How did the Commission assess Romania's second payment request?
The European Commission has today endorsed a positive preliminary assessment of part of the milestones and targets linked to Romania's second payment request under the Recovery and Resilience Facility (RRF), the key instrument at the heart of NextGenerationEU.
On 16 December 2022, Romania submitted to the Commission a payment request based on the 49 milestones and 2 targets set out in the Council Implementing Decision for the second payment. After looking at the evidence provided by the Romanian authorities, the Commission considered 47 milestones and 2 targets out of the 49 milestones and 2 targets to be satisfactorily fulfilled.
The 47 milestones and 2 targets that have been satisfactorily fulfilled demonstrate progress in the implementation of Romania's recovery and resilience plan. They cover reforms in the areas of the green and digital transition, as well as reforms and investments related to improving governmental coordination for public policy delivery, improving water management, supporting tourism and promoting culture. Other reforms and investments are aimed at improving human resources management in the healthcare sector, enhancing tax administration and the sustainability of the pensions system, modernising infrastructure in education, ensuring the independence of the judiciary and stepping-up the fight against corruption. The payment request also covers reforms to improve road safety and investments to financially support the private sector.
The Commission has found that two milestones related to energy investments (specifically, milestone 129 and milestone 133) have not been satisfactorily fulfilled. The Commission acknowledges the first steps already taken by Romania to fulfil these outstanding milestones, though important work remains to be done. The Commission is therefore activating the ‘payment suspension' procedure, under Article 24(6) of the RRF Regulation.
In line with the RRF Regulation and as explained in the Communication published on 21 February 2023, this procedure gives Member States additional time to fulfil the outstanding milestones, while receiving a partial payment linked to the milestones and targets that have been satisfactorily fulfilled.
How do the milestones fulfilled by Romania under the second payment request effectively support the green transition?
The green transition is supported by reforms linked to eight milestones included in the second payment request. These relate to the promotion of sustainable transport and road safety, the decarbonisation of the energy sector, the establishment of a fund to support residential and public buildings' renovation to make them more energy-efficient and earthquake-proof, and a new boost to electricity generation from renewable sources.
How do the milestones fulfilled by Romania under the second payment request effectively contribute to the digital transition?
These milestones cover the final study on the feasibility of developing government cloud infrastructure, the entry into force of the law for the governance of cloud services for the public sector, the entry into force of the interoperability law to ensure data can be accessed and shared across different public systems, the signature of a contract for the implementation of government cloud infrastructure and multi-country projects related to processors and semi-conductors. Romania launched a tender for telecom companies to grant 5G licences and another one aimed at boosting the digital skills of SMEs' employees.
How do the milestones fulfilled by Romania so far contribute to improving Romania's economic and social situation, and its resilience?
Four fulfilled milestones under this payment request advance key tax and pensions reforms. They will make enrolment in the electronic system of the National Agency for Fiscal Administration (ANAF) mandatory for all taxpayers; prevent tax evasion by strengthening cooperation between ANAF and the Labour Inspection authority; improve budgetary planning by introducing a performance-based methodology; and ensure the fiscal sustainability of so-called ‘Pillar 2' pensions (i.e. mandatory private pension scheme) and facilitate digital interactions between users of Pillar 2 pensions and private pension funds.
The social reforms under this payment request will facilitate the introduction of work vouchers, contributing to boost the formal employment of those who are now officially ‘unemployed' or ‘inactive'. The adoption of the National Housing Strategy and its action plan will also contribute to reducing severe housing deprivation for vulnerable people, especially for those in marginalised communities.
Other milestones fulfilled under the second payment request are related to the digitalisation of the education system, financial support for educational establishments with high risk of drop-outs, technical support for the governance reform of the education system and the greening of buildings of the pre-university facilities. In addition, contracts have been signed for the setting-up of 110 nurseries. Romania is also granting funds to universities for improving their digital infrastructure and the digital skills of students and staff.
Does the achievement of these milestones contribute to an effective implementation of the Plan?
The fulfilled milestones constitute significant steps in the implementation of Romania's recovery and resilience plan, and of its broader reform agenda. For example, one of the milestones refers to streamlining public policy planning in the short and medium term, while adequately linking institutional strategic planning mechanisms with budgetary programming and strengthening the framework for carrying out impact assessments. This is an important step towards achieving a better coordination, formulation and implementation of government policies, as well as to increase transparency and trust in the public sector. This framework should also ensure that reforms included in Romania's RRP will be conducted in the most efficient way.
Why does the Commission consider that Romania has not fulfilled two milestones related to energy investments?
The Commission has found that two milestones related to energy investments (milestone 129 and milestone 133) have not been satisfactorily fulfilled. These milestones concern the signature of contracts for the construction of at least 100 MW of new electrolysers capacity for generation of renewable hydrogen and the signature of contracts for high-efficient gas cogeneration and district heating projects. The Commission's finding that these milestones are not satisfactorily fulfilled is based on the framework for assessing milestones and targets under the RRF Regulation (set out in Annex I to the 21 February 2023 Communication).
The Council Implementing Decisions approving the recovery and resilience plans are the basis for evaluating the satisfactory fulfilment of milestones and targets. The Commission relies on the description of each milestone and target, its context and purpose to determine the requirements that Member States must fulfil. It then establishes, based on the due justifications provided by the Member States, whether a specific milestone or target has been satisfactorily fulfilled.
How will the Commission determine the amount to be suspended if it concludes that Romania has indeed not fulfilled two milestones?
If, following Romania's observations, the Commission were to confirm its assessment that the two outstanding milestones have not been satisfactorily fulfilled, it will determine the amount of the payment to be suspended by applying its methodology for payment suspension (set out in Annex II to the 21 February Communication).
This methodology provides a clear and consistent approach to determine the relevant amounts to be suspended in case of a partial payment, while reflecting the fact that not all measures contribute equally to the realisation of the objectives of a national recovery and resilience plan.
The methodology is in line with the RRF Regulation, which caters for adverse and unexpected developments and allows partial or full suspensions of payments in case of implementation shortcomings. Member States might be confronted with delays in the implementation of measures, affecting the timely fulfilment of some milestones and targets. These situations should be exceptional and corrected as soon as possible. They should not, where justified, prevent payments from being made for milestones and targets that have been fulfilled. The RRF Regulation caters for such a situation where implementation issues for one or more of the milestones or targets of a payment request cannot be addressed in time before the submission of a payment request.
The payment suspension procedure therefore favours the continued implementation of the plan and provides time for Member States to fulfil the relevant milestone(s) or target(s) within a period of six months. If this is done, the Commission will then lift the suspension. However, if a milestone or target is not satisfactorily fulfilled at the end of the six months, the Commission will follow the process outlined in the RRF Regulation for decommitting the amount suspended
What are the next steps?
In line with Article 24(6) of the RRF Regulation, the positive preliminary assessment and the payment suspension are two distinct procedures that follow different steps.
-As regards the positive preliminary assessment: the Commission has now sent its preliminary assessment of the milestones and targets that Romania has fulfilled to the Economic and Financial Committee (EFC), asking for its opinion. The EFC's opinion, to be delivered within a maximum of four weeks, should be taken into account in the Commission's final assessment. Following the EFC's opinion on the positive preliminary assessment and Romania's observations on the payment suspension, and taking both into account, the Commission will adopt the decision on the payment of the instalment, in accordance with the examination procedure, through a comitology committee. Following the adoption of the decision by the Commission, the payment to Romania can take place.
-As regards the payment suspension: the Commission has communicated to Romania the reasons why it considers that two milestones were not satisfactorily fulfilled. This communication starts an administrative procedure between the Commission and the Member State concerned. Romania now has a right to present to the Commission its observations within one month of receipt of the communication. If, following Romania's observations, the Commission were to confirm its assessment that the two outstanding milestones have not been satisfactorily fulfilled, it will determine the amount of the payment to be suspended by applying its methodology for payment suspension (set out in Annex II to the 21 February Communication). From that moment, Romania will have a period of six months to satisfactorily fulfil the outstanding milestones. During this period of six months, the Commission will engage in active dialogue with the Romanian authorities. If and when the milestones will have been fulfilled, the Commission will lift the suspension of the payment and send its assessment to the EFC, following the above outlined procedure on the positive preliminary assessment.
The Commission will assess further payment requests by Romania based on the fulfilment of the milestones and targets outlined in the Council Implementing Decision, reflecting progress on the implementation of the investments and reforms.
The amounts disbursed to the Member States are published in the Recovery and Resilience Scoreboard, which shows progress of the implementation of the national recovery and resilience plans.
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