewable municipal waste, solid biofuels,
liquid biofuels, and biogas.
Source:
IRENA, Ember
Energy efficiency
Energy efficiency gains have maintained
their pace in Romania, although a large
untapped potential still exists.
In 2023,
primary energy consumption (PEC) decreased by
3.4% to 29.95 Mtoe. Final energy consumption
(FEC) decreased by 3.1% to 23.28 Mtoe. Compared
to 2022, FEC decreased in industry by 13.6% and
in residential by 4.3%, whereas it increased in
transport by 7.8% and in services by 7.4%.
According to the recast Energy Efficiency Directive,
Romania should try to reach a PEC of 30.16 Mtoe
and an FEC of 22.47 Mtoe by 2030.
Under its long-term renovation strategy,
Romania aims to achieve 9% savings on
energy use and increase the annual
renovation rates to 3.39% by 2030.
Although
final energy consumption in households decreased
by 4.3% between 2022 and 2023, it increased
slightly by about 5% when applying climate
The Romanian permitting framework is
moderately aligned with the Commission’s
Recommendation.
Between 2023 and 2024, the
Romanian authorities took several important steps
to improve the legal framework for granting
permits for projects on renewables. This included
introducing measures to facilitate participation by
individuals and communities by enabling a
simplified grid connection procedure for renewable
self-consumers, as well as digital and transparent
grid connection processes. However, the permitting
process for renewable energy projects is not
centralised. This results in parallel procedures and
duplication of documentation requirements. There
is room for improvement also regarding the
an insight into international competitiveness (price used for
the calculation excludes VAT and other recoverable
taxes/levies/fees as non-household consumers are usually
able to recover VAT and some other taxes).
(
129
) Yearly electricity data, Ember.
(
130
) IRENA Renewable Capacity Statistics 2025.
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corrections(
131
). Unless Romania steps up its
efforts to improve the energy efficiency of
buildings, it would be difficult to reach the
expected objectives for 2030 in terms of reducing
energy consumption in the buildings sector.
Heating and cooling represent 76% of the
country’s
residential
final
energy
consumption, of which 29% comes from
renewables.
Approximately
2.5
million
households are using a gas boiler for heating
purposes, while the heat pump market remains
limited. While renovation programmes exist, there
are currently no financial programmes in place
that specifically target heat pumps(
132
). In
Romania, electricity was 3.4 times more expensive
than gas in 2023, decreasing to 3.2 times more
expensive in the first half of 2024. This means
that end users save energy but do not make any
significant financial savings if they choose a heat
pump for heating. The residential electricity-to-gas
price ratio has decreased by 14% over the past
five years, making heat pumps slightly more
financially attractive. However, Romania is taxing
electricity heavier than gas, increasing the
obstacles for the deployment of heat pumps
Romania’s national financing framework
mobilising investments in energy efficiency
is mostly composed of grants and subsidies.
In 2024, Romania continued to implement the
support scheme to improve the energy efficiency
of the industry sector, where investments support
also the deployment of digital energy consumption
measurement systems and promote on-site
renewable installation. Little private funding is
leveraged, in the absence of dedicated financial
instruments for energy efficiency and with an
underdeveloped energy services sector, as a key
market-enabler
for
energy
efficiency
improvements.
Security of supply and diversification
Despite progress in renewables, Romania’s
overall energy mix in 2023 remained heavily
reliant on fossil fuels,
with, oil accounting for
36% and natural gas for 25% of the energy
mix(
133
)(
134
), while renewables (together with
biofuels) accounted for 20%. There is little change
compared to the previous year, and overall, still
less than one third of the country’s energy mix
(20% renewables and 9% nuclear) comes from
non-fossil sources of energy. The recent efforts
made by Romania to decarbonise its energy sector
are not yet reflected in the energy mix.  
Romania covers most of its natural gas
demand from domestic production and has
diversified the sources of import for the
remaining part.
Romania does not need to
develop new cross-border gas infrastructure for
security-of-supply reasons. The country is
finalising the Tuzla-Podisor pipeline as part of the
BRUA corridor. Maximising the use of existing
infrastructure is essential for the security of
supply of the entire south-east European region. In
this context, the CESEC High-Level Group is looking
into the gas quality harmonisation process, with a
view to removing regulatory obstacles that impede
the use of the Trans-Balkan
pipeline. Romania’s
engagement in this process is essential in view of
the important role it plays for the security of
supply in the region.
Fossil fuel subsidies
In 2023, environmentally harmful (
[1]
) fossil fuel
subsidies without a planned phase-out before
2030 represented 0.47%(
[2]
)
of Romania’s GDP(
[3]
)
(
133
)Electricity and heat have been excluded to avoid double-
counting, focusing on primary energy sources.
(
134
) Gross inland consumption,
Eurostat.
(
[1]
) Direct fossil fuel subsidies that incentivise maintaining or
increasing in the availability of fossil fuels and/or use of
fossil fuels.
(
131
)Climate correction applied to whole final energy consumption
in households that is multiplied by the average heating
degree days (HDD) over the 2006-2023 period and divided
by the HDD in the corresponding year.
132
( )https://www.sustainability-
today.ro/index.php/2024/07/02/epg-scenarios-for-adoption-
of-heat-pumps-in-romania-until-2030/
(
[2]
) Numerator is based on volumes disclosed by the Romanian
authorities via the 2025 NECPR reporting. For all Member
States, it includes public R&D expenditures for fossil fuels as
reported by the IEA (Energy Technology RD&D Budgets) and
excludes, for methodological consistency, excise tax
exemption on kerosene consumed in intra-EU27 air traffic.
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(EU weighted average of 0.49%). Income/price
support accounted for 72% of this volume, while
tax measures and direct grants represented 17%
and 11%, respectively. Fossil fuel subsidies
without a planned phase-out before 2030 and
which do not specifically address, in a targeted
way, energy poverty nor genuine energy security
concerns included ongoing price caps for heating
supplied to households, an excise tax reduction on
gasoil used in agriculture, and excise tax
exemptions on natural gas consumed by
households.
Additionally,
Romania’s
2023
[5]
Effective Carbon Rate( ) averaged EUR 54.6 per
tonne of CO₂, below the EU weighted mean of EUR
84.80(
135
).
(
[3]
) 2023 Gross Domestic Product at market prices, Eurostat.
(
[5]
) The Effective Carbon Rate is the sum of carbon taxes, ETS
permit prices and fuel excise taxes, representing the
aggregate effective carbon rate paid on emissions.
(
135
) OECD (2024), Pricing Greenhouse Gas Emissions 2024
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Table A8.1:
Key Energy Indicators
Romania
2021
Household consumer - Electricity retail price (EUR/KWh)
Energy & supply [%]
Network costs
Taxes and levies including VAT
VAT
Household consumer - Gas retail price
Energy & supply
Network costs
Taxes and levies including VAT
VAT
Non-household consumer - Electricity retail price
Energy & supply
Network costs
Taxes and levies excluding VAT
Non-household consumer - Gas retail price
Energy & supply
Network costs
Taxes and levies excluding VAT
Wholesale electrity price (EUR/MWh)
Dutch TTF (EUR/MWh)
0.1562
45.5%
27.3%
27.3%
15.9%
0.0373
63.0%
20.9%
16.1%
16.1%
0.1102
54.8%
16.9%
14.6%
0.0332
72.1%
10.7%
1.8%
214.6
n/a
EU
2023
0.1897
43.3%
32.3%
24.4%
16.0%
0.0552
64.1%
19.9%
15.9%
15.9%
0.1700
61.5%
15.4%
8.5%
0.0478
76.3%
7.0%
0.8%
104.0
n/a
2022
0.2889
59.4%
17.9%
22.7%
16.0%
0.0833
73.5%
10.6%
16.0%
16.0%
0.2813
70.7%
7.8%
6.6%
0.1017
78.6%
5.1%
0.6%
264.5
n/a
2024
0.1873
39.2%
35.1%
25.7%
16.0%
0.0564
60.6%
23.4%
16.0%
16.0%
0.1588
58.5%
16.5%
10.8%
0.0403
71.7%
11.3%
1.2%
103.3
n/a
2021
0.2314
36.6%
26.7%
36.7%
14.5%
0.0684
43.7%
22.5%
33.8%
15.5%
0.1242
43.0%
15.8%
30.4%
0.0328
66.2%
7.7%
12.5%
111.0
46.9
2022
0.2649
54.3%
25.3%
20.3%
13.4%
0.0948
61.0%
17.3%
21.7%
11.6%
0.1895
66.5%
10.7%
9.9%
0.0722
77.3%
3.8%
6.1%
233.2
123.1
2023
0.2877
55.6%
24.8%
19.6%
13.8%
0.1121
64.5%
17.1%
18.4%
10.2%
0.1971
63.0%
11.9%
11.2%
0.0672
77.3%
5.3%
7.3%
99.1
40.5
2024
0.2879
47.8%
27.2%
25.0%
14.6%
0.1128
53.9%
18.3%
27.8%
13.6%
0.1661
55.8%
15.5%
15.4%
0.0517
68.7%
7.1%
11.6%
84.7
34.4
2017
Gross Electricity Production (GWh)
Combustible Fuels
Nuclear
Hydro
Wind
Solar
Geothermal
Other Sources
Gross Electricity Production [%]
Combustible Fuels
Nuclear
Hydro
Wind
Solar
Geothermal
Other Sources
Net Imports of Electricity (GWh)
As a % of electricity available for final consumption
Electricity Interconnection [%]
Share of renewable energy consumption - by sector [%]
Electricity
Heating and cooling
Transport
Overall
64 296
28 672
11 509
14 853
7 407
1 856
-
-
44.6%
17.9%
23.1%
11.5%
2.9%
0.0%
0.0%
2 894 -
-5.9%
6.9%
42.0%
26.6%
6.6%
24.5%
2018
64 876
27 308
11 377
18 097
6 322
1 771
-
-
42.1%
17.5%
27.9%
9.7%
2.7%
0.0%
0.0%
2 544
-5.1%
10.0%
41.8%
25.4%
6.3%
23.9%
2019
59 623
23 787
11 280
16 006
6 773
1 778
-
-
39.9%
18.9%
26.8%
11.4%
3.0%
0.0%
0.0%
1 518
3.1%
9.1%
42.6%
25.7%
7.8%
24.3%
2020
55 935
20 088
11 466
15 701
6 945
1 733
-
-
35.9%
20.5%
28.1%
12.4%
3.1%
0.0%
0.0%
2 792
5.8%
9.3%
43.4%
25.3%
8.5%
24.5%
2021
59 470
22 162
11 284
17 745
6 576
1 703
-
-
37.3%
19.0%
29.8%
11.1%
2.9%
0.0%
0.0%
2 199
4.4%
7.6%
42.7%
24.6%
8.9%
23.9%
2022
56 003
21 569
11 089
14 360
6 997
1 988
-
-
38.5%
19.8%
25.6%
12.5%
3.6%
0.0%
0.0%
1 224 -
2.6%
14.6%
43.7%
26.3%
8.9%
24.2%
2023
57 983
18 367
11 191
18 649
7 548
2 227
-
-
31.7%
19.3%
32.2%
13.0%
3.8%
0.0%
0.0%
3 018
-6.9%
18.3%
47.4%
29.1%
8.0%
25.8%
2024
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16.3%
-
-
-
-
2020
Import Dependency [%]
of Solid fossil fuels
of Oil and petroleum products
of Natural Gas
Dependency from Russian Fossil Fuels [%]
of Natural Gas
of Crude Oil
of Hard Coal
28.2%
22.0%
64.6%
16.6%
44.8%
32.3%
99.2%
2021
31.6%
23.2%
68.2%
22.8%
77.6%
26.5%
99.0%
2022
32.4%
20.0%
72.7%
18.1%
12.8%
26.4%
59.4%
2023
27.9%
13.0%
70.6%
4.2%
0.0%
0.0%
20.8%
2020
57.5%
35.8%
96.8%
83.6%
41.0%
25.7%
49.1%
2021
55.5%
37.2%
91.7%
83.6%
40.9%
25.2%
47.4%
2022
62.5%
45.9%
97.8%
97.6%
20.7%
18.4%
21.5%
2023
58.3%
40.8%
94.5%
90.0%
9.3%
3.0%
1.0%
2017
Gas Consumption (in bcm)
Gas Consumption year-on-year change [%]
Gas Imports - by type (in bcm)
Gas imports - pipeline
Gas imports - LNG
Gas Imports - by main source supplier [%]
Bulgaria
Algeria
Hungary
Russia
11.9
5.4%
1.2
1.2
0.0
1.1%
0.0%
0.0%
98.9%
2018
11.8
-0.9%
1.5
1.5
0.0
1.6%
0.0%
11.7%
86.7%
2019
11.0
-6.6%
2.7
2.7
0.0
4.5%
0.0%
58.6%
36.9%
2020
11.4
3.3%
2.1
2.1
0.0
2.5%
0.0%
52.8%
44.8%
2021
12.0
6.0%
3.6
3.6
0.0
18.5%
0.0%
3.8%
77.6%
2022
10.0
-16.9%
2.9
2.9
0.0
71.0%
0.0%
14.7%
12.8%
2023
9.6
-4.2%
2.7
2.7
0.0
95.2%
3.8%
1.0%
0.0%
Source:
Eurostat, ENTSO-E, S&P Platts
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ANNEX 9: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT
Romania is one of the EU Member States
most exposed to climate risks and should
take urgent action to build up resilience.
Additional action is required to clarify
responsibilities, increase its preparedness and
water resilience and reduce its economy’s impact
on nature. Climate change has increasing
repercussions in Romania, in particular due to
extreme weather events such as flooding,
droughts and heatwaves. Despite abundant
freshwater resources, the country faces water
pollution, flooding and water management
challenges. Sustainable water management
remains a major environmental issue, particularly
in terms of water governance, wastewater
treatment and water efficiency. A driver of
economic growth, Romania’s manufacturing and
agricultural sectors are among the main causes of
Romania’s water issues. The state of nature,
ecosystems and soils risks degrading, posing
significant risks in terms of the economy and
competitiveness. A significant number of key
sectors for the Romanian economy (agriculture,
forestry, fisheries and aquaculture, mining and
metals, construction, water utilities, healthcare
delivery, supply chain and transport, food and
beverage) are highly dependent on ecosystem
services. Romania is one of the Member States
with the highest dependence. Addressing climate
risks and protecting the environment are therefore
essential to ensure business and production
continuity, economic stability and competitiveness,
and social fairness.
exacerbated by the high concentration of dams
and poor maintenance of reservoirs and flood
defences and the delay in the implementation of
the prevention measures set out in Romania’s
Flood Risk Management Plan (FRMP). Of the 2 627
measures in the second FRMP, 67% have not been
started, mostly protection measures, while only
56% of the measures under the first FRMP have
been completed or are ongoing. Nature-based
solutions should be systematically considered
rather than grey solutions, in particular at the
spatial planning stage. Illegal logging also
threatens disaster resilience, especially in
Romania’s primary and old-growth
forest and
Natura 2000 sites. Climate change is expected to
increase the number of heatwaves.
Climate risks directly affect Romania’s
economy and society.
Romania has identified 16
key sectors affected by climate change, with
agriculture being particularly vulnerable. In 2019,
droughts impacted 25% of arable land, potentially
reducing crop yields (
137
). Agricultural losses are
estimated to be 16% higher in Romania in a world
that is 2.0 °C hotter (
138
). Climate change also
threatens Romania’s water security, by increasing
competition for water between electricity
generators, industry, agriculture, tourism and
households. Furthermore, droughts can affect
energy production and energy security, which
relies heavily on hydro and nuclear power (
139
). The
country’s high climate protection gap may pose
challenges to public finances, which might have to
step in for uninsured economic losses following
climate-related disasters. Romania has a
pronounced gap in insurance against flooding; all
climate-related perils have an insurance
penetration of below 50% (
140
). Between 1980 and
2020, only 5% of economic losses were
insured (
141
). Rising temperatures and extreme
events can also increase the spread of infectious
(
137
) Climate ADAPT, 2024, Country Profile Romania
–
Assessment,
Link.
(
138
)
The European Commission’s Joint Research Centre (JRC)’s
PESETA project (Projection of Economic impacts of climate
change in Sectors of the European Union based on bottom-
up Analysis,
Link.
(
139
) Climate ADAPT, 2024, Country Profile Romania
–
Assessment,
Link.
(
140
) EIOPA, 2024, Dashboard on insurance protection gap for
natural catastrophes,
Link.
(
141
) EEA, 2024,
Economic losses from weather- and climate-
related extremes in Europe,
Link.
Climate adaptation and preparedness
Romania faces several challenges resulting
from climate change, including river and
coastal flooding, droughts and heatwaves.
The 2024 floods across Central Europe caused by
storm Boris had a severe impact on the country.
Climate change is causing increasingly variable
precipitation, resulting in more severe floods,
droughts, and water security challenges (
136
).
Romania should consider modernising and
reinforcing its water infrastructure where
necessary.
Flood risks might be further
(
136
) EEA, 2024,
Economic losses from weather- and climate-
related extremes in Europe,
Link.
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diseases, including mosquito- and tick-borne
illnesses. For example, Romania reported cases of
human West Nile fever in 2023, which resulted in
67 reported deaths in Europe.
National policy measures related to
adaptation and preparedness remain limited,
and additional efforts are needed.
Although
Romania has developed a national adaptation
strategy for the period 2024-2030, with its
respective action plan, both are yet to be adopted.
Romania has also established the national
platform for adaptation to climate change (RO-
ADAPT) to support the development of national
and sectoral climate change adaptation policies.
However, its 2023 reporting lacks information on
nature-based solutions. The national recovery and
resilience plan includes measures to reduce flood
risks, improve water disposal and storage, and
adapt forest ecosystems. In addition, there are
cohesion policy support projects which target flood
management and improvement of the risk
response system. However, Romania reports
limited funding for disaster risk reduction, and
beneficiaries have weak administrative capacity
for developing and implementing projects.
Romania took first steps to improve
interinstitutional coordination and to address
climate adaptation at sub-national level.
Weak cooperation between different actors and
institutions has been identified as one of the main
barriers to progress. The Interministerial
Committee on Climate Change established in 2022
could improve cooperation by bringing together 15
ministries and the offices of the President and
Prime Minister. The number of cities participating
in the Covenant of Mayors has slightly increased,
as has the number of Romanian cities and
municipalities that have developed tailored local
adaptation
strategies.
Furthermore,
some
municipalities and regions are participating in the
EU Mission on Adaptation to Climate Change.
considerably lower than that of other Member
States, standing at EUR 26 per m
3
of abstracted
water in 2022 and showing a slightly fluctuating
trend over a 5-year period. The water exploitation
index plus (WEI+) reached 21 in 2022, showing an
increasing trend over the last few years, with
exceptions in 2019 and 2021. Seasonal data show
that the country’s total water consumption is
generally greater than its renewable freshwater
resources in the summer months. The highest
WEI+ value (32.5) was reached in the third quarter
of 2022, and the second highest value (31.5) in
the third quarter of 2017. The main consumer of
water is manufacturing, followed by agriculture.
Between 2016 and 2021 water abstraction in the
manufacturing sector increased by 4.5%, and that
sector accounts for the highest water
consumption, at 2 029.5 million m
3
, i.e. 50.5% of
total consumption in 2021, putting a significant
strain on the country’s water resources.
Water quality in Romania has marginally
improved.
Romania’s
third
river
basin
management plan (2022-2027) under the Water
Framework Directive shows that the ecological
status and potential of surface water bodies has
only slightly improved since the second plan.
Approximately 67% of surface water bodies are
classified
as
having
good
ecological
status/potential. Their chemical status has slightly
improved, as 97.6% of surface water bodies have
a good chemical status. As regards groundwater
bodies, their quantitative status has not
deteriorated since the second plan, with 100%
reported as having good quantitative status. Their
chemical status has slightly improved, with at
least 91.7% now reported as having good
chemical status. However, 8.4% are at risk of
failing to achieve good chemical status by 2027.
Romania’s wastewater treatment is a
particular cause for concern.
Despite
improvements in compliance over the years, in
particular thanks to EU funding, Romania has
experienced serious difficulties in implementing
the Urban Wastewater Treatment Directive.
Overall, Romania’s compliance rate was 12% in
2020. This partial implementation has forced the
European Commission to take legal action. In this
respect, 150 large agglomerations are still failing
to meet the urban wastewater collection
obligations, while 154 large agglomerations do not
comply with secondary treatment obligations, and
154 large agglomerations with the tertiary
treatment obligations. In addition, according to the
Water resilience
Large areas of Romania are water-stressed,
and there is pressure on water resources due
to demands from manufacturing and
agriculture.
These sectors are heavily dependent
on water supply, and irrigation is crucial in many
rural areas. Romania’s water productivity is
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third RBMP, water quality is affected by
discharges, particularly in coastal and transitional
waters. It is therefore necessary to take additional
measures and implement the projects needed to
fully comply with the requirements of the
Directive, taking advantage of the available EU
funding, i.e. the European Regional Development
Fund and the Recovery and Resilience Facility. As
shown in Graph A9.2, the investment needs for
water protection and water management are
substantial, standing at around EUR 1.9 billion per
year by 2027. Of this, EUR 0.8 billion is linked to
wastewater measures. Drinking water measures
require an additional EUR 189 million per year and
the other aspects of the Water Framework
Directive around EUR 915 million per year above
the existing levels of financing. The 2021-2027
multiannual financial framework and the Recovery
and Resilience Facility already help to meet
Romania’s investment needs for water
protection
and
management.
Further
infrastructure
development would help improve water
management, e.g. wastewater collection and
treatment, water reuse, reducing leaks in networks
and the general water supply. Romania has one of
the lowest compliance rates with EU water
legislation. Additional investments are needed to
improve monitoring (quality and quantity) and
support nature-based solutions, flood prevention
and river restoration.
the true extent and condition of ecosystems in
Romania.
Graph A9.1:
Direct dependency(1) on ecosystem
services(2) of the gross value added generated by
economic sector in 2022
0%
Agriculture
Forestry
Fishery and acquaculture
Mining and metals
Construction
Water utilities
Healthcare delivery
Aviation travel and tourism
Food beverages and tobacco
Supply chain and transport
Public services and others
Electricity
Chemical and materials industry
Electronics
Oil and gas
Real estate
Heat utilities
Automotive
Retail consumer goods and…
Information technology
Banking and capital markets
Insurance and asset…
Digital communications
High
Medium
Low
20%
40%
60%
80% 100%
Biodiversity and ecosystems
The state of nature and ecosystems risks
degrading in Romania, reducing the country’s
climate resilience.
Romania is one of the most
biologically diverse countries in the EU, it hosts 87
habitat types and 245 species covered by the
Habitats Directive. The country also hosts
populations of 148 threatened bird species as
listed in Annex I to the Birds Directive. According to
the latest available data, 68% of the country’s
habitats have a good status, above the EU average
of 14.7%. The conservation status of species, with
46% reported as having a good status, is higher
than the EU average of 27%. In the case of birds,
some 19% of the breeding species showed short-
term increasing or stable population trends, while
that figure for wintering species was 15%. Data
show an improving trend compared to the previous
reporting period. However, this positive trend
needs to be nuanced due to the problems with the
reported data, in particular uncertainties regarding
(1) Dependency based on the sector’s own operations,
excluding value chain operations within countries and across
international value chains. A high dependency indicates a high
potential exposure to nature-related shocks or deteriorating
trends, which means that the disruption of an ecosystem
service could cause production failure and severe financial
loss.
(2) Ecosystem services are the contributions of ecosystems to
the benefits that are used in economic and other human
activity, including provisioning services (e.g. biomass
provisioning or water supply), regulating and maintenance
services (e.g. soil quality regulation or pollination), and cultural
services (e.g. recreational activities).
Source:
Hirschbuehl et al., 2025,
The EU economy's
dependency on nature,
Link.
Nature degradation can create significant
risks
to
Romania's
economy
and
competitiveness, as it is one of the Member
States with the highest supply chain
dependency on ecosystem services.
Direct
dependency on ecosystem services (37% highly
dependent) is in line with the EU average (slightly
below the EU average (44%). 30% of Romania’s
gross value added is characterised by a high level
of dependency in the supply chain compared to
the EU-27 average of 22%. Several sectors such
as agriculture, forestry, fisheries and aquaculture,
mining and metals, construction, water utilities,
and healthcare delivery (see Graph A9.1) are
particularly dependent on ecosystem services, with
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100% of the gross value added of these sectors
directly dependent on ecosystem services. Other
sectors are also heavily dependent, though not at
100%. Romania shows a particularly high
downstream dependency of 52%, which seems to
be largely due to high dependency in the IT and
the insurance sectors. This means that failure to
maintain the capacity of ecosystems to deliver
services could entail significant costs or even stop
production in these sectors. Protecting and
restoring key ecosystems would ensure that the
long-term competitiveness of these economic
sectors is preserved.
Graph A9.2:
Investment needs and gaps in EUR
million, at 2022 constant prices
global biodiversity agreements and undermines its
long-term economic and social development. This
is mainly due to weak administrative capacity and
lack of political interest.
Sustainable agriculture and land use
Romania’s carbon removals fall short
of the
level of ambition needed to meet its 2030
target for land use, land use change and
forestry (LULUCF).
Recent trends show that
LULUCF removals have been slowly decreasing
since 2020 in Romania. To meet its 2030 LULUCF
target, additional carbon removals of -2.4 million
tonnes of CO
2
equivalent (CO
2
eq) are needed (
142
).
The latest available projections show a gap to
target of 2.0 million tonnes of CO
2
eq for 2030
(
143
). Additional measures therefore need to be
applied to reach the 2030 target.
Romanian agriculture is a source of
greenhouse gas emissions and has a
moderate impact on air, water and soils.
In
2022, agriculture was responsible for a total of
17 988 million tonnes of CO
2
eq. This includes
9 917 million tonnes of CO
2
eq from livestock. The
utilised agricultural area (UAA) in Romania
decreased by 7% from 13.7 million hectares in
2012 to 12.7 million hectares in 2022.
Furthermore, according to data from the Nitrates
Directive, 12.6% of groundwater monitoring
stations in Romania recorded average nitrate
concentrations above 50 mg/l between 2016 and
2019, exceeding the healthy threshold for human
consumption. The livestock density index was 0.35
in 2020, which is below the EU average of 0.75.
Ammonia emissions have shown a decreasing
trend with a reduction of 10% between 2015 and
2022. In 2022, no pesticides were detected in
surface water bodies.
Romania is transitioning to a sustainable food
system by implementing policies to reduce the
environmental impact of agriculture. In 2022,
3.35% of its agricultural land has landscape
features such as woods and non-productive
grasslands, which is below the EU average of
(
142
) National LULUCF targets of the Member States in line with
Regulation (EU) 2023/839.
(
143
) Climate Action Progress Report 2024 COM/2024/498.
4 000
3 500
3 000
2 500
2 000
1 500
1 000
500
-
Biodiversity
Baseline
Gap
Water
Source:
European Commission, DG Environment,
Environmental investment needs & gaps assessment
programme, 2025 update.
Targeted action on nature protection and
restoration is needed to meet Romania’s
nature restoration targets.
Taking into account
both Natura 2000 and other nationally-designated
protected areas, Romania legally protects 23.5%
of its land areas (EU-27 average 26%) and 21.4%
of its marine areas (EU-27 average 12%).
Romania has not yet presented a National
Biodiversity Strategy and Action Plan. Romania
requires EUR 3.8 billion of investment per year to
effectively conserve and restore its natural capital,
mitigate the impacts of climate change, and
preserve the country’s rich biodiversity (see Graph
A9.2). The current level of financing for
biodiversity and ecosystem conservation in
Romania is around EUR 755 million per year. This
shortfall puts at risk the country’s commitment
to
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5.6%. Organic farming, which reduced the use of
synthetic fertilisers and pesticides, made up 5.1%
of Romania’s agricultural land, a more than 50%
increase since 2018. Romania aims to reach 6% of
UAA under organic farming by 2030, which it will
be able to achieve if the current growth trend in
organic farming area is maintained over the
coming years. To mitigate the environmental
impact of agriculture, under the CAP strategic plan
the Romanian government has taken measures to
ensure soil protection during sensitive climatic
periods and has incentivised farmers to adopt
environmentally-friendly agronomic practices. The
plan also supports the increase in the share of
organic farming and the use of soil covers,
promotes crop rotation and diversification, and
helps to reduce nutrient losses, as well as other
sustainable agriculture practices. These measures
are crucial to the long-term competitiveness of
Romania’s agri-food system and its bioeconomy,
which play a significant economic role. The
bioeconomy, encompassing the production and
processing of biological products, contributed
EUR 17.9 billion of added value to the country’s
gross domestic product in 2021. Agriculture
accounted for EUR 9.6 billion, while the food
industry contributed EUR 2.1 billion.
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Table A9.1:
Key indicators tracking progress on climate adaptation, resilience and environment
Climate adaptation and preparedness:
Drought impact on ecosystems
[area impacted by drought as % of total]
Forest-fire burnt area
(1)
[ha, annual average 2006-2023]
Economic losses from extreme events
[EUR million at constant 2022 prices]
Insurance protection gap
(2)
[composite score between 0 and 4]
Heat-related mortality
(3)
[number of deaths per 100 000 inhabitants in 2013-
2022]
Sub-national climate adaptation action
[% of population covered by the EU Covenant of
Mayors for Climate & Energy]
Water resilience:
Water Exploitation Index Plus, WEI+
(4)
[total water consumption as % of renewable
freshwater resources]
Water consumption
[million m
3
]
Ecological/quantitative status of water bodies
[% of water bodies failing to achieve good status]
Surface water bodies
Groundwater bodies
Biodiversity and ecosystems:
Conservation status of habitats
(6)
[% of habitats having a good conservation status]
Common farmland bird index
2000=100
Protected areas
[% of protected land areas]
Sustainable agriculture and land use:
Bioeconomy's added value
(7)
[EUR million]
Landscape features
[% of agricultural land covered with landscape
features]
Food waste
[kg per capita]
Area under organic farming
[% of total UAA]
Nitrogen balance
[kg of nitrogen per ha of UAA]
Nitrates in groundwater
(8)
[mgNO
3
/l]
Net greenhouse gas removals from LULUCF
[Kt CO
2
-eq]
2018
14 264
-
2019
15 352
-
2018
68.2
-
-
2019
-
-
-
(5)
Romania
2018
0.04
22 158
150
-
94
2019
0.22
22 158
-
-
94
2020
12.08
22 158
485
-
94
2021
0.77
22 158
32
-
94
2022
14.93
22 158
1 147
1.00
94
2023
1.27
22 158
16
1.00
EU-27
2018
6.77
2021
2.76
24 142
62 981
40
32
33
34
31
31
41
44
Romania
2018
17.8
2019
18.3
2020
23.3
2021
18.5
2022
21.0
2023
-
EU-27
2018
4.5
2021
4.5
3 228
3 372
3 800
4 003
3 743
-
-
-
-
-
-
-
Romania
2020
-
-
-
33%
0%
-
-
-
-
-
-
EU-27
59%
93%
2021
-
-
23
2022
-
-
24
2023
-
-
-
2018
14.7
72.2
-
2021
-
74.4
26
Romania
2020
14 496
-
2021
17 886
-
2022
2023
EU-27
2018
634 378
2021
716 124
3.4
-
-
2.4
-27.4
-
(9)
-
2.9
-27.6
-
46 734 -
-
3.6
1.1
-
49 110 -
-
4.4
-16.2
-
48 149 -
46 466
-
5.1
-
-
-
-
7.99
-
-
-
256 077 -
240 984
-
-
46 770 -
(1) The data show the average for the timespan 2006-2023 based on EFFIS - European Forest Fire Information System.
(2) Scale: 0 (no protection gap)
–
4 (very high gap). EIOPA, 2024, Dashboard on insurance protection gap for natural catastrophes.
(3) van Daalen, K. R. et al., 2024, The 2024 Europe report of the Lancet Countdown on health and climate change: unprecedented
warming demands unprecedented action. The Lancet Public Health.
(4) This indicator measures total water consumption as a percentage of the renewable freshwater resources available for a given
territory and period. Values above 20% are generally considered to be a sign of water scarcity, while values equal or greater than
40% indicate situations of severe water scarcity.
(5) European Commission, 2024, seventh Implementation Report from the Commission to the Council and the European
Parliament on the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third
River Basin Management Plans and Second Flood Risk Management Plans).
(6) For this indicator, the EU average includes figures for the UK under the previous configuration, EU-28.
(7) European Commission, 2023, EU Bioeconomy Monitoring System dashboards.
(8) Nitrates can persist in groundwater for a long time and accumulate at a high level through inputs from anthropogenic sources
(mainly agriculture). The EU drinking water standard sets a limit of 50 mg NO
3
/L to avoid threats to human health.
(9) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2024
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839
–
Annex IIa.
Source:
Eurostat, EEA.
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FAIRNESS
ANNEX 10: LABOUR MARKET
Despite improvements in employment rates,
Romania still has one of the lowest labour-
market participation rates in the EU.
This is
characterised by significant disparities across
regions and persistent underrepresentation of
certain population groups, and the low
effectiveness of Active Labour Market Policies
(ALMPs). Obstacles to the country’s ability to
innovate and compete in an increasingly digital
and green economy include high rates of inactivity,
low levels of training and lifelong learning and a
lack of essential skills among the labour force.
Furthermore, demographic challenges such as an
ageing population, declining birth rates and
outward migration patterns, culminating in a
shrinking working-age population, pose a long-
term threat to its labour market and to sustainable
growth. To address these challenges, useful
measures include i) improving the integration of
vulnerable groups in the labour market, ii)
enhancing the scope and effectiveness of active
labour market policies and iii) modernising the
public employment service (PES); such measures
will hopefully contribute to competitiveness and
inclusive growth.
Despite
recent
improvements,
the
employment situation in Romania remains
challenging.
The employment rate remains one
of the lowest in the EU (69.5% in 2024 vs 75.8%
in the EU), with significant geographical disparities.
While more developed regions have higher
employment rates (Bucharest-Ilfov, 81.1%) and
have benefited in recent years from foreign
investment, less developed regions face
challenges in terms of employment, with some
rates even declining considerably (north-east,
69.6% in 2024 down from 79.5% in 2019). The
south-east
region
recorded
the
lowest
employment rate in Romania at 62.6%, resulting in
a gap of 18.5 percentage points (pps) between the
highest and lowest regional employment rates,
thereby exacerbating regional disparities (see
Annex 16).
Meanwhile, the unemployment rate in 2024
remained unchanged compared to the
previous two years and was below the EU
average (5.4% compared to 5.9%).
Long-term
unemployment in Romania decreased in recent
years and is in 2024 below the EU average (1.8%
vs EU: 1.9%). Romania's long-term unemployment
accounts for 33.4% of total unemployment (vs
32.2% in the EU in 2024). Some key factors
contributing to long-term unemployment in
Romania include the lack of adequate skills and a
significant proportion of undeclared work,
accounting for an estimated 21.7% of the total
labour output in 2019, according to the latest
available estimates (
144
). Improving labour market
outcomes will be a key factor in achieving the
national employment rate target of 74.7% by
2030.
Graph A10.1:
Key labour market indicators
%
35
80
70
60
50
20
30
25
40
15
30
10
20
10
0
5
0
2012
2021
2009
2010
2011
2013
2014
2015
2016
2017
2018
2019
2020
2022
2023
Activity rate 15-64 (rhs)
Employment rate 20-64 (rhs)
Unemployment rate 15-74 (lhs)
Long-term unemployment rate 15-74 (lhs)
Youth unemployment rate 15-24 (lhs)
NEETrate 15-29 (lhs)
Source:
Eurostat
While wage growth has been strong, in-work
poverty rates remain high.
Nominal wage
growth is expected to moderate at 9.9% in 2025,
after 18.2% in 2023 and 12.8% in 2024.(
145
)
Similarly, real wages have been increasing rapidly,
outpacing the EU average, with growth reaching
6.8% in 2024. Real wages growth is projected to
remain strong at 5.8% in 2025. The growth in real
wages is due to both robust nominal wage growth
and rapid disinflation (inflation decreased from
9.7% in 2023 to 5.5% in 2024). The statutory
minimum wage also increased by more than 58%
(
144
)
ELA (2023),
Factsheet on undeclared work
–
ROMANIA
(
145
) Data for 2024 and 2025 are based on the European
Commission Autumn 2024 economic forecast.
83
2024
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between Q1-2022 and Q1-2025, corresponding to
an increase of close to 24% in real terms. Despite
relatively high labour productivity growth, strong
wage growth is associated with risks of
competitiveness losses due to the significant
increases in unit labour cost (ULC) since 2014 and
the decrease in export market shares in recent
years (2021-23), as well as the fact that wage
growth has been higher than what could be
expected based on economic fundamentals since
2014. At the same time, wage levels remain low
compared to most other Member States and in-
work poverty is amongst the highest in the EU (see
Annex 11). Despite being employed, 18.2% of
single-person households in Romania face are at
risk of in-work-poverty, with their equivalised
annual disposable income falling below 60% of
the national median (vs EU: 11.6%).
The gender employment gap remains high,
which
is
indicative
of
deep-rooted
inequalities regarding women’s participation
in the labour market.
Romania still has one the
lowest employment rates for women in the EU, at
60.3% in 2023 (9.2 pps lower than the general
population level and 10.5 pps below the EU
average), despite some improvements in recent
years. Consistent with the general EU trend, the
gender employment gap decreased compared to
2023 (18.1 pps in 2024 vs 10.0 pps in the EU).
Women with low qualifications face greater
difficulties in finding a job, as reflected in the
gender employment gap among low-skilled
individuals (32.4 pps vs 21.5 pps EU average).
Women’s participation in the labour market
is hampered by ineffective activation
measures as well as by the limited access to
early childhood education and care services,
especially in rural areas.
Romania has one of
the lowest rates of children under 3 enrolled in
formal childcare (11.4% vs 39.2% in EU in 2024)
and the system of parental leave predominantly
reserved for mothers rather than fathers. Romania
faces challenges related to the gender
employment gap that are deeply rooted in socio-
cultural traditions (
146
).
Access to the labour market is especially
challenging for Romania's young people, with
(
146
)
Robayo-Abril, Monica; Chilera, Chifundo Patience; Rude, Britta;
a significant proportion unemployed or
inactive.
Youth unemployment rates remain
among the highest in the EU (23.9% in 2024 vs
14.9% in the EU), and approximately 1 in 5 young
people (aged 15-29) were not in employment,
education or training (NEETs) in 2024 (19.4% vs
11.0% in the EU), despite decreasing trends for
both indicators. The difficulty of finding work
stems from high rates of early school leaving, and
a misalignment between the skills provided
through the education and training system and the
needs of the labour market (see Annex 12). As for
young NEETs, Romania also faces a gender gap,
with the rate for women aged 15-29 being 11.2
pps higher than for men. According to the latest
available data, the rate of young persons with
disabilities not in employment, education or
training in Romania was 46.3% in 2022, which
was one of the highest rates in the EU(
147
).
Furthermore, over half of young people from
Roma communities are NEETs (59%)(
148
).
Vulnerable groups, including low-skilled
adults, persons with disabilities and Roma
people, also face barriers to labour market
integration.
The employment rate of low-skilled
people remains well below the EU average (45.1%
vs EU: 58.7% in 2024) and remains significantly
lower compared to that of people with tertiary
education (90.0%). With a disability employment
gap at 44.8 pps (EU: 24.0 pps), and one of the
lowest activity rates in the EU (47.8% in 2022,
compared to the EU average of 64%), Romania
faces challenges in helping persons with
disabilities into work(
149
). Romania has set a target
of 55% employment of persons with disabilities by
2027. Another positive development is the
adoption of the national strategy on preventing
the institutionalisation of adults with disabilities
2022-30 (see Annex 11). Roma labour market
participation has remained low in recent years,
falling from 45% in 2016 to 41% in 2021, along
with
significant
gender
disparities
(the
employment rate of Roma women was 23% vs
59% of Roma men). Uneven access to Public
Employment Services (PES) and training
(
147
)
European comparative data on persons with disabilities -
Publications Office of the EU
(
148
)
All data on Roma communities come from the European Agency for
Fundamental Rights (2022)
Roma Survey 2021,
except where
explicitly mentioned otherwise.
Publications Office of the EU
Costache, Irina. 2023. Gender Equality in Romania: Where Do We
Stand? - Romania Gender Assessment.
(
149
)
European comparative data on persons with disabilities -
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opportunities in the rural areas has further
widened the employment gap between the
vulnerable groups and the rest of the population.
Population decline and working-age people
emigrating pose significant challenges to the
labour market.
Between 1991 and 2022,
Romania's population fell by approximately 4.1
million (around 18%), with the trend increasing
over the past decade. In 2016, it was estimated
that around 17% of Romanians were living abroad,
with emigration levels increasing by 9% in
2022(
150
). In 2022, of the total number of 36 000
new immigrants, excluding EU nationals, 76%
received a labour visa and were integrated in the
labour market in Romania. The inflows of labour
force from non-EU countries such as Ukraine,
Nepal and Sri Lanka, and the positive net-
migration rate of 5.2 per thousand inhabitants in
2023 seem to act as a brake on the shrinking
labour force(
151
). In 2024, to tackle emigration, the
Romanian government announced the launch of
an initiative under Romania’s recovery and
resilience plan to develop a programme to attract
highly-skilled talent from abroad, especially
Romanian expatriates, in the fields of research,
development and innovation. While it is too early
to gauge the effectiveness of these measures, it is
a positive initiative to tackle the challenges in the
labour market. If implemented properly this could
boost Romania’s competitiveness.
Labour
shortages
and
unfavourable
demographic
trends
could
affect
competitiveness.
Although the overall job-
vacancy rate is among the lowest in EU (0.7% in
the fourth quarter of 2024 vs 2.3% in the EU), the
number of shortage occupations in Romania was
among the highest in the EU in 2023. At the same
time the country had one of the highest surpluses,
highlighting labour market imbalances (
152
).
According to a recent study by 2026, the labour
force deficit is estimated to reach over 220 000
posts, amounting to an estimated productivity loss
of EUR 9.5 billion(
153
). The manufacturing and ICT
sectors are particularly badly affected, recording
the most severe labour shortages in absolute
terms in 2022. Although 6.9% of all post-
(
150
)
OECD (2022),
OECD Economic Surveys: Romania 2022
( )
OECD (2024), International Migration Outlook 2024.
151
secondary education graduates were ICT
specialists, among the highest rates in the EU,
they account for just 2.6% of total employment.
The discrepancy is explained largely by the
difficulty of retaining talent in Romania.
Romania’s
performance as regards women in the digital
sector is worth highlighting and continues to
improve - female ICT specialists account for 26%
of all ICT specialists, against an EU average of
19.4%. Disparities in labour shortages are also
observed at regional level, with around 70% of the
estimated shortage in the more developed
Bucharest-Ilfov, north-west and centre regions.
Employers have reported that students and young
graduates lack basic skills, and inter-personal and
communication abilities (
154
), hindering their
employability. A very small proportion of the
population holds a tertiary education qualification,
amid rising demand for high-skilled labour (
155
);
over 70% of the population lacks basic digital
skills, impacting the
workforce‘s
preparedness for
the digital transition (see Annex 12). With a
shrinking working population, projected to decline
by 23.7% by 2050, there are strong indications
that skills gaps will lead to growing labour
shortages, potentially threatening competitiveness.
The transition to a green economy will
further increase the demand for skilled
labour, highlighting the importance of
upskilling and reskilling.
Sectors crucial to the
green transition such as energy, water supply,
sewage and waste management, reported some of
the highest annual job vacancy rates in Romania in
2023 (1.4% in vs 0.8% for the general economy).
Skills shortages are also reportedly holding back
the activity of 84% of small and medium-sized
enterprises in the construction sector(
156
).
Conversely, the phasing out of coal mining
threatens the jobs of approximately 32 000
workers, predominantly men over the age of 50. It
would therefore be beneficial to boost reskilling
policies to ensure the green transition does not
actually hinder the prospects of certain population
groups. The Just Transition Fund supports the
worst hit regions to provide the workers affected
with relevant training. Long-term upskilling efforts,
including through targeted active labour market
policies, will be beneficial if we are to meet the
(
154
) (
155
)
According to CEDEFOP (2023),
2023 skills forecast EN
Romania
(
152
)
EURES (2023),
Report on labour shortages and surpluses
(
153
)
PwC (2023),
Analysis of the Romanian labour market
(
155
)
According to CEDEFOP (2023),
2023 skills forecast EN Romania
(
156
)
Flash Eurobarometer
529
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labour and social demands of a transforming
economy.
Improving the effectiveness of active labour
market policies is crucial to addressing gaps
in the labour market.
Spending on active labour
market policies (ALMPs) accounted for 64.1% of
the total budget for tackling unemployment
managed by the Romanian PES, one of the highest
proportions in the past four years(
157
). At the same
time, government expenditure on labour market
policies is among the lowest in the EU (0.09% of
GDP in 2023, equal to approximately
EUR 292 million). Helping people with the greatest
difficulties in getting jobs, such as women, young
NEETs, people with disabilities and Roma people,
would help tackle labour shortages and improve
social conditions. In 2023, 61% of the PESs‘
expenditure on ALMPs was devoted to subsidies
for both employers and jobseekers, job creation,
start-ups and graduate traineeships, while training
activities constituted only about a third of the
allocation(
158
).
Targeting and outreach campaigns also seem
to be ineffective.
Of the 17 775 unemployed
people enrolled on training courses offered by PES
in 2024, only 44 were people with disabilities
(0.24% of the total participants), 686 were Roma
people (3.8%), and 18.7% were young people aged
15-30(
159
). These low numbers of participants
among vulnerable groups are evidence of the need
for tailor-made measures. Steps have been taken
with the launch of the national strategy on adult
continuing education 2024-2030(
160
), targeting
especially low-skilled adults, people with
disabilities, Roma people, NEETs and other
vulnerable groups. The idea is to provide access to
fair, flexible and appropriate upskilling and
reskilling training, and to prepare the working
population for the green and digital transition.
The ongoing modernisation of PESs with EU
support has the potential to contribute to
improved labour market outcomes.
Underlying
issues hindering the work of PESs include i)
(
157
)
ANOFM (2024),
Activity report for the year 2023
(
158
)
Ibid.
(
159
)
ANOFM (2024),
Progress report on the implementation of the
training plan on 30.11.2024
Education 2024-2030
underfunding, ii) inefficient targeting of ALMPs, iii)
low human resources and capacity, and iv) a lack
of dialogue with the social partners. Women,
NEETs and persons with disabilities who
participate in ALMP measures appear to have less
success in getting work compared to other
jobseekers. To address these issues, it would be
beneficial to enhance the effectiveness of PESs,
focusing on effective outreach and personalised
support for jobseekers.
Graph A10.2:
Employment rate by educational
attainment, ALMP expenditure and skills
mismatch
100
90
80
70
60
50
40
30
2019
2020
2021
2022
2023
High skilled
Medium skilled
Low skilled
Source:
Eurostat
(
160
)
Ministry of Education (2024),
National Strategy on Adult Continuing
Romania has made a commitment to a
comprehensive reform of its PESs supported
by the ESF+ and the Recovery and Resilience
Facility.
The 2021-27
ESF+ ‘Education and
Employment’
programme
will
invest
EUR 153.2 million until 2029 to boost the capacity
of PESs by investing in human resources and
improving service quality. The ReCONECT project,
supported by the 2014-2020 ESF, provided tools
for i) monitoring the integration of graduates in
vocational education and training and higher
education, ii) anticipating skills needs, and iii)
evaluating public policies for decision making on
active measures and training policies. Furthermore,
it would be beneficial if social partners were more
actively involved in shaping and implementing
employment policies. By taking steps to tackle
these challenges and to modernise the PES, with a
focus on efficient, data-based ALMPs, Romania
could improve activation, ultimately contributing to
the achievement of the 2030 employment target.
86
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ANNEX 11: SOCIAL POLICIES
Social conditions are improving in Romania,
but the country continues to face significant
challenges related to poverty and social
exclusion, particularly among vulnerable
groups and in rural areas.
This is particularly
due to limited economic opportunities, especially in
rural areas, coupled with restricted access to
healthcare, long-term care, education, employment
and social services. Moreover, income inequalities
persist, at least partially due to the low
redistributive impact of the tax and benefit
system. Demographic shifts raise concerns about
the adequacy and sustainability of pension and
long-term care systems. The limited capacity of
the social protection system and uneven access to
quality services also pose risks to Romania’s
sustainable and inclusive growth, competitiveness
and prosperity.
Romania has made progress, but poverty and
social exclusion risks are still high.
The at-
risk-of-poverty or social exclusion (AROPE) rate
has been falling gradually since 2016, with a
decrease of 4.1 percentage points (pps) in 2024
compared to 2023. This is mainly due to a
reduction in the severe material and social
deprivation rate, which is 18.7 pps lower than in
2016. Conversely, the at-risk-of-poverty (AROP)
rate has decreased by 4.6 pps since 2016. These
developments can be attributed to above EU
average economic growth as well as a longer-term
convergence process. However, in 2024, poverty
rates remain among the highest in the EU, with the
AROPE rate standing at 27.9% (EU: 21.0%), severe
material and social deprivation at 17.2% (EU:
6.4%), and the AROP rate at 19.0% (EU: 16.2%).
Graph A11.1:
Percentage of people at risk of
poverty or social exclusion (AROPE) and its
components
AROPEand depth of poverty (%)
40
35
30
25
20
15
2019
2020
2021
2022
2023
2024
Sustained efforts are needed to reach the
national poverty reduction target for 2030.
The number of people at risk of poverty or social
exclusion has decreased by 1.7 million since 2019
(reaching around 5.3 million in 2024). At the
current pace, achieving the 2030 target of a
reduction of at least 2.5 million, including 500 000
children, compared to 2019 appears feasible.
Measures will still need to be stepped up,
especially as only modest progress has been made
in reducing the number of children at risk of
poverty or social exclusion (-171 000 only in
2024), and Romania has one of the highest depths
of poverty in the EU: in 2024, the median income
of those at risk of poverty was significantly below
the national poverty threshold (27.3% vs 22.8%
for the EU). This gap decreased by 11.1 pps
compared to the previous year.
Rural areas and vulnerable groups are
particularly affected by poverty and social
exclusion.
In 2024, the AROPE rate in rural areas
was 26.1 pps higher than in urban areas, which
represents one of the largest rural-urban divides in
the EU. The AROPE rate for persons with
disabilities improved in 2024 but remained one of
the highest in the EU (38.4% vs the EU average of
28.8%). Almost 50% of persons with severe
disabilities were at risk of poverty and social
exclusion in Romania in 2024. This is also linked to
the low employment rate of persons with
disabilities and a large disability employment gap
in Romania (see Annex 10). The AROPE rate for
older people (aged 65+) has improved thanks to
the lower risk of income poverty but remains very
high (29.3% vs 19.5% for the EU average) as
Romania has one of the largest populations of
older people in severe material and social
deprivation in the EU (19.6% vs 5.1% for the EU
average). In 2021, 78% of Roma were at risk of
poverty, up 8 pps from 2016 (
161
). In response,
around EUR 2.5 billion from the European Social
Fund Plus (ESF+) has been allocated to improving
the accessibility and quality of social services. As
part of the social inclusion and dignity programme
(2021-2027), integrated social, healthcare and
educational services will be scaled up nationally to
reach 2 000 disadvantaged rural communities and
to train the staff required (with a EUR 677 million
contribution from the EU). Approximately EUR 887
million from the ESF+ are allocated for material
(
161
) FRA report 2021
Roma in 10 European Countries - Main
results | European Union Agency for Fundamental Rights.
Depth of poverty (EU)
AROPE (EU)
Depth of poverty (RO)
AROPE (RO)
People at risk of poverty or social exclusion [ilc_peps01n],
Severe material and social deprivation rate [tespm030], At-
risk-of-poverty rate [tespm010].
Source:
Eurostat
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aid, combined with accompanying measures, for
the most vulnerable. These measures should be
properly implemented and complemented by
additional initiatives to effectively address the
challenges faced by rural communities and
vulnerable groups.
Employment status plays an important role
in determining poverty risks, and in-work
poverty is high.
In 2024, a very high percentage
of quasi-jobless households were at risk of
poverty, at 83.3% (vs 64.8% for the EU), up from
75% in 2022. Part-timers and the self-employed,
especially in rural areas where job opportunities
are scarce and subsistence farming is
predominant, face higher poverty risks compared
to the general population, with limited
improvements in recent years. In-work poverty
was also higher than the EU average (10.9% vs
8.2% for the EU in 2024) (see Annex 10). In 2024,
women also faced a higher risk of poverty or
social exclusion (27.6% vs 25.1% for men). This
gender gap is related to the lower participation of
women in the job market (58.3% vs 76.3% for
men). In 2024, the AROPE rate among those with a
low level of education fell by 2.7 pps, compared to
2023, but remained high at 54.7% (EU: 33.9%).
This rate is notably linked to the low participation
rate of the low skilled in employment (36.9% vs
46.3% for the EU).
The risk of poverty or social exclusion among
children remains among the highest in the
EU.
Compared to 2023, the AROPE rate for
children fell by 5.2 pps, reaching 33.8% in 2024,
which is the lowest level ever recorded in Romania.
Yet, it remains much higher than the EU average
(24.2%) resulting in significant educational
disadvantages and inequalities (see Annex 12).
Risks are more pronounced for children whose
parents have low educational attainment or who
live in households with many children. By 2030,
Romania aims to reduce the number of children at
risk of poverty or social exclusion by at least
500 000 compared to the 2021 level of 1.5
million. To mitigate the impact of poverty on
children, Romania is implementing its European
Child Guarantee (ECG) action plan adopted in
November 2023. The 2024 ECG progress report
shows that Romania has made progress in some
areas, such as the provision of free healthy school
meals. At the same time, further improving
services for children in rural areas is needed. The
ECG’s implementation is supported by EU cohesion
policy funds and the Recovery and Resilience
Facility, including through the creation of day-care
centres and creches, educational and material
assistance for the most deprived children and their
families, community-based services to avoid
separating children from their families, and
integrated community services in rural areas.
Despite rapid income growth, income
inequalities remain relatively high.
The gross
disposable household income per capita in 2024 is
at 178% of its 2008 level, compared to 113% in
the EU, demonstrating a robust convergence trend.
In 2024, the income of the richest 20% of the
population was 4.62 times higher than that of the
poorest 20% (EU: 4.66), which is the lowest level
in the last 10 years. Some of the key factors
driving inequalities are a high proportion of low-
wage earners coupled with low coverage of
collective bargaining, and a still weak income
redistribution system. There is scope to improve
the effects of taxes and social benefits on
reducing inequalities (
162
). Other major drivers
include the insufficient access to quality education,
especially among families at risk of poverty or
social exclusion, low educational attainment and
low job market participation.
Energy and transport poverty, as well as
environmental inequalities, pose challenges
to the fair green transition.
In 2024, the
percentage of the population unable to keep their
homes adequately warm was higher than the EU
average (10.8% vs 9.2% overall and 20.8% vs
19.7% for the AROP population), though the gap
has recently narrowed. Similarly, 14.5% of
individuals faced arrears on utility bills in 2024, an
increase of 7.2 pps since 2021 and nearly double
the EU average. To address this, Romania is
preparing a national action plan on energy poverty.
The Romanian recovery and resilience plan (RRP)
includes a voucher scheme for energy efficiency
and renewables in single-family homes prioritising
vulnerable households and a one-stop shop for
guidance. Yet, Romania is currently addressing
energy poverty mainly through recurring subsidies,
with few structural measures tackling its root
causes. Additionally, in 2024, a significant
proportion of the population lacked access to a
car, far exceeding the EU average (15.6% vs
5.6%). This makes transport options scarce,
(
162
)
Economic inequalities in the EU - Key trends and policies, p. 33
Publications catalogue - Employment, Social Affairs &
Inclusion - European Commission.
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considering the concurrent decline in the use of
public transport for passenger travel on land,
which dropped from 27% in 2011 to 20% in 2022.
People in rural areas, who often lack effective
public transportation infrastructure, rely even more
on private cars. Overall, Romania’s transportation
infrastructure and public transportation system
may not be adequately addressing the needs of its
population, particularly those in lower-income (and
rural) communities. On environmental inequalities,
the consumption footprint of the wealthiest 20%
of the population was 2.4 times higher than the
footprint of the poorest 20% in 2022 (EU: 1.9).
The social protection system presents
adequacy and coverage gaps.
Social protection
benefits expenditure is among the lowest in the EU
(16.0% vs 26.8% of GDP in 2023), especially
regarding social assistance and unemployment
benefits. In 2022, households on minimum income
benefits had a net income of only 9.9% of the
AROP threshold, and only 7.8% of the net income
of a low-wage worker (EU: 55.6% and 46.1%
respectively). Moreover, only 7.9% of the
unemployed (for less than 12 months) received
benefits in 2023 (EU: 36.3%). The system’s limited
capacity to alleviate poverty risks means there is
further scope to increase both the efficiency and
the effectiveness of social transfers. In 2024, the
impact of social transfers (excluding pensions) on
poverty reduction was among the lowest in the EU,
at less than half of the EU average (18.8 % vs
34.4%), and 3.2 pp. higher than in 2023. Workers
in non-standard forms of employment (including
casual and seasonal workers) and the self-
employed have limited social protection coverage
and face very high poverty and material and social
deprivation rates. There is scope for further action
to strengthen access to social protection, in line
with the 2019 Council Recommendation on access
to social protection for workers and the self-
employed (
163
). The Romanian RRP includes the
formalisation of work for domestic workers,
aiming to help them acquire the status of insured
person in the social security and health insurance
system. The adequacy of minimum income is
expected to improve following the implementation
of the minimum inclusion income reform, enacted
in January 2024 as part of the RRP, which roughly
doubled the amount of support provided. Further
(
163
) Council recommendation on access to social protection for
workers and the self-employed (EUR-Lex - 32019.1115(01)
- EN - EUR-Lex).
steps to increase the adequacy of minimum
income schemes would help secure adequate
minimum income, as the level will remain well
below the EU average in relation to the national
poverty threshold, and ensure active inclusion as
set out in the Council Recommendation on this
matter (
164
).
Demographic trends pose a challenge for the
future adequacy of the pension system.
The
aggregate pension replacement ratio (excluding
other social benefits) defined as the gross median
individual pension income (for the 65-74 age
group) relative to gross median individual earnings
from work (for the 50-59 age group) was equal to
0.46 (below the EU average of 0.61). The severe
material and social deprivation rate for the age
group 65+ is one of the highest in the EU (19.6%
vs 5.1%), and significantly higher than for the
Romanian working-age population (15.2%). The
ongoing reform of the public pension system as
part of the RRP is expected to have a positive
effect on the adequacy of low and medium
pensions and the social benefits for pensioners.
Yet, demographic trends are likely to put financial
pressure on the pension system, which is
increasingly relying on longer working lives to
maintain its adequacy and fiscal sustainability. The
population aged 65+ is projected to increase from
3.7 million to 4.3 million, while the working-age
population (20-64) is expected to decrease by
30% to 7.8 million in 2070 (
165
). Consequently, the
old-age dependency ratio is projected to increase
from 0.3 in 2022 to about 0.6 by 2070.
Access to long-term care services for older
people and persons with disabilities remains
limited.
Romania’s long-term
care (LTC) services
are severely underfunded, with one of the lowest
public expenditure levels in the EU in 2022 (0.3%
of GDP vs 1.7% for the EU). It is also one of the
countries with the highest self-reported LTC needs.
Only 4.7% of people aged 65+ with high care
needs used formal home care services in 2019
(EU: 28.6%), and 61.6% reported a lack of
assistance in personal care or household activities
(EU: 46.6%) (
166
). Rural and remote communities
must often rely on scarce, undersized insufficient
(
164
)
Council adopts recommendation on adequate minimum
income - Employment, Social Affairs & Inclusion - European
Commission
(
165
)
2024 Ageing Report
–
Country Fiche for Romania
(
166
)
Ibid.
89
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and low-quality services (
167
). The lack of qualified
staff restricts adequate access to LTC, with 0.6
workers per 100 people aged 65+ (EU: 3.2).
Insufficient availability of services leads to a
relatively high share of informal carers providing
high-intensity informal care (
168
). The low
availability and affordability of quality non-
residential, community-based care delays the
deinstitutionalisation and transition to independent
living of persons with disabilities. As of November
2024, out of the 124 centres providing services to
persons with disabilities, only 4 were located in
rural areas, while 6 out of the 41 counties lacked a
registered centre in their territory (
169
). In 2022,
Romania adopted a national strategy on long-term
care and active ageing for 2023-2030. In 2024,
Romania also adopted a wider reform aiming to
improve the financing and quality of social
assistance (
170
). The reform is underpinned by RRP
measures, such as the national strategy on
preventing the institutionalisation of adults with
disabilities for 2022-2030 and the law on
supporting the process of deinstitutionalisation of
adults with disabilities. More than EUR 800 million
from 2021-2027 cohesion policy funds are
earmarked for services for older persons and
those with disabilities.
House prices increased modestly in recent
years, but housing market activity is
subdued.
Up 43% since 2015 in nominal terms,
house prices grew by 3.3% in 2023 and 3.9%
year-on-year in Q3-2024, after an increase of
4.4% in 2021 and 7.2% in 2022. However, housing
market activity is sluggish, with high borrowing
costs reducing home loan demand and depressing
sales. The modest growth in house prices has
weighed on the real value of household net worth,
and negative wealth effects, slow hiring and
elevated uncertainty about future job market
conditions are acting as a drag on consumer
spending. Despite this, EU-funded infrastructure
investments in energy efficiency and transport are
benefiting the construction sector. However, the
country has experienced a significant decline in
housing construction over the past decade,
reinforcing the perception of insufficient supply in
both social housing and private housing markets.
(
167
) Romania Ministry of Social Affairs,
Report on the
implementation of the Council Recommendation on access
to high quality and affordable long-term care.
168
( ) More than 20 hours per week.
(
169
)
Romanian Government page
–
ADD
description.
(
170
) Law 100/2024.
Overall housing affordability has improved
over the past decade.
House prices have grown
less rapidly than household incomes and the
standardised house price-to-income ratio has
decreased by 37% since 2015 and stands around
40% below its long-term average. House price
levels compared to income levels are relatively
lower than in most EU countries. Taking into
account the cost of mortgage funding, the
borrowing capacity of households has improved
significantly over the past decade as well. While
the rental market is rather small, the ratio of new
rents to incomes has decreased over the last ten
years.
Romania’s housing stock faces challenges
due to the lack of diversification.
A vast
majority of Romanians (95.6%) own their homes,
with a small portion (4.4%) living in formal rentals,
while the informal rental market may be larger. In
2022, Romania had a limited social housing stock,
with applications for rentals far outnumbering the
available units. In 2022, homelessness affected
over 8 000 individuals and was more concentrated
in urban areas (70%), especially in Bucharest
(35.5%), with lack of employment being the main
cause (44.1%). The lack of land title increases
housing insecurity in informal settlements, making
it harder to connect homes to utilities and limiting
access to State support in remote areas. The
government’s efforts to formalise property rights
and connect permanent homes to roads, water and
electricity are crucial to improving the living
conditions of vulnerable populations.
High housing costs negatively impact living
standards.
In 2024, 4.7% of the population faced
housing costs above 40% of their total disposable
household income (net of housing allowances) (EU:
8.2%). For people experiencing poverty risks, this
housing cost overburden rate has risen in recent
years driven by limited access to affordable
housing, reaching 16.3% in 2024 (EU: 31.1%).
Housing cost overburden rates are also higher in
rural areas than in cities (5.8% vs 4.3%).
90
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Graph A11.2:
Housing cost overburden and
overcrowding rate (%)
Housing cost overburden rate and overcrowding rate (%)
60
50
40
30
20
housing. These funds also support local authorities
in regulating informal settlements. There remains
scope in Romania to improve housing market
regulation and introduce inclusive zoning policies,
requiring a minimum percentage of affordable
and/or social housing units in new developments,
and to strengthen the implementation of the
2022-2027 national strategy for the social
inclusion of the homeless.
Romania has an ambitious strategic
framework to address its social challenges.
It
is currently implementing the 2022-2027 national
strategy on social inclusion and poverty reduction
 (
173
) and multiple sectoral strategies. If
implemented well, these could help increase the
effectiveness and efficiency of social protection
measures and the coverage of the most
vulnerable. To this end, coordination between
social security and healthcare systems, as well as
the prompt adoption of secondary legislation and
procedures to deliver the new social assistance
and care reform, will be instrumental. In working
with marginalised groups such as homeless
people, public services would benefit from
improved identification and outreach methods, in
cooperation with civil society. The success of the
2022-2027 national Roma strategy depends on
better coordination between key ministries,
involving Roma NGOs and local Roma communities
in designing, implementing and monitoring policies,
and will require action to combat antigypsyism
and segregation (
174
).
10
0
2016
2017
2018
2019
Overburden rate (EU)
Overcrowding rate (EU)
2020
2021
2022
2023
2024
Overburden rate (RO)
Overcrowding rate (RO)
Housing cost overburden rate [tespm140], Overcrowding rate
[tessi170]. People at risk of poverty or social exclusion
[ilc_peps01n].
Source:
Eurostat
Poor housing conditions are widespread,
especially in rural areas and among
marginalised communities (
171
).
In 2024, 40.7%
of people lived in an overcrowded household (EU:
16.9%). For people at risk of poverty this
percentage rose to 53.7% (EU 28.8%). In 2023,
Romania also had a very high rate of people
facing severe housing deprivation in rural areas
(14.5% vs EU 3.5%). The rate is also particularly
high for households under the poverty threshold,
single parents and families with children.
Furthermore, in 2023, a relatively high proportion
of the population and of those below the poverty
threshold lacked access to basic sanitary facilities
such as indoor flushing toilets (15.4% and 43.3%,
respectively).
Romania is implementing measures to
improve
housing
affordability
and
availability.
In 2022, as part of its RRP, Romania
adopted its first ever national housing strategy for
2022-2050, aiming to increase access to
adequate housing for vulnerable groups, especially
young people, persons with disabilities, people in
informal
settlements
and
homeless
172
people ( ). The RRP includes investments in new
housing for young people and for healthcare and
education professionals working in marginalised
communities. The cohesion policy funds support
energy-efficient construction and renovation as
well as construction and renovation of social
(
171
) ESPAN, Urban-rural divide and regional disparities in access
to public services and regarding social inclusion indicators,
2023.
(
172
) 2022-2027 national strategy for the social inclusion of the
homeless [Link].
(
173
)
Strategia naţională privind incluziunea socială şi reducerea
sărăciei pentru perioada 2022–2027
(mmuncii.ro).
(
174
) DG JUST, Report on the implementation of national Roma
strategic frameworks, 2024 (45a7ad5c-4fc3-4881-a681-
407e47d70d7b_en).
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ANNEX 12: EDUCATION AND SKILLS
Skills shortages due to an underperforming
education and training system weigh on the
competitiveness of Romania’s evolving
economy.
Due to rapid growth and the transition
to an increasingly services-dominated, digital and
green economy, the demand for high-skilled labour
is rising, exacerbating existing shortages (see
Annex 10). Tertiary educational attainment
remains stagnant at low levels, while the number
of trained STEM professionals is insufficient to
meet the growing demand. Shortcomings of the
education and training system are reflected in
persistently low levels of basic skills (particularly
among disadvantaged students) and high rates of
early school leaving. Socio-economic disadvantage
begins from an early age and is a key determinant
of educational outcomes. To sustain fair growth,
increase innovation capacity, improve productivity
and effectively improve opportunities for all
Romanians, it is urgent to bolster educational
outcomes and improve the development of basic
and STEM skills, at every stage from early
childhood education and care up to adult learning.
Low and declining participation in early
childhood education and care (ECEC) limits
early learning and worsens inequalities.
In
2022, enrolment for children aged 3 to
compulsory primary education was 75.7% (EU:
94.6%), 9.8 percentage points (pps) less than in
2015. The rate is particularly low for the Roma -
27% enrolled in 2021 (
175
) and in rural areas. The
rural-urban gap (
176
) is widening due to access and
socio-economic factors. For children aged 0-3,
participation in childcare remains low (7.3% in
2024, EU average 39.2%), also hampering
women’s participation in the labour market (see
Annex 10). The recovery and resilience plan (RRP)
finances nurseries, complementary ECEC services
and teacher training for quality improvements.
Nevertheless, the need remains to better align
professional development in ECEC to staff
needs (
177
) and ensure adequate access to the
ECEC network.
A lack of basic skills among young people
undermines human capital potential and
hampers the country’s competitiveness.
The
2022 OECD Programme for International Student
Assessment (PISA) showed that 48.6% of
Romanian 15-year-olds lack a minimum level of
proficiency in mathematics (EU: 29.5%), 41.7% in
reading (EU: 26.2%) and 44% in science (EU:
24.2%) (
178
). These are among the highest
underachievement rates in the EU. In response,
Romania will start implementing a national
programme to improve basic skills, which includes
measures co-financed by the European Social
Fund Plus (ESF+). Nevertheless, effective upscaling
of the programme, delivery of the necessary
remedial education, and more generally
addressing the wider drivers of low basic skills
performance are yet to be seen.
Graph A12.1:
Early leavers from education and
training by degree of urbanisation
30.
25.
20.
15.
10.
5.
0.
2020
Total
2021
Cities
2022
Towns and suburbs
2023
Rural areas
2024
Source:
Eurostat
(
175
) Fundamental Rights Agency (FRA), (2022),
Headline
indicators for the EU Roma strategic framework for equality,
inclusion and participation for 2020-2030.
176
( )
In 2023/2024, the gross
enrolment rate for children aged 3-5
was 72.7% in rural areas, compared to 95.5% in urban areas.
177
( ) OECD (2025), Education and Skills in Romania, Reviews of
National Policies for Education, OECD Publishing, Paris
(forthcoming on 27 May 2025)
The poor level of basic skills reflects
challenges linked to teaching and school
curriculum.
Most Romanian schoolteachers
received limited pedagogical preparation in initial
teacher education (
179
), directly impacting teaching
quality. Continuous professional development is
not sufficiently adapted to teachers’ classroom
needs (
180
), including competence-based teaching.
To achieve the required number of 18 teaching
hours for a full-time equivalent, teachers in rural
areas often teach multiple subjects, without the
necessary qualification. Aspects related to
certification and career progression could be
(
178
) OECD (2023), PISA 2022 Results (Volume I):
The State of
Learning and Equity in Education.
179
( ) OECD (2017),
Reviews of Evaluation and Assessment in
Education,
Kitchen, H., et al., Romania 2017.
180
( ) OECD (2020),
Improving the teaching profession in Romania.
92
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further considered (
181
). Effective implementation
of the 2012/2013 competence-based curriculum
for primary and lower secondary education has
been hampered by delays with providing support
for teachers and alignment of assessment
practices, and challenges with monitoring. Further
changes, for example, focusing on basic skills
across all subjects and preventing overcrowding,
could also be considered. The curriculum revision
for upper secondary is ongoing. The new education
laws aim to improve teacher policies, including
initial and continuous teacher education
programmes, review quality assurance to better
support schools, and enhance equity measures.
However, several key aspects have still to be
worked out or have been postponed (
182
).
Students’ socio-economic
background is a
strong predictor of basic skills performance.
The PISA test showed that 57.8% of students from
the poorest quartile lack a minimum level in
mathematics, reading and science simultaneously,
compared to 9% from the richest quartile.
Furthermore, the concentration of disadvantaged
children in rural schools has a strong influence on
learning outcomes. The urban-rural gap in
performance was 119 points in maths. Half of
Roma children attend segregated schools (
183
),
exacerbating marginalisation
and learning
disadvantages. With 45% of schools operating
with less than 50 students (
184
), fragmentation of
the school network affects learning outcomes and
efficiency of spending in education, with schools in
rural areas often running multi-grade classes.
Low shares of top-performing students in
basic skills and with creative thinking impact
on talent development, high-end skills and
innovation.
In the PISA test, only 4.0% of
Romanian 15-year demonstrated advanced
competencies in mathematics (EU: 7.9%); 2.0%
excelled in reading (EU: 6.5%); and 1.4% were top-
performers in sciences (EU: 6.9%). Only 14.3%
demonstrated advanced creative thinking in the
PISA test (EU average: 25.1%).
High early school-leaving rates limit
opportunities to enter the labour market
with minimal qualifications or progress to
further education.
In 2024, 16.8% of those aged
18-24 were early leavers from education and
training (EU: 9.3%). The rate is especially high in
rural areas (26.5%), in towns and suburbs (15.3%),
and for the Roma. More than 2 300 schools have
benefited from the Recovery and Resilience Facility
grants to prevent dropout in grades 5-8. However,
24% of children from rural areas and 14% in
urban areas are outside the school system (
185
),
requiring specific outreach and reintegration
measures. Second chance programmes are
insufficient, especially in rural areas, and do not
address the needs of adults.
Difficulties
persist
in
ensuring
the
employability of vocational education and
training (VET) graduates, despite their
potential to fill labour market gaps.
In 2023,
61.3% of pupils in medium-level education were
enrolled in VET, above the EU average of 52.4%.
The authorities have put forward measures to
increase VET attractiveness, such as providing
‘technological scholarships’, which, in the
2024/2025 academic year, are supporting over
60 000 VET students with a monthly grant of
RON 300 (around EUR 60). However, the 2022
PISA results show a large performance gap
between students enrolled in general vs vocational
education. School dropout is also considerably
higher for the latter (
186
). Especially concerning is
the low employment rate of recent VET graduates
(age 20-34), which stood at only 65.7% in 2024
(versus 80% in the EU). Difficulties in ensuring
quality and labour-market relevant VET could be
linked to insufficient VET financing, deficiencies in
the teaching workforce, and very weak links with
employers, as only 7.2% of recent VET graduates
had been exposed to work-based learning in 2024
(versus 65.3% in the EU).
A substantial modernisation of the VET
system is underway, with support from EU
funds.
To tighten links with the labour market, the
2023 law on pre-university education sets a target
(
185
) ibid.
(
186
) Ministry of Education,
State of Education, Report for Pre-
(
181
) See the recommendations of OECD 2024:
Reforming School
Education in Romania: Strengthening Governance, Evaluation
and Support Systems.
182
( ) E.g. the set-
up of ARACIIP (i.e. the quality assurance and inspection
agency for pre-university education) and the reorganisation of
county school inspectorates to provide support to schools, the
National Centre for Training and Development in the Didactic Career,
the national Centre for inclusive education are delayed.
183
( )
FRA (2022).
(
184
)
Ministry of Finance and Ministry of Education (2023)
,
Raportul de
analiză și eficientizare a cheltuielilor publice în domeniul
educație.
)
university Education 2023/2024.
93
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to transition all secondary VET programmes into
the dual system by 2029-2030. The main vehicle
for achieving this is the establishment of regional
dual education consortia, as part of the RRP. The
RRP is also funding the equipment of practice
workshops and IT laboratories in all VET schools.
Around 40 000 VET students will participate in
ESF+-funded
apprenticeships/traineeships
to
increase their preparedness for the labour market.
Measures such as better school guidance and
counselling or remedial learning programmes
would nevertheless be welcome to further support
to successful transitions to the labour market.
Low tertiary educational attainment limits
the availability of professionals with high-
end skills.
Only 23.2% of people aged 25-34 had
a tertiary degree in 2024 (26.3% of women,
20.3% of men), significantly below the EU average
of 44.2%. The rate is structurally constrained by
low participation in university programmes, partly
due to access challenges for students from
disadvantaged backgrounds and high early school
leaving. In addition, there is still a considerable
number of twelfth graders not sitting the
baccalaureate exam
–
a prerequisite for enrolling
in higher education, although the passing rate has
been improving (
187
), but is still low for students
from the technological track. Dropout from
university programmes is widespread and many
graduates have emigrated. To improve access for
disadvantaged students and retention rates,
implementation of two national programmes has
started with ESF+ support. The recent introduction
of dual VET in higher education is meant to
increase labour market relevance, including
through greater involvement of employers in
programme development. It also aims to improve
participation in higher education, including by
revising the baccalaureate exam.
Trends in future labour market needs
highlight the importance of increasing the
number of STEM graduates.
From 2022 to
2035, employment in high-tech manufacturing
and services in Romania is predicted to register
one of the highest growths among all EU Member
States (
188
). 30% of higher education students
(International Standard Classification of Education
level 5-8) are pursuing a degree in science,
(
187
)
In 2024, 78.2% of those who sat this exam in the July session were
awarded a passing grade.
(
188
) CEDEFOP (n.d.),
Employment growth in high-tech economy.
technology,
engineering
and
mathematics
(EU:27.1%). However, the low participation rate
means the absolute number of professionals
trained is insufficient (including in ICT). In 2022,
7.2% of university students were enrolled in ICT
programmes (EU: 5.2%), with women making up
32% of these students (compared to the EU
average of 20.2%). In 2022, 6.8% of all university
students graduated in ICT (EU: 4.5%). However,
only 3.3% of PhD students studied ICT (EU
average: 3.7%). In 2022, 36.1% of pupils enrolled
in medium-level VET in Romania were studying
STEM fields, close to the EU average of 36.2%. The
higher education law envisages a national
programme to support learning in STEM, but
effective implementation is yet to be seen, partly
due to financial constraints.
Improving levels of digital literacy is
particularly
critical for Romania’s digital
transition.
Despite performing strongly in several
areas related to digital infrastructure and
connectivity, Romania’s population is struggling to
improve its levels of digital literacy, posing barriers
to the wider digitalisation of the economy (
189
). In
2023, less than a third of those aged 16-74 had
basic digital skills (27.7% versus 55.6% in the EU).
Moreover, 74% of Romanian 14-year-olds lack the
essential computer and information literacy skills
needed to navigate
today’s digital world (EU-23
average: 43%) (
190
). The RRP is providing support
for digital infrastructure in schools and digital
skills training for teachers. The ESF+ co-funded
project ‘Digital skills for the labour market’ is
expected to upskill 45 000 employees starting
from 2025.
The transition to a green economy could
generate better opportunities for Romanians,
if paired with the appropriate upskilling and
reskilling measures.
Romania has recently
stepped-up measures to facilitate learning for
sustainability in school education, including
through a dedicated strategy (
191
), and the specific
Green Week activities. Nevertheless, there is scope
to improve students’ knowledge on sustainable
development (
192
)
and
develop
dedicated
(
189
)
Report on the state of the Digital Decade 2024, Romania
(
190
)
Results from ICILS 2023, International Association for the Evaluation
of Educational Achievement (IEA).
191
( ) National Strategy on Education for the Environment and Climate
Change 2023-2030.
192
( ) In the 2022 International Civic and Citizenship Education Study
Romanian students scored below the EU-17 average on knowledge
of sustainable development.
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frameworks in higher education. Only 44% of
Romanians believe that they have the necessary
skills to contribute to the green transition, which is
significantly below the EU average of 54% (
193
).
Decarbonisation efforts are affecting the jobs of
many workers in coal-intensive sectors (see
Annex 7). The large investments in green energy to
be made in the next few years, namely through
REPowerEU, mean that skilled workers will be in
high demand in these emerging sectors. Effective
training programmes to bridge the skills gap are
vital. If Romania matches its projected contribution
to the EU’s 2030 renewable energy target,
between 2 000 and 6 000 additional skilled
workers will be needed for the deployment of wind
and solar energy(
194
).
Improving skills development is crucial for
competitiveness and tackling existing labour
shortages.
A significant percentage of Romanian
firms identify the lack of adequate skills within the
workforce as the primary constraint for
business (
195
), and 87% of SMEs note difficulties in
finding employees with the appropriate skillset.
Moreover, these shortages risk becoming
exacerbated. The European Centre for the
Development of Vocational Training (CEDEFOP)
projects that by 2035 there will be a 30% increase
in demand for high-skilled labour, while the share
of low-skilled employees in the labour force is
projected to decline to 8% by 2035. Skills
intelligence in Romania has witnessed an
important development with the operationalisation
of the ReCONECT platform in December 2023,
which
integrates
mechanisms
for
skills
forecasting, tracking VET and higher education
graduates, and monitoring and evaluating public
training policies. Romania should now ensure that
skills intelligence data informs policymaking to
effectively address labour market needs. About
EUR 2.67 billion from cohesion policy funding
(2021-2027 programming period) are channelled
to measures supporting skills development in
Romania (
196
), including a pilot project on individual
learning accounts.
Adults’ engagement
in learning is improving,
but more efforts will be required to increase
(
193
)
Special Eurobarometer 527
.
(
194
)
EMPL-JRC AMEDI+ project.
resilience and fairness in Romania’s society.
The rate of adult participation in learning reached
19.1% in 2022 (from 5.8% in 2021) (
197
) and
surpassed the 2030 national skills target of
17.4%. However, it remains only about half of the
EU average (39.5% in 2022). The reasons behind
low engagement include high costs and lack of
flexibility of available training options (
198
), as well
as a general lack of recognition of the professional
and personal benefits it offers (
199
). Participation
rates also vary significantly across different
population groups. Individuals outside the labour
market and those from rural areas exhibit much
lower engagement rates (6.4% and 11.2%,
respectively). The largest disparities are between
those who did not complete upper secondary
education and those with tertiary education (3.9%
versus 41.2%). Meanwhile, individuals with lower
qualifications face growing challenges, such as
rising unemployment and higher poverty rates.
This underscores the need for skills policies that
simultaneously address labour shortages and
inequalities,
thereby
fostering
sustainable
competitiveness.
The implementation of the new strategic
framework for skills development is ongoing.
After several years without a national vision for
adult learning, two complementary national
strategies were adopted in 2023 and 2024, by the
Ministry of Labour and the Ministry of Education,
respectively.
Their
drafting
was
closely
coordinated, but this also highlights the current
fragmentation in skills policymaking. As Romania
moves forward with implementation, it will be
important
to
further
strengthen
cross-
governmental cooperation and the involvement of
business and social partners. Other important
policies to foster productivity growth and
competitiveness include enhancing the role of the
private sector in upskilling efforts - namely
through
stronger
and
better
enforced
200
requirements for employee training ( ) or tax
incentives
–
and continuing to raise awareness of
the benefits of lifelong learning.
(
197
) Adult Education Survey - participation in education and
training excluding guided on-the-job training.
198
( )
National Statistical Institute, 2022
(
199
) Centre for the Study of Democracy, Concordia Employers’
Confederation (2023),
Research Report. The participation in lifelong
learning in Romania.
(
200
) According to the Labour Code (Law 53/2003), companies are only
required to provide training and paid training leave once every two or
three years (depending on their number of employees). Measures to
enforce these provisions are not set out.
(
195
) 2024 World Bank Enterprise Survey for Romania.
(
196
)
DG EMPL, "An in-depth
overview of the EU cohesion funds’
investments in skills in the context of the European Year of
Skills"’
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ANNEX 13: SOCIAL SCOREBOARD
Table A13.1:Social
Scoreboard for Romania
Social Scoreboard for Romania
Adult participation in learning (during the last 12 months, excl. guided on
the job training, % of the population aged 25-64, 2022)
Early leavers from education and training
(% of the population aged 18-24, 2024)
Equal opportunities and
access to the labour market
Share of individuals who have basic or above basic overall digital skills
(% of the population aged 16-74, 2023)
Young people not in employment, education or training
(% of the population aged 15-29, 2024)
Gender employment gap
(percentage points, population aged 20-64, 2024)
Income quintile ratio
(S80/S20, 2024)
Employment rate
(% of the population aged 20-64, 2024)
Dynamic labour markets
and fair workingconditions
Unemployment rate
(% of the active population aged 15-74, 2024)
Long term unemployment
(% of the active population aged 15-74, 2024)
Gross disposable household income (GDHI) per capita growth
(index, 2008=100, 2023)
At risk of poverty or social exclusion (AROPE) rate
(% of the total population, 2024)
At risk of poverty or social exclusion (AROPE) rate for children
(% of the population aged 0-17, 2024)
Impact of social transfers (other than pensions) on poverty reduction
(% reduction of AROP, 2024)
Social protection and
inclusion
Disability employment gap
(percentage points, population aged 20-64, 2024)
Housing cost overburden
(% of the total population, 2024)
Children aged less than 3 years in formal childcare
(% of the under 3-years-old population, 2024)
Self-reported unmet need for medical care
(% of the population aged 16+, 2024)
Critical situation
To watch
Weak but improving Good but to monitor
On average
Better than average
Best performers
19,1
16,8
27,7
19,4
18,1
4,62
69,5
5,4
1,8
161,0
27,9
33,8
18,8
44,8
4,7
11,4
2,2
(1) Update of 5 May 2025. Members States are categorised based on the Social Scoreboard according to a methodology agreed
with the EMCO and SPC Committees. Please consult the Annex of the Joint Employment Report 2025 for details on the
methodology (https://employment-social-affairs.ec.europa.eu/joint-employment-report-2025-0).
Source:
Eurostat
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ANNEX 14: HEALTH AND HEALTH SYSTEMS
Romania’s health system faces significant
challenges. These needs be addressed if the
country is to improve the health of its
population and social fairness, while
boosting the competitiveness of its economy.
Challenges include: (i) low life expectancy, high
treatable mortality and impact on workforce
productivity; (ii) inadequate allocation of resources
reflected in poor geographical distribution,
ineffective organisation and management of
health infrastructure, as well as insufficient focus
on disease prevention and outpatient care; (iii)
shortages of healthcare workers and limited
access to care.
Life expectancy at birth in Romania
rebounded above its pre-COVID-19 level but
was still among the lowest in the EU in 2023.
There is a striking gender gap, with women
expected to live 7.8 years longer than men. That
said, they can only expect to live around seven
months longer than men in good health. Treatable
mortality is the highest in the EU, suggesting
serious shortcomings in the effectiveness of the
health system. Cardiovascular mortality is high
and increasing, due in part to behavioural risk
factors. The 2024–2030 national strategy to
combat cardiovascular and cerebrovascular
diseases, published in October 2024, sets out
integrated measures for the prevention of these
diseases, early diagnosis, treatment and patient
rehabilitation. Romania participates in several
EU4Health-funded joint actions that aim to reduce
the burden of cardiovascular diseases, cancer,
diabetes and respiratory diseases.
Graph A14.1:
Life expectancy at birth, years
81.3
75.6
81.4
than the EU average. As a result, the number of
potential productive life years lost due to non-
communicable diseases such as cancer and
cardiovascular diseases is considerably higher
than the EU average (
201
). Cancer in particular has
a major impact on workforce participation and
productivity
(
202
).
These
challenges
are
exacerbating the effects of population ageing on a
shrinking labour force. Between 2022 and 2040,
the working age population in Romania is forecast
to shrink by 0.9% every year as a result of lower
birth rates (EU average: 0.3%).
Graph A14.2:
Treatable mortality
per 100 000 population
210.6
91.3
208.6
89.2
235.1
254.7
215.0
89.7
91.7
93.3
2018
2019
2020
Romania
EU
2021
2022
Age-standardised death rate
(mortality that could be
avoided through optimal quality healthcare)
Source:
Eurostat (hlth_cd_apr)
80.4
74.2
80.1
80.6
75.1
76.4
72.8
2019
2020
2021
Romania
EU
2022
2023
Romania’s health system is strongly hospital
centred.
In 2022, health spending per inhabitant
was among the lowest in the EU, with the largest
share going towards inpatient care and day care
(around 43% of total health expenditure). This,
together with a high number of hospital beds (640
per 100 000 population in 2022, much higher than
the EU average), illustrates Romania’s strongly
hospital-centred care model. Out-of-pocket
payments account for a greater proportion of
spending on health in Romania than the EU
average. Nearly two thirds of all out-of-pocket
payments are for outpatient pharmaceuticals (
203
).
Under the Romanian recovery and resilience plan
(RRP), around EUR 2.11 billion is planned for health
reforms and supporting investments. Significant
funding for healthcare (EUR 3.8 billion) is also
planned under the 2021-2027 cohesion policy
(
201
) Update to 2021 data of analysis presented by Health at a
Glance: Europe 2016 - © OECD 2016
(
202
) OECD/European Commission (2025), EU Country Cancer
Profiles Synthesis Report 2025, OECD Publishing, Paris,
https://doi.org/10.1787/20ef03e1-en
(
203
) OECD/European Commission (2024),
Health at a Glance:
Europe 2024: State of Health in the EU Cycle,
pp. 186-187.
Source:
Eurostat (demo_mlexpec)
Shortcomings in the effectiveness of the
health system negatively affect Romania’s
workforce, productivity and competitiveness.
In Romania, mortality at working age as a
proportion of total mortality is significantly higher
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Table A14.1:Key
health indicators
2019
Cancer mortality per 100 000 population
Mortality due to circulatory diseases per 100 000 population
Current expenditure on health, purchasing power standards, per capita
Public share of health expenditure, % of current health expenditure
Spending on prevention, % of current health expenditure
Available hospital beds per 100 000 population**
Doctors per 1 000 population*
Nurses per 1 000 population*
Mortality at working age (20-64 years), % of total mortality
Number of patents (pharma / biotech / medical technology)
Total consumption of antibacterials for systemic use,
daily defined dose per 1 000 inhabitants****
264.2
830.6
1 311
80.5
1.5
620
3.2
0.8
22.7
3
25.8
2020
260.3
918.2
1 441
80.3
2.0
627
3.3
0.8
21.6
3
25.2
2021
243.2
1 005.4
1 662
78.3
3.7
634
3.5
0.9
21.3
1
25.7
2022
240.8
924.5
1 627
77.8
2.8
640
3.6
0.9
20.8
3
27.6
2023
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
21.0
1
27.4
EU average*
(latest year)
234.7 (2022)
336.4 (2022)
3 684.6 (2022)
81.3 (2022)
5.5 (2022)
444 (2022)
4.2 (2022)*
7.6 (2022)*
14.3 (2023)
29 (2023)***
20.0 (2023)
*The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple
average is used based on 2022 (or latest 2021) data except for Luxembourg
(2017). Doctors’ density data refer to practising
doctors in all countries except Greece, Portugal (licensed to practise) and Slovakia (professionally active). Density of nurses: data
refer to practising nurses (EU recognised qualification) in most countries except France and Slovakia (professionally active) and
Greece (hospital only). **‘Available hospital beds’ covers somatic care, not psychiatric care. ***The EU median is used for patents.
Source:
Eurostat database; European Patent Office; ****European Centre for Disease Prevention and Control (ECDC) for 2023.
funds. These funds aim, in particular, to improve
the performance of healthcare providers, with
measures resulting in a higher quality of care, and
a more effective organisation and management of
infrastructures (both hospital and outpatient
settings), including a newly created National
Agency for Development of Health Infrastructure.
As regards public health, the focus on
disease prevention is still insufficient.
In
2022, spending on prevention in Romania
accounted for 2.8% of total spending on health,
far below the EU average of 5.5%. According to
2023 data, vaccination coverage among children,
for example for measles and hepatitis B, is among
the lowest in the EU, reflecting gaps in access to
primary care (
204
). In 2023, the consumption of
antibiotics was well above the EU average, despite
the recommended national target (
205
) to reduce
total consumption by 27% between 2019 and
2030. A strategy to prevent and limit healthcare-
associated infections was approved at the end of
2023. On behavioural risk factors, a large portion
of the population is overweight, and Romania is
among the countries with the highest increase in
alcohol consumption between 2010 and 2022,
alongside having one of the lowest rates of fresh
fruit consumption (
206
).
Challenges in accessing outpatient care is a
main driver for the high levels of treatable
mortality in Romania.
Access to care is limited
(
204
)
Health at a Glance: Europe 2024,
pp. 160-161.
(
205
) National target set by the Council Recommendation on
stepping up EU actions to combat antimicrobial resistance in
a
‘one
health’ approach,
2023/C 220/01.
206
( )
Health at a Glance: Europe 2024,
Chapter 4.
by the low share of public funding for outpatient
care, and the uneven distribution of healthcare
resources between regions and between income
levels. The limited scope of primary care services
and the limited availability of general practitioners
result in people making avoidable visits to
emergency departments, as this is the easiest way
to access specialist care. Furthermore, the limited
role of primary care in disease prevention, early
diagnosis and treatment in Romania, results in a
high level of avoidable hospitalisations, such as
for diabetes patients. The national health strategy
for 2023-2030 aims to strengthen the role and
improve the performance of outpatient care. In
addition, specific measures under both the RRP
and the cohesion policy aim to improve health
services in primary, outpatient and community
care. In 2024, the level of unmet needs for
medical care has decreased compared to 2023
(5.2% in 2023 to 2.2% in 2024) although financial
barriers continue to contribute to unmet needs,
with notable income-related and rural-urban
disparities remaining (see Annex 11). To improve
access to innovative treatments for patients with
various chronic conditions, the Romanian
government has approved the introduction of 28
innovative medicines in the benefit package of the
social health insurance, starting from 1 May 2024.
Shortages of health staff limit the
availability of care.
The density of doctors in
Romania is below the EU average (3.5 doctors per
1 000 population in 2021 vs 4.2), with an uneven
distribution across the country. There were only
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0.9 practicing nurses (
207
) per 1 000 population in
Romania in 2022, the lowest rate in the EU (EU
average: 7.6), posing a significant challenge to the
health system (see Annex 11). The number of
nursing graduates per 100 000 population is also
among the lowest in the EU. Despite a higher
density of medical graduates than the EU average,
emigration of health workers contributes to staff
shortages. To tackle health workforce issues, the
government has approved a multiannual strategy
(2022-2030) and sectoral action plans, as part of
Romania’s RRP.
The Romanian health system’s potential to
drive innovation and foster industrial
development in the EU medical sector
remains largely untapped.
Romania is among
the EU countries that report the lowest public
spending on health research and development.
This is reflected in the low number of European
patents granted: only seven in 2023 in the
combined
areas
of
pharmaceuticals,
biotechnologies and medical devices (vs an EU-
level median of 29 (
208
). Clinical trial activity in
Romania is also limited (
209
). At the beginning of
October 2024, the health programme under the
cohesion policy funds was amended to incorporate
two new priorities contributing to the Strategic
Technologies for Europe Platform resulting in new
measures to support skills, and research and
development promoting innovation in health.
Romania is lagging behind in the uptake of e-
health
and
overall
health
system
digitalisation
and
needs to overcome gaps in
data storage and sharing.
For instance, in 2024,
the share of people accessing their personal
health records online in Romania (9.9%) was less
than a fifth of the EU average. There is also a wide
gap in patient use depending on an individual’s
socio-economic background. Significant planned
investments under the RRP and cohesion policy
aim to boost the digital transformation of the
healthcare sector in Romania. Measures focus on:
(i) increasing the digital capacity of health
institutions at all levels; (ii) improving data
(
207
) Under the newly adopted Eurostat definition of nurses
(following the EU Directive 2005/36/EC on the recognition of
professional qualifications) nurse density numbers shown
below are significantly lower than numbers using a broader
definition, as for instance used for the OECD health statistics.
(
208
) European Patent Office,
Data to download | epo.org.
(
209
) EMA (2024),
Monitoring the European clinical trials
environment,
p. 9.
management; and (iii) accelerating telemedicine
adoption, also among vulnerable populations and
in rural areas. These initiatives aim to integrate
health institutions through digital infrastructure,
improving access to health data, reducing
fragmentation, and improving the quality of
healthcare services.
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HORIZONTAL
ANNEX 15: SUSTAINABLE DEVELOPMENT GOALS
This Annex assesses Romania’s progress on
the Sustainable Development Goals (SDGs)
along the dimensions of competitiveness,
sustainability,
social
fairness
and
macroeconomic stability.
The 17 SDGs and their
related indicators provide a policy framework
under the UN’s 2030 Agenda for Sustainable
Development. The aim is to end all forms of
poverty, fight inequalities and tackle climate
change and the environmental crisis, while
ensuring that no one is left behind. The EU and its
Member States are committed to this historic
global framework agreement and to playing an
active role in maximising progress on the SDGs.
The graph below is based on the EU SDG indicator
set developed to monitor progress on the SDGs in
the EU.
As regards SDGs linked to
competitiveness,
Romania is improving on SDG 8 (Decent work
and economic growth) and SDG 9 (Industry,
Innovation and Infrastructure), but is moving
away from the goal for SDG 4 (Quality
Graph A15.1:
Progress towards the SDGs in Romania
education).
On SDG 8, although the percentage of
young people not in employment, education or
training fell from 20.9% to 19.4% between 2019
and 2024, the figure remains well above the EU
average of 11% in 2024, down from 12.8% in
2019. On quality education (SDG 4), the
percentage of adults with at least basic digital
skills remained stable from 2021 to 2023,
standing at around 27.7%. This is significantly
lower than the EU average of 55.6% in 2023, up
from 53.9% in 2021. Romania also needs to catch
up with the EU average for SDG 9 (0.52% of GDP
expenditure on R&D; EU average: 2.24% in 2023).
To address the challenges linked to productivity,
Romania’s recovery and resilience plan (RRP) aims
to create a full professional route for higher
technical education, digitalise the education
process to improve digital skills for students and
teachers and support research and innovation.
Romania is improving on all SDGs related to
sustainability
(SDGs 2, 6, 9, 11, 12, 13, 14)
except for SDG 15 (Life on land).
Yet, Romania
For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable
development in the European Union’;
for
details on extensive country-specific data on the short-term progress of Member States:
Key findings
–
Sustainable development
indicators - Eurostat (europa.eu).
A high status does not mean that a country is close to reaching a specific SDG, but signals that it
is doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past
five years. The calculation does not take into account any target values, as most EU policy targets are only valid for the aggregate
EU level. Depending on data availability for each goal, not all 17 SDGs are shown for each country.
Source:
Eurostat, latest update of 28 April 2025. Data refer mainly to the period 2018-2023 or 2019-2024. Data on SDGs may
vary across the report and its annexes due to different cut-off dates.
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needs to catch up with the EU average for most of
these (SDGs 2, 6, 9, 11, 12, 15). On SDG 12
(Responsible consumption and production), the
material footprint was 33.2 tonnes per inhabitant
in 2023, compared to an EU average of 14.2
tonnes. On SDG 11 (Sustainable cities and
communities), the number of road traffic deaths
per 100 000 persons was 8.1 in 2023, compared
to an EU average of 4.5 and the recycling rate of
municipal waste in 2022 was 12.3% for an EU
average of 48.2% in 2023. On SDG 9, the patent
applications to the European Patent Office (EPO)
per million inhabitants was 9 in 2024, while the EU
average was 156.
While Romania has made progress on some
SDGs related to
gender equality (SDG
5),
affordable and clean energy
(SDG 7) and
good health and well-being
(SDG 3), and in
some cases significant progress (SDGs 1 and
8), it is moving away from the target for SDG
4 (quality
education).
While the percentage of
the population at risk of poverty and social
exclusion decreased between 2018 and 2023
from 38.7% to 32%, though the self-reported
unmet needs for medical care increased slightly
from 4.9% to 5.2% over that period.
Romania’s
track record on gender equality is concerning
compared to the risk of the EU. In 2024, only
19.5% of seats were held by women in national
parliaments and governments compared to 33.4%
in the EU. As regards SDG 7, the RRP aims to
support clean energy production and energy-
efficiency renovation.
Romania is improving on all SDGs related to
macroeconomic stability
(SDGs 8, 16, 17).
Romania’s
real GDP per capita (SDG
8) rose from
EUR 11,830 in 2019 to EUR 13,130 in 2024 -
chain linked volumes (2012) (EU average:
EUR 33,530 in 2024). However, the country faces
challenges related to trust in institutions, with the
Corruption Perceptions Index standing at 46 in
2024 (EU average: 62).
The index’s scale runs
from 0 (highly corrupt) to 100 (very clean)).
Romania performs well on SDG 17 (Partnership for
the goals). The RRP is expected to further improve
the fight against corruption and help increase trust
in public administration.
As the SDGs form an overarching framework, any
links to relevant SDGs are either explained or
depicted with icons in the other annexes.
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ANNEX 16: CSR PROGRESS AND EU FUNDS IMPLEMENTATION
Romania faces structural challenges in a
wide range of policy areas, as identified in
the country-specific recommendations (CSRs)
addressed to the country as part of the
European Semester.
They refer, among other
things, to renewable energy and energy
infrastructure, the functioning of the labour
market, education, training and skills, fiscal
governance, public administration and social
protection.
The Commission has assessed the 2019-2024
CSRs considering the policy action taken by
Romania to date and the commitments in its
recovery and resilience plan (RRP).
At this
stage, Romania has made
at least ‘some progress’
on 74% of the CSRs (
210
),
and ‘limited progress’ on
22% (Table A16.2).
EU funding instruments provide considerable
resources to Romania by supporting
investments and structural reforms to
increase competitiveness, environmental
sustainability and social fairness, while
helping to address challenges identified in
the CSRs.
In addition to the EUR 28.5 billion
funding from the Recovery and Resilience Facility
(RRF) in 2021-2026, EU cohesion policy funds (
211
)
are providing EUR 31 billion to Romania
(amounting to EUR 44.4 billion with national
cofinancing) for 2021-2027 (
212
) to boost regional
competitiveness and growth. Support from these
instruments combined represents around 18.3% of
2024 GDP (
213
). The contribution of these
instruments to different policy objectives is
outlined in Graphs A16.1 and A16.2. This
substantial support comes on top of financing
provided to Romania under the 2014-2020
multiannual financial framework, which financed
cohesion policy projects until 2023 and has had
(
210
) 9% of the 2019-2024 CSRs have been fully implemented,
15% substantially implemented, and some progress has
been made on 50%.
(
211
) In 2021-2027, cohesion policy funds include the European
Regional Development Fund, the Cohesion Fund, the
European Social Fund Plus and the Just Transition Fund. The
information on cohesion policy included in this annex is
based on adopted programmes with the cut-off date of 5
May 2025.
(
212
) European territorial cooperation (ETC) programmes are
excluded from the figure.
(
213
) RRF funding includes both grants and loans, where
applicable. GDP figures are based on Eurostat data for 2024.
significant benefits for the economy and
Romanian society. Project selection under the
2021-2027 cohesion policy programmes is
advanced, while significant volumes of investment
are yet to be mobilised.
The Romanian RRP contains 111 investments
and 66 reforms to stimulate sustainable
growth, foster digital transition and achieve
climate objectives.
A year before the end of the
RRF timespan, implementation is on its way, with
33.13% of the funds disbursed (
214
). However,
implementation of reforms and investments needs
to urgently accelerate, to ensure completion of all
RRP measures by 31 August 2026. At present,
Romania has fulfilled 14 % of the milestones and
targets in its RRP. The main bottlenecks to EU
funds implementation in Romania are delays in
procurement, political instability, ineffective
governance and insufficient administrative
capacity.
Graph A16.1:
Distribution of RRF funding in
Romania by policy field
With
Green transition
Digital transformation
Smart, sustainable and
inclusive growth
Social & territorial cohesion
Health & resilience
Next generation
(1) Each RRP measure helps achieve the aims of two of the
six policy pillars of the RRF. The primary contribution is shown
in the outer circle, while the secondary contribution is shown
in the inner circle. Each circle represents 100% of the RRF
funds. Therefore, the total contribution to all pillars displayed
on this chart amounts to 200% of the RRF funds allocated.
Source:
European Commission
Romania also receives funding from several
other EU instruments,
including those listed in
Table A16.1. Most notably, the common
agricultural policy (CAP) provides Romania with an
EU contribution of EUR 15 billion under the CAP
strategic plan 2023-2027 (
215
). Operations
(
214
) As of mid-May 2025, Romania has submitted 3 payment
requests.
(
215
)
An overview of Romania’s formally approved strategy to
implement the EU’s common agricultural policy nationally
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amounting to EUR 2.8 billion (
216
) have been signed
under the InvestEU instrument backed by the EU
guarantee, improving access to financing for
riskier operations in Romania.
Graph A16.2:
Distribution of cohesion policy
funding across policy objectives in Romania
Smarter Europe
Greener Europe
Connected Europe
Social Europe
supporting youth employment and promoting
entrepreneurship. Another EUR 1.9 billion aims to
improve education quality, address skills shortages
and foster lifelong learning. EUR 145 million is
dedicated to green skills and jobs, while over
EUR 570 million supports vocational education and
training, higher education, and adult learning in
critical technologies (STEP). More than 1.5 million
people will benefit, including more than 500 000
children and young people, with 240 000 finding
jobs and 354 000 gaining new qualifications.
Other
funds
are
contributing
to
competitiveness in Romania, for instance
through open calls.
The Connecting Europe
Facility has financed strategic investment in rail
transport, projects for the integration of the
energy market and security of energy supply and
uptake of 5G in smart communities. Horizon
Europe has supported research and innovation
projects in priority areas such as climate, energy
and mobility and food, bioeconomy, natural
resources, agriculture and environment. In
Romania, the Technical Support Instrument (TSI) is
focused on enhancing the capabilities of the public
administration and supporting the development of
a comprehensive regional green hydrogen market.
Romania’s RRP also contains ambitious
measures
to
improve
the
business
environment and competitiveness.
Measures
covered by submitted payment requests include: (i)
the entry into force of the ‘Single Industrial
Licence’ law aimed at reducing the
administrative
burden for the business environment and of
legislative amendments to streamline, simplify
and fully digitise business-related procedures; and
(ii) the entry into force of a law that encourages,
facilitates and regulates the voluntary and
functional integration and merger of research
institutions in Romania.
EU funds are playing a significant role in
promoting environmental sustainability and
green transition in Romania during the
current seven-year EU budget (multiannual
financial framework).
Cohesion policy funding
will be used to increase capacity for renewable
energy generation by around 300 MW. Around
660 000 people will benefit from new or upgraded
wastewater treatment capacity. Investments will
also support the development of additional waste
recycling capacity, planned to reach 360 000
tonnes/year. In addition, EUR 306 million are
earmarked
to
address
climate
disaster
Europe closer to citizens
JTF specific objective
Source:
European Commission
Cohesion policy funds aim to increase the
productivity
and
competitiveness
of
Romanian firms and improve the business
environment.
The
European
Regional
Development Fund (ERDF) and the Just Transition
Fund (JTF) provide support to 22 300 businesses,
targeting
investments
in innovation
and
digitalisation. Close to 4 000 small and medium-
sized enterprises (SMEs) are investing in new skills
and 400 public institutions will be supported in a
swift digital transition. More than half of JTF EUR
2.14 billion allocation targets economic
diversification in territories which rely on high
emission
sectors,
industrial
installations
undergoing technological transformations towards
a low carbon economy, as well as SMEs involved in
strategic technologies (STEP). Romania is
mobilising over EUR 1.5 billion of cohesion policy
funding in support of the objectives of the
Strategic Technologies for Europe Platform (STEP)
aiming at developing critical technologies such as
digital technologies (microelectronics, including
semiconductor
technologies,
and
artificial
intelligence), and clean and resource efficient
technologies (green hydrogen production). The
European Social Fund Plus (ESF+) is investing
EUR 1.7 billion to boost competitiveness and
productivity by modernising labour market
institutions,
strengthening
social
dialogue,
can be found at:
https://agriculture.ec.europa.eu/cap-my-
country/cap-strategic-plans/romania_en
(
216
) Data reflect the situation on 31.12.2024.
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management. ERDF investments will also
contribute to more sustainable urban environment
by extending the length of tram and metro lines by
more than 200 km and improving transport
connectivity across the country through
reconstruction. Through its CAP strategic plan,
Romania allocates around 25% of direct payments
to eco-schemes. These involve incentives to
farmers that go beyond the legal requirements or
usual practice in terms of climate and
environment. Around EUR 1.64 billion in support
will go to farmers who are willing to implement
environmentally friendly farming practices,
including ensuring soil protection during sensitive
climatic periods, diversifying crops and protecting
soil through minimum tillage. The different eco-
schemes are expected to be applied on up to 5.6
million hectares of land, depending on their
targeted area. Significant support (41% of the
rural development budget) will also be used to
encourage environmentally friendly practices for
areas with high natural value, for example areas
that are important for the life of birds and
butterflies. Annually, farmers are expected to
apply these practices on 611 000 hectares of land.
EUR 245 million will be available for small farms
(up to 10 hectares) to motivate them to adopt
practices aimed at sustainable agriculture,
preventing soil degradation and improving
biodiversity.
Romania’s RRP, including the REPowerEU
chapter, has a comprehensive set of reforms
and investments for the green transition.
Measures covered by submitted payment requests
include: (i) the development of flexible and high-
efficient gas-fired combined heat and power
generation (CHP) in district heating to achieve
deep decarbonisation; (ii) a reform of the
electricity market; (iii) the establishment of a
national support scheme for energy efficiency
renovation and integrated renovation (seismic
consolidation and energy efficiency) for public
buildings; and (iv) investments in sustainable
urban mobility.
Promoting fairness, social cohesion and
improving access to basic services are
among the key priorities of EU funding in
Romania.
The
ERDF
is
supporting
the development of classroom infrastructure for
childcare facilities, covering more than 130 000
children. The capacity of new or modernised social
housing will benefit more than 4 300 people, while
integrated action targeting the inclusion of
marginalised groups will support 6 100 people.
Nearly 260 000 people per year will benefit from
increased capacity in healthcare facilities. The
ESF+ dedicates EUR 1.9 billion, or 25.9% of its
total budget, to fostering social inclusion by
improving social services, particularly in rural and
marginalised communities, and to supporting the
European Child Guarantee. ESF+ will fund
integrated community services for at least
450 000 vulnerable people, provide material
support to 1.2 million deprived Romanians and
350 000 children, and will improve community and
home-based care for over 12 500 older people.
Romania’s RRP contains several reforms and
investments related to fairness and social
policies.
Measures covered by the three payment
requests submitted include a reform of the public
pension system; a reform of the governance of the
pre-university
education
system
and
professionalisation of management; investments
to support educational establishments with a high
risk of dropouts; the adoption of a national long-
term care strategy; and implementation of a
minimum inclusion income to help the most
vulnerable people out of poverty. To help Romania
implement its RRP, in 2024 the TSI assisted with
measures
for
improving
the
regulatory
frameworks in social housing and for combating
bid rigging in public procurement.
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Table A16.1:Selected
EU funds with adopted allocations - summary data (million EUR)
Instrument/policy
RRF grants (including the RepowerEU allocation)
RRF loans
Allocation 2021-2026
13 566.1
14 942.2
Disbursed since 2021 (1)
5 779.9
3 662.6
Disbursed since 2021 (3)
(covering total payments to the
Member State on commitments
originating from both 2014-
2020 and 2021-2027
programming periods)
17 212.6
9 357.8
4 038.3
3 153.3
663.3
78.5
Instrument/policy
Allocation 2014-2020 (2)
Allocation 2021-2027
Cohesion policy (total)
European Regional Development Fund (ERDF)
Cohesion Fund (CF)
European Social Fund (ESF, ESF+) and the Youth Employment
Initiative (YEI)
Just Transition Fund (JTF)
Fisheries
European Maritime, Fisheries and Aquaculture Fund (EMFAF)
and the European Maritime and Fisheries Fund (EMFF)
Migration and home affairs
Migration, border management and internal security - AMIF,
BMVI and ISF (4)
The common agricultural policy under the CAP strategic
plan (5)
Total under the CAP strategic plan
European Agricultural Guarantee Fund (EAGF)
European Fund for Agricultural Development (EAFRD)
24 070.8
12 376.1
6 535.0
5 159.6
30 986.5
17 976.0
3 537.7
7 333.0
2 139.7
168.4
162.5
214.2
Allocation 2023-2027
14 969.6
9 934.8
5 034.7
333.6
108.0
Disbursements under the
CAP Strategic Plan (6)
4 200.1
3 600.6
599.5
(1) The cut-off date for data on disbursements under the RRF is 31 May 2025.
(2) Cohesion policy 2014-2020 allocations include REACT-EU appropriations committed in 2021-2022.
(3) These amounts relate only to disbursements made from 2021 onwards and do not include payments made to the Member
State before 2021. Hence the figures do not comprise the totality of payments corresponding to the 2014-2020 allocation. The
cut-off date for data on disbursements under EMFAF and EMFF is 29 April 2025. The cut-off date for data on disbursements
under cohesion policy funds, AMIF, BMVI and ISF is 5 May 2025.
(4) AMIF - Asylum, Migration and Integration Fund; BMVI - Border Management and Visa Instrument; ISF - Internal Security Fund.
(5) Expenditure outside the CAP strategic plan is not included.
(6) The cut-off date for data on EARDF disbursements is 5 May 2025. The information on EAGF disbursements is based on the
Member State declarations until March 2025. Disbursements for the Direct Payments (EAGF) started in 2024.
Source:
European Commission
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Table A16.2:Summary
table on 2019-2024 CSRs
Romania
2019 CSR 1
Ensure compliance with the Council recommendation of 14 June
2019 with a view to correcting the significant deviation from the
adjustment path toward the medium-term budgetary objective.
Ensure the full application of the fiscal framework.
Strengthen tax compliance and collection.
2019 CSR 2
Safeguard financial stability and the robustness of the banking
sector.
Ensure the sustainability of the public pension system and
the long-term viability of the second pillar pension funds.
2019 CSR 3
Improve the quality and inclusiveness of education, in particular for
Roma and other disadvantaged groups.
Improve skills, including digital, notably by increasing the labour
market relevance of vocational education and training and higher
education.
Increase the coverage and quality of social services and
complete the minimum inclusion income reform.
Improve the functioning of social dialogue.
Ensure minimum wage setting based on objective criteria, consistent
with job creation and competitiveness.
Improve access to and cost-efficiency of healthcare, including
through the shift to outpatient care.
2019 CSR 4
Focus investment-related economic policy on transport, notably on
its sustainability, low carbon energy and energy efficiency,
environmental infrastructure as well as innovation, taking into
account regional disparities.
Improve preparation and prioritisation of large projects and
accelerate their implementation.
Improve the efficiency of public procurement and ensure full and
sustainable implementation of the national public procurement
strategy.
2019 CSR 5
Ensure that legislative initiatives do not undermine legal certainty by
improving the quality and predictability of decision-making, including
by appropriate stakeholder consultations, effective impact
assessments and streamlined administrative procedures.
Strengthen the corporate governance of state-owned enterprises.
2020 CSR 1
Pursue fiscal policies in line with the Council’s recommendation of 3
April 2020, while taking all necessary measures to effectively
address the pandemic, sustain the economy and support the
ensuing recovery.
Avoid the implementation of permanent measures that would
endanger fiscal sustainability.
Strengthen the resilience of the health system, including in the areas
of health workers and medical products, and improve access to
health services.
2020 CSR 2
Provide adequate income replacement and
extend social protection measures and
extend access to essential services for all.
Mitigate the employment impact of the crisis by developing flexible
working arrangements and activation measures.
Strengthen skills and digital learning and
ensure equal access to education.
Assessment in May 2025
Not relevant anymore
Not relevant anymore
Not relevant anymore
Limited progress
Substantial progress
Substantial progress
Substantial progress
Substantial progress
Some progress
Some progress
Some progress
Some progress
Substantial progress
Substantial progress
Substantial progress
Some progress
Some progress
Some progress
SDG 6, 7, 9, 10, 11,
12, 13
SDG 16
SDG 9
SDG 4, 8, 10
SDG 4
SDG 1, 2,10
SDG 1, 2, 10
SDG 8
SDG 8
SDG 3
Relevant SDGs
SDG 8, 16
SDG 8, 16
SDG 8, 16
SDG 8
SDG 8
SDG 8
Some progress
Some progress
Some progress
Limited progress
SDG 16
Some progress
Not relevant anymore
Not relevant anymore
SDG 9
SDG 8, 16
Limited progress
Some progress
Some progress
Full implementation
Some progress
Limited progress
Substantial progress
Some progress
Some progress
SDG 8, 16
SDG 3
SDG 1, 2, 10
SDG 1, 2, 10
SDG 1, 2, 10
SDG 8
SDG 4
SDG 4, 8, 10
(Continued on the next page)
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Table (continued)
2020 CSR 3
Ensure liquidity support to the economy benefiting businesses and
households, particularly small and medium-sized enterprises and the
self-employed.
Front-load mature public investment projects and
promote private investment to foster the economic recovery.
Focus investment on the green and digital transition, in particular on
sustainable transport,
digital service infrastructure,
clean and efficient production and use of energy and environmental
infrastructure, including in the coal regions.
2020 CSR 4
Improve the quality and effectiveness of public administration and
improve the predictability of decision-making, including through an
adequate involvement of social partners.
2021 CSR 1
Pursue fiscal policies in line with the Council Recommendation of
June 2021 with a view to bringing an end to the situation of
excessive government deficit in Romania.
2022 CSR 1
Pursue fiscal policies in line with the Council Recommendation of
June 2021 with a view to bringing an end to the situation of
excessive government deficit in Romania.
2022 CSR 2
18
an
Some progress
Full implementation
Some progress
Some progress
Some progress
Some progress
Some progress
Limited progress
Some progress
Some progress
Not relevant anymore
Not relevant anymore
Not relevant anymore
SDG 8, 16
SDG 16
SDG 16
SDG 8, 9
SDG 8, 16
SDG 8, 9
SDG 11
SDG 9
SDG 6, 7, 9, 10, 11,
12, 13
18
an
Not relevant anymore
SDG 8, 16
RRP implementation is monitored by assessing RRP
Proceed with the implementation of its recovery and resilience plan,
payment requests and analysing reports published
in line with the milestones and targets included in the Council
twice a year on the achievement of the milestones and
Implementing Decision of 3 November 2021.
targets. These are to be reflected in the country reports.
Swiftly finalise the negotiations with the Commission on the 2021-
Progress on the cohesion policy programming
2027 cohesion policy programming documents with a view to
documents is monitored under the EU cohesion policy.
starting their implementation.
2022 CSR 3
Some progress
Reduce overall reliance on fossil fuels.
Facilitate the further expansion of sustainable energy production by
accelerating the development of renewables,
upgrading energy transmission grids and increasing interconnection
with neighbouring Member States.
Increase the pace and ambition of renovations to advance the
energy efficiency of the building stock.
2023 CSR 1
Pursue fiscal policies in line with the Council Recommendation of 18
June 2021 with a view to bringing an end to the situation of an
excessive government deficit in Romania by 2024, and to strengthen
Romania’s external position.
Wind down the emergency energy support measures in force, using
the related savings to reduce the government deficit, as soon as
possible in 2023 and 2024. Should renewed energy price increases
necessitate new or continued support measures, ensure that these
are targeted at protecting vulnerable households and firms, fiscally
affordable, and preserve incentives for energy savings.
Preserve nationally financed public investment and ensure the
effective absorption of RRF grants and other EU funds, in particular
to foster the green and digital transitions.
For the period beyond 2024, continue to pursue a medium-term
fiscal strategy of gradual and sustainable consolidation, combined
with investments and reforms conducive to higher sustainable
growth, to achieve a prudent medium-term fiscal position.
2023 CSR 2
Some progress
Limited progress
Limited progress
Some progress
Limited progress
Limited progress
SDG 8, 16
SDG 7, 9, 13
SDG 7, 9, 13
SDG 7, 9, 13
SDG 7
Limited progress
SDG 8, 16
Full implementation
SDG 8, 16
No progress
SDG 8, 16
RRP implementation is monitored through the
Ensure an effective governance and strengthen the administrative
capacity to allow for a continued swift and steady implementation of
assessment of RRP payment requests and analysis of
the bi-annual reporting on the achievement of the
the recovery and resilience plan. Swiftly finalise the REPowerEU
chapter with a view to rapidly starting its implementation. Proceed
milestones and targets, to be reflected in the country
with the speedy implementation of cohesion policy programmes, in
reports. Progress with the cohesion policy programming
close complementarity and synergy with the recovery and resilience
is monitored in the context of the Cohesion Policy of the
European Union.
plan.
(Continued on the next page)
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Table (continued)
2023 CSR 3
Reduce reliance on fossil fuels and
accelerate the energy transition, in particular by deploying
renewable energy faster and improving grid capacity to allow new
capacity to operate in the market.
Increase energy efficiency and the ambition of building renovation
efforts, including by providing better access to information and
sustainable finance options.
Step up policy efforts aimed at the provision and acquisition of skills
and competences needed for the green transition.
2024 CSR 1
Submit the medium-term fiscal-structural plan in a timely manner.
Tighten fiscal policy in order to achieve a fiscal adjustment for 2024
as a whole. In 2025, in line with the requirements of the reformed
Stability and Growth Pact, limit the growth in net expenditure to a
rate consistent with, inter alia, reducing the general government
deficit towards the 3% of GDP Treaty reference value and keeping
the general government debt at a prudent level over the medium
term.
2024 CSR 2
Significantly accelerate the implementation of cohesion policy
programmes and the recovery and resilience plan, including the
REPowerEU chapter, ensuring completion of reforms and investments by
August 2026, by guaranteeing effective governance and strengthening
administrative capacity. In the context of the mid-term review, continue
focusing on the agreed priorities, taking action to better address the
needs regarding social housing, the related social services and the
development of smaller urban areas, while considering the opportunities
provided by the Strategic Technologies for Europe Platform initiative to
improve competitiveness.
Some progress
Some progress
Limited progress
SDG 7, 9, 13
SDG 7, 9, 13
Some progress
Limited progress
Some progress
Full implementation
SDG 7
SDG 4
SDG 8, 16
SDG 8, 16
No progress
RRP implementation is monitored through the
assessment of RRP payment requests and analysis of
the bi-annual reporting on the achievement of the
milestones and targets, to be reflected in the country
reports. Progress with the cohesion policy programming
is monitored in the context of the Cohesion Policy of the
European Union.
Source:
European Commission
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ANNEX 17: COMPETITIVE REGIONS
Favourable economic conditions provide an
opportunity for regional convergence in
Romania.
Harnessing the competitive advantages
of regions in key sectors of the economy,
promoting equal access to high quality public
services at regional and local levels, and
addressing challenges of demography, quality of
institutions and governance are all key in ensuring
social and economic convergence.
Romania’s GDP growth has been driven by
access to EU funds, foreign investment and
economic integration.
Romania has seen a
sustained growth in GDP per head, which increased
from just 30% of the EU-27 average in 2002 to a
record high of 78% in 2023. This positive trend is
expected to continue in 2024-2026, driven by
capital deepening and growth in total factor
productivity.
Despite the significant internal economic
disparities between the capital and other
regions, convergence has been particularly
strong in Romania since 2013.
While all
Romanian regions have continued to move
towards the EU-27 average in terms of GDP per
head, the capital region has improved more
rapidly, widening regional disparities. In 2023, GDP
per head in the București-Ilfov
region was 190%
of the EU-27 average, in stark contrast to the
other regions, which ranged from 78% in Vest to a
low of 47% in Nord-Est.
Creating opportunities across Romanian
regions would help to tackle negative
demographic trends and support regions'
productive base and growth potential.
The
capital region, Vest, Nord-Vest and Centru have
shown better GDP per head performance
compared to the rest of the country, despite recent
population increases. While in the last 10 years
population in Romania declined by 4.5 per 1 000
residents, between 2022 and 2023, these four
regions registered annual demographic increases
ranging from 8.2
(București-Ilfov)
to 1.1 (Vest) per
1 000 residents. Of the other regions only Nord-
Est recorded a population increase (0.8), with Sud-
Est (-3.5), Sud-Vest Oltenia (-3.7) and Sud-
Muntenia (-3.7) all recording a population decline.
Competitiveness
All Romanian regions are below the EU-27
average in terms of competitiveness.
The
Regional Competitiveness Index 2.0 (Map A17.1)
shows that the regional gaps in GDP per head
between the capital and the rest of Romania are
largely driven by disparities in labour productivity,
as well as gaps in higher education, labour market
efficiency and innovation.
Map A17.1:
Regional Competitiveness Index 2.0,
2022 edition
Source:
DG REGIO, JRC based on Eurostat
Labour productivity growth has accelerated
significantly over the past decade.
Annual
growth in labour productivity between 2013 and
2022 (measured as GDP per hour worked)
outpaced the EU-27 average (3.5% vs 0.9%).
However, this growth was unevenly distributed
across the country. The capital region showed the
fastest growth (6.2%), followed closely by Vest
(5.2%) and Nord-Vest (4.5%). Two regions - Centru
(1.6%) and Sud-Est (2.6%) - saw lower but still
above EU average productivity growth. In contrast,
Sud-Vest Oltenia (0.6%) and Sud-Muntenia (0.5%)
experienced below-average growth, while Nord-Est
(-0.5%) saw a decline in productivity.
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Table A17.1:Selection
of indicators at regional level in Romania
GDP
per head
(PPS)
Real GDP
per head
growth
Productivity
Real
Productivity
Real
Human
Population
Employment
- GDP per productivity - GDP per productivity
resources
aged 30-34
R&D
in knowledge-
Population
person
growth
hour
growth
in science and
with high
expenditure
intensive
growth
employed (per person worked
(per hour
technology
educational
services
(PPS)
employed)
(PPS)
worked)
(core)
attainment
Average
annual
change
per 1000
residents
2014-2023
1.7
-4.5
-1.9
-2.9
-1.4
-6.8
-8.5
1.0
-9.1
-8.3
At-risk-of-
Access to
Urban
poverty or alternative
waste
social
fuel
water not
exclusion infrastructure collected
Number of
electric
% of total
vehicles
population
charging
points within
10 km
2024
21.0
27.9
25.6
24.7
33.8
39.7
28.8
12.0
35.1
21.3
2022
287
31
19
9
8
11
5
186
9
12
Index
EU-27 = 100
Average
Average
Average
Index
Index
annual
annual
annual
EU-27 = 100
EU-27 = 100
% change
% change
% change
% of GDP
% of
% of total
% of total
population
employment employment
aged 30-34
% of
generated
load
2023
European Union (27 MS)
Romania
Nord-Vest
Centru
Nord-Est
Sud-Est
Sud-Muntenia
Bucureşti-Ilfov
Sud-Vest Oltenia
Vest
100
78
71
70
47
61
60
190
62
78
2014-2023
1.6
4.1
5.5
3.1
0.0
1.9
0.6
7.8
0.2
6.1
2023
100
85
75
81
47
74
78
167
70
90
2014-2023
0.6
3.7
5.3
1.9
-0.6
1.3
1.6
6.4
0.3
6.1
2022
100
71
61
70
43
62
63
130
57
74
2013-2022
0.9
3.5
4.5
1.6
-0.5
2.6
0.5
6.2
0.6
5.2
2022
2.28
0.46
0.24
0.43
0.24
0.09
0.24
0.85
0.13
0.76
2024
49.2
29.3
27.5
29.7
22.0
24.8
22.2
51.3
26.3
30.4
2024
41.5
25.2
23.3
21.9
18.6
24.9
22.8
43.2
21.7
22.2
2024
44.8
23.6
21.4
17.3
19.0
17.6
15.3
51.2
16.6
19.5
2020
2.4
36.9
32.0
36.0
38.6
30.3
55.6
18.7
55.2
24.8
Source:
Eurostat and ARDECO (JRC)
Graph A17.1:
Labour productivity per hour
45
40
2015 EUR per hour worked
35
30
25
20
15
10
5
deteriorating in rural areas (26.3%), whereas cities
had a much lower rate (5.0%) Furthermore, in the
2022 Programme for International Student
Assessment test, the performance gap between
schools in urban and rural areas was among the
highest in the EU (119 score points for
mathematics, compared to the EU average of 49).
Increasing the proportion of women and
young people in regional labour markets and
reducing unemployment would help to
improve competitiveness, in particular in the
less developed regions.
Regional variations in
labour market conditions are significant, with the
unemployment rate ranging from 2.2% in the
capital region to 9.9% in Sud-Est. Rural areas have
a substantially higher unemployment rate (8.2%)
than cities (2.1%). Moreover, the rate of youth
unemployment was alarmingly high across all
regions, with participation in the labour market
hampered by significant gaps in skills, especially in
the less developed regions. There are also wide
regional disparities in the employment rate of
women: only half of the female population aged
20-64 was employed in the Sud-Est region in
2023, compared to 76.6% in the capital region.
There is significant scope to enhance
innovation by supporting the scale-up of
innovative enterprises, especially where
major universities are located.
Chronically low
investment in R&D and weak innovation
performance exacerbate regional disparities.
Regarding business expenditures on research and
development (BERD), all regions fell short of the
EU average (1.53%), with a national average of
0.29%. The proportion of employment in high-tech
0
2015
Other NUTS2 regions
Capital region
National average
2022
EU27
2012
2013
2014
2016
2017
2018
2019
2020
Unit: Real GDP per hour worked (EUR, 2015 prices).
Source:
ARDECO (JRC).
Human capital and educational attainment
are the key factors behind the productivity
gaps in Romania and in particular the
differences between the capital region and
other regions.
In 2024, in almost all less
developed regions, the proportion of the
population aged 30-34 with a tertiary degree was
below the national average (23.6%), ranging from
15.3% (Sud-Muntenia) to 21.4% (Nord-Vest). In
stark contrast, the București-Ilfov
region displayed
a significantly higher proportion of the population
with a high level of education (51.2%), exceeding
even the EU-27 average (44.8%).
The divide in educational outcomes is not
only regional but also exists between urban
and rural areas.
There is significant scope for
targeted initiatives to improve educational
outcomes and human capital development in rural
areas (see Annex 12). The rate of early leavers
from school and training was alarmingly high and
2021
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sectors in 2024 was above the EU average (5.2%)
only in București-Ilfov
(9.2%) and Vest (6.0%),
while other regions had proportions ranging from
0.8% to 3.4%. These indicators consistently
suggest that Romania, and particularly its less
developed regions, struggles to capitalise on
growth trends in advanced and dynamic sectors.
Digital disparities persist between Romania’s
regions, and ICT uptake is low.
Overall,
Romania continues to have major shortcomings in
digital transformation of businesses and
digitalization of public services, whilst digital skills
and digital infrastructure show better results. This
indicates that further efforts would be useful to
encourage technology transfer and boost regional
competitiveness.
contrast, the price-to-income ratio was between
15-19 times the average annual salary in all less
developed regions at NUTS 2 level. On a more
granular (NUTS 3) level, there are significant
regional disparities: the price-to-income ratio of
Sălaj (30.9)
is nearly three times as high as in
Bucharest (10.6) (Map A17.2). On average, 9% of
the population faced housing cost overburden in
2023, with the highest percentage in the Sud-Est
region (13%).
Map A17.2:
House prices relative to income, 2019
Social fairness
In 2024, the country had one of the highest
percentages of population at risk of poverty
or social exclusion (AROPE) in the EU, with
significant regional disparities.
Additionally,
stark rural-urban disparities remain in the risk of
poverty or social exclusion, with cities recording
14.3%, while rural areas face a rate three times
higher, at 41.7%. The AROPE rate ranges from
21.3% in Vest to 39.7% in Sud-Est, compared to
12.0% in the capital region.
Addressing Romania’s combination of high
net outmigration and ageing population
would help to improve social cohesion and
the Romanian economy's competitiveness,
both at national and regional level.
Six of the
seven less developed regions are trapped in a
vicious cycle of low population growth, outward
migration of skilled labour, and persistent
workforce shortages. This, in turn, erodes social
cohesion and imperils people's “right to stay” in
the place they call home, putting at risk their
communities and undermining the stability and
wellbeing of the regions as a whole.
Affordable housing remains a major
challenge in Romania, but bucking the current
trend within the EU, the issue is more
pronounced in rural areas than in urban
areas.
Housing was more affordable in the capital
region, with 100 square metres of living space
costing 11 times the average annual income. By
Source:
European Commission, Mapadomo
Structural deficiencies in accessibility and
quality of public transport infrastructure
significantly affect social cohesion in
Romania’s less developed
regions.
In 2021, in
the capital region, 74.9% of the population living
in a radius of 120 km can be reached in less than
90 minutes, but this ratio drops to less than 40%
in most of the less developed regions, bottoming
out at 26.1% in Centru. The situation is even more
critical in rail transport performance: on average,
3.8% of the population living in a radius of 120
km can be reached by rail transport in less than 90
minutes, well below the EU average of 15.7%.
These differences undermine the essential
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preconditions for economic development, labour
market participation and inclusive growth.
Effective and equitable access to essential
services is of crucial importance for regional
development.
Insufficient
administrative
capacity, poor coordination and inefficiencies limit
regional and local authorities’ capacity to attract
investments and provide basic services. The lack of
key infrastructure in waste, water, sanitation and
digital connectivity is particularly noticeable when
comparing the capital region with the less
developed regions, and between urban and rural
areas. In response to decarbonising transport,
access to alternative fuel infrastructure, measured
by the number of electric vehicle charging points
within 10 km, is severely limited in all Romanian
regions, with none reaching even 6% of the EU
average (287) except for the capital region, which
still only reaches two thirds of the EU average (
217
).
Capacity deficits are also chronic at the level
of small or shrinking cities, hampering the
cohesion policy priorities of inclusive and
sustainable urban development.
Local urban
authorities often lack the experience or financial
stability to implement participatory and integrated
projects. Moreover, the legal basis for functional
urban area partnerships is weak, disincentivising
cooperation between local territorial units.
There are significant regional differences in
access to basic services such as healthcare
and long-term care in rural areas.
Social
workers and long-term care are unevenly
distributed across the regions. They are
concentrated in the București-Ilfov
region and
other major Romanian cities, while rural remote
communities often have to rely on scarce,
undersized and low-quality long-term care
services (
218
). Disparities in accessibility are often
intertwined
with
broader
socio-economic
challenges, which can further compromise health
outcomes and worsen disparities across the whole
territory. Access to education and health facilities
is unequal across regions, and even more across
(
217
) Indicators of access to alternative fuel infrastructure are
based on calculations by DG REGIO and the JRC, using data
from the European Alternative Fuels Observatory (EAFO),
Eurostat, TomTom and Eco-Movement.
(
218
)
Romania Ministry of Social Affairs Report on the
implementation of the Council Recommendation on access to
high quality and affordable long-term care.
the urban-rural divide. The percentage of
population with a primary school within 15-
minutes' walking distance is 70.5% in the capital
region, but drops below 50% in all other regions,
bottoming out at 30.7% in Nord-Est. In cities in
Sud-Muntenia 87% of children under 15 have a
primary school within 15 min walking, but this
percentage drops to 14.7% in rural areas in Nord-
Est. At the same time, challenges remain in
balancing the physical access to primary education
in rural areas and ensuring quality of education in
these areas, especially in areas facing
depopulation (see Annex 12).
However, potential competitive advantages
exist in some other regions besides the
capital.
With 13 universities, Nord-Vest stands
out in terms of number and quality of higher
education institutions, both nationally and
compared to other central and eastern Member
States. Creating the conditions to improve people’s
skills in all regions would help to increase growth
opportunities and competitiveness.
Sustainability
All Romanian regions have pollutant
concentrations above the EU average.
Despite making progress to achieve better
air quality standards, results vary according
to the extent of urbanisation.
The București-
Ilfov region ranks highest in air quality concerns,
with a concentration of PM2.5 pollutants and years
of life lost due to PM2.5 pollution exceeding the
EU average. All this shows a pressing need for
nationwide efforts to improve air quality,
particularly in the capital region. Strategic
integrated projects supporting, for example,
implementation of air quality plans, would help to
facilitate those efforts.
The quality and provision of water utility
services
vary
significantly
between
Romanian regions and cities.
Only 82% of the
country’s population has access
to water supply
and only 88% to sanitation services (respectively
67% and 77% in rural areas). Romania has one of
the lowest compliance rates with EU water
legislation and faces the highest investment needs
to reach and maintain compliance. Although there
has been some progress in recent years, water
leaks in the public network and the lack of urban
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wastewater treatment are ongoing problems. It
would be beneficial to step up measures to extend
and modernise drinking water and wastewater
infrastructure, and to ensure a sustainable service
at a reasonable price.
All Romanian regions experience high
climate-related vulnerability. If properly
addressed, this could create opportunities for
sustainability.
Exposure to harmful climate
impacts, especially flooding and drought, is
particularly high in the southern and eastern
regions, bearing significant human and economic
costs (see Map A17.3).
Map A17.3:
Climate change impact on GDP
Unit: Additional economic costs of a 2°C global warming
scenario by 2050 compared to the present day
baseline.
Source: DG REGIO, JRC
Limited economic resources and low
administrative capacities available to the
regional and local administrations hinder
adequate investment in climate risk
management and adaptation.
Improved water
infrastructure, combined with nature-based
solutions and the use of renewable energy
sources, also through energy communities, have
the potential to drive innovative and sustainable
growth and yield additional economic and social
benefits. For example, nature-based solutions
could help reduce climate-related disaster risks
such as floods, but also attract tourism, increase
property values and improve air quality and public
health conditions.
113