World Bank approves almost EUR 600 M loan for inclusive and green economic growth in Romania

The World Bank Group (WBG) Board of Executive Directors today approved the second Inclusive and Green Growth Development Policy Loan (DPL) for Romania in the amount of EUR 591.9 million. This loan is the second of two financing operations supporting the Government’s key structural reforms to enhance inclusion, strengthen fiscal management, and foster decarbonization and climate resilience. The financing supports Romania’s National Recovery and Resilience Plan, facilitating increased absorption of European Union (EU) funds. The first development policy financing, for EUR 622.2 million, was approved in June 2022.

“Through this financing, the World Bank is helping the Government to step up its efforts to advance social inclusion, enhance fiscal management and accelerate the energy transition,” said Anna Akhalkatsi, World Bank Country Manager for Romania. “Recent World Bank analysis shows that Romania needs to address poverty and inclusion challenges, and its ability to do so will require strong institutions. This is why the financing is complemented by the World Bank’s technical assistance.”  

This World Bank support aims to advance inclusion by strengthening social protection programs such as integrating disabled persons into communities and enabling longer term integration of forcibly displaced persons from Ukraine. For example, low-income families and single persons in Romania that are living in relative monetary poverty will benefit from enhanced support through the Minimum Inclusion Income (VMI) program. To unlock the implementation of the VMI, this DPL supported the adoption of necessary regulations, while also ensuring the indexation of benefits to average annual inflation to maintain them at an adequate level.

The financing contributes to strengthening fiscal management by eliminating tax loopholes and bolstering the budgetary frameworks.

Furthermore, it advances a holistic set of core reforms to decarbonize the economy, enabling the green transition in Romania. Specifically, it targets policy actions related to phasing out coal, boosting energy efficiency, developing green hydrogen and storage technologies, and increasing the forest cover. The financing also provides support for mobilizing private capital at scale. These actions will not only support Romania’s energy transition, but will contribute to the EU’s objectives of becoming the first net-zero region by 2050.