The World Bank and Romania, through the Ministry of Finance, signed on Tuesday a loan of 600 million euro for development policies (Development Policy Loan), with an emphasis on inclusive and green economic growth, according to a statement of the bank.
Approved on June 30 by the World Bank Board of Directors, this loan is the first in a series of two financing operations and is complemented by a $24.2 million grant from the IBRD Innovative Global Public Goods Solutions Fund, also signed on Tuesday.
The loan and financial assistance support the Romanian authorities in carrying out important structural reforms to advance social inclusion (including measures to respond to the humanitarian crisis), to strengthen fiscal management, to encourage decarbonisation and to improve resilience to climate change.
“Romania’s recent transition to high-income countries is encouraging, but the population still has one of the highest levels of poverty and inequality in the European Union, which requires additional efforts. This partnership will support the Government’s efforts to boost social inclusion and to respond to the constraints that impede sustainable economic growth with a positive impact on the environment in Romania,” said Anna Akhalkatsi, Country Manager for Romania, World Bank.
In the last two decades, Romania has made progress in reducing poverty and increasing economic performance. However, regional disparities in revenue and service provision remain large and there is still room for effort, which can support economic growth stimulated by measures aimed at streamlining institutions, including by improving the collection rate and cost-effectiveness, by extending the coverage of adequate social assistance, as well as by supporting adaptation to climate change and implementing measures to mitigate their impact.
According to the European Union’s Periodic Economic Report (EU RER) published on Monday by the World Bank, the pandemic and the war in Ukraine have further damaged the development environment and slowed Romania’s convergence with the European Union.
The Romanian Government is committed to addressing these challenges and implementing reforms, which are essential for consolidating potential growth and reducing recent negative effects on the economy.
“Granting this loan and, respectively, the non-reimbursable financial assistance, signed today, confirms the recognition by the World Bank of the stability of our country’s macroeconomic framework and also of the progress made in responding to the current humanitarian crisis and structural reforms on cost-efficiency, tax reform, renewable energy and increasing the energy efficiency of buildings. On the other hand, this operation reconfirms the active role of the World Bank in responding promptly, through financing and technical expertise, to the specific needs and efforts of the Romanian authorities to increase the growth potential of our country,” said the Minister of Finance, Adrian Câciu.