Economic Policy Reforms 2023

Romania

See more data for Romania on the related dashboard.

Product and labour markets functioning

Performance gaps

• Trust in institutions is low and corruption remains a major issue.

• Productivity growth in the business sector is held back by burdensome red tape and slow debt restructuring.

• Legislation changes too often and takes inadequate account of its impact on ease of doing business.

Recommendations

• Provide the National Anti-Corruption Directorate with more resources and powers. Provide better guidance to members of Parliament on identifying and managing conflicts of interest.

• Simplify licencing and permit systems, notably by enhancing the use of online services, to make it easier to register new businesses.

• Strengthen the insolvency regime to facilitate debt restructuring, notably by introducing out-of-court mechanisms.

• Reduce further the use of emergency decrees and conduct more impact assessments on proposed legislation.

Digital transition

Performance gaps

• A relatively large number of Romanians do not have basic digital skills and do not use digital tools.

• Substantial scope for enhancing public-service efficiency through technology remains. Notably, improved systems for tax administration would enhance compliance and help overcome Romania’s problem of low tax revenue.

Recommendations

• Devote more resources to ICT equipment in deprived schools and training for teachers.

• Accelerate the computerisation of tax administration as part of efforts to improve tax collection.

Inclusiveness, social protection, and ageing

Performance gaps

• Income inequality is widened by women being heavily occupied with caring roles, unemployment in disadvantaged communities and inadequate education for vulnerable students.

• Unmet medical needs are high among deprived communities, including the Roma.

• The pension system is in deficit and pension payouts are modest, in part reflecting early retirement, especially among women.

Recommendations

• Provide greater access to affordable and good quality childcare and long-term care services.

• Strengthen active labour market policies for vulnerable jobseekers.

• Increase support for students at risk of dropping out of school.

• Improve access to healthcare, notably through more community nursing and use of telemedicine.

• Harmonise the legal retirement age between women and men and link it to life expectancy.

• As planned, revise the pension benefit formula to strengthen financial sustainability, while preventing old-age poverty.

Climate transition

Performance gaps

• Romania remains highly dependent on coal for electricity generation. Stronger inducements through tax and support are needed to decarbonise the energy mix and increase the efficiency of energy use.

• Use of solid-fuel fired stoves for heating and cooking contributes to indoor air pollution and premature deaths.

Recommendations

• Increase investments in renewable electricity generation.

• Extend carbon taxation to sectors of the economy not covered by the EU Emission Trading Scheme and harmonise its level.

• Increase vehicle and energy taxation to better reflect environmental impact.

• Expand support for households to stop using polluting stoves and improve home insulation.

Overall performance