The World Bank’s Board of Executive Directors on Thursday approved EUR500 million (USD 558.27 million equivalent) for Romania for the Second Fiscal Effectiveness and Growth Development Policy Loan (DPL). The objective of the new program is to reform institutions and implement policies that are central to achieve higher sustainable growth, create more and better jobs, and improve living standards in Romania, worldbank.org informs.
“Romania’s authorities have demonstrated a sustained commitment to a reform agenda that is at the heart of reducing poverty and exclusion, and creating greater opportunities for Romania’s citizens,” said Cyril Muller, World Bank Vice President for Europe and Central Asia. “The World Bank is standing by Romania’s side to advance its continued economic transformation and faster convergence with the EU.”
The new program supports three overarching priorities:
- First, it focuses on boosting Romania’s growth potential through enhancing the performance and governance of State-Owned Enterprises to boost export competitiveness and macro-economic performance. In addition, the DPL will help improve the efficiency of public spending, by supporting centralized procurement in the health sector. This will generate significant savings that can be channeled to improve health outcomes and reduce the health gap with other EU member states.
- Second, it contributes to reducing poverty and social exclusion by supporting a comprehensive reform of the social assistance system that is expected to lift half a million Romanians out of poverty. In addition, reforms of the cadaster system will enable free and systematic registration of properties, including purchase, sale and inheritance of land, for more than one million Romanians, especially for people from marginalized communities and the Roma. A functioning cadaster system will also be critical to attract investments.
- Finally, it supports global public goods through the adoption of the first National Climate Change Strategy and Action Plan on Climate Change. These are expected to spur investments in renewable and low carbon energy sources and improve energy efficiency in the residential and industrial sectors.
“The Government’s reform priorities focus on achieving Romania’s faster convergence with the EU, reducing poverty and exclusion, and strengthening the confidence of investors in the Romanian economy for long-term, sustainable growth,” said Anca Dragu, Romanian Minister of Public Finance. “The DPL will be an important catalyst to unlocking productivity gains and enhancing the medium-term growth potential of Romania.”
The World Bank opened its office in Romania in 1991. Since then, the Bank has provided over USD 10.6 billion in loans, guarantees and grants in sectors such as education, health, agriculture, environment, social assistance, justice, transport, and others. The Bank’s current portfolio includes investment lending, analytical work and technical assistance to support Romania’s reform priorities. The International Finance Corporation (IFC), the private sector arm of the World Bank Group, also has a vibrant program in Romania having invested more than USD 2.5 billion since the start of operations in Romania.
In 2014, Romania became a contributing member of the International Development Association (IDA), through which the Bank provides concessional financing to its lowest-income borrowers, marking a milestone in Romania’s evolving role as a donor of the World Bank. In 2016, the World Bank Group and Romania celebrated 25 years of continued partnership in supporting poverty reduction and sustainable development.