Bank Group Contribution

In November 2012, Romania had the second largest portfolio in Europe and Central Asia (ECA), with an undisbursed commitment of US$2.089 billion under nine active lending operations. A larger part (86 percent) is committed under two innovative new operations: the Deferred Drawdown Option (DDO) DPL of US$1.333 billion and the Results-Based Social Assistance System Modernization Project of US$0.497 billion. Grant financing includes a US$5.5 million Global Environment Facility (GEF) project for pollution control, a Prototype Carbon Fund for reducing greenhouse gases, a US$1.715 million Japanese grant (Policy and Human Resources Development [PHRD] fund) providing technical assistance (TA) to the government for Improved Policy Making and Institutional Framework for People with Disability, and a US$0.43 million Institutional Development Fund (IDF) grant for monitoring and evaluating policy making.

Romania’s Bank-financed analytic and advisory activities (AAA) Portfolio for FY2013–14 includes a Country Economic Memorandum; a Citizens Scorecard; the EU2020 Policies for Productivity, Employment, and Skills Enhancement; the Insolvency and Creditor Rights Report; and work on capacity building for the Asset Recovery Office. The Reimbursable Advisory Services (RAS) portfolio in Romania is now the largest in the Bank. Financed with EU funds, it aims to modernize public administration and help strengthen Romania’s capacity to absorb EU funds. The active portfolio consists of 19 RAS as of mid-FY13 in agriculture, education, public finance, transport, competition, justice, public investments, and regional development. Ten more are expected to be signed this year.

The International Finance Corporation (IFC) has invested US$1.37 billion in 52 projects, supporting roughly US$3.3 billion in investments since starting operations in Romania in 1990.

The Multilateral Investment Guarantee Agency (MIGA) has guaranteed 13 projects in Romania; at end-FY10, the agency’s gross exposure was about US$102 million.

Partners

The International Bank for Reconstruction and Development (IBRD) has maintained close partnerships with other donors, especially the EC and the IMF. This trilateral cooperation has aided the efforts made by the Romanian government to promote economic recovery, sustainable growth, public administration reform, and living standards similar to the rest of the EU countries. However, World Bank support has been successful primarily because of the close cooperation between the Bank and the Romanian government. Constructive coordination between the EC and the government led to a memorandum of understanding signed by the government and the Bank to modernize public administration and strengthen Romania’s capacity to increase EU funds absorption. The Bank’s work is highly relevant, as it provides input to the Government of Romania with a view to preparing for the next EU financing period. Other important partners include the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), particularly on transport- and infrastructure-related projects.

Moving Forward

IBRD will continue to help Romania promote sustainable growth with a focus on medium-term solutions, including to (i) achieve EU convergence, (ii) weather the impact of the crisis and a possible euro-contagion, and (iii) maintain medium-term macro stability.

IBRD will continue this support through a mix of investment lending and TA, to complement EU funds and help increase the absorption of EU Structural Funds. The IMF/EU/Bank program and the DDO DPL will help cushion the Romanian economy against shocks.

The Bank’s approach through the Country Partnership Strategy (CPS) (2009–13) is designed to support public administration reform and more sustainable growth in Romania to prevent further crises. Functional reviews of 12 ministries helped the government identify specific reforms to build stronger public administration. The macro-stabilization process was complemented by improvements in targeting social assistance (SA) toward lowest-income households, the disabled, and families with children. At mid-point, the Bank began helping the government implement public reforms through the Modernization of Administration Program and the enhancement of EU funds absorption, carrying out projects in the social sectors and tax administration, supporting its external issuance program through a DDO, advancing the discussion on growth via a series of growth policy notes, and promoting private sector development with the IFC. Through this work, the Bank hopes to help Romania’s people reap the full benefits of EU membership and enjoy a quality of life similar to its EU neighbors.