EUR 1.3 bn disbursement for Romania following unblocking of NRRP Payment Request No. 3

Romania is to receive a partial disbursement of approximately 1.3 billion euros under the NRRP facility, after the European Commission gave a positive preliminary assessment of the substantial progress made by the Romanian authorities in recent months to correct and clarify the milestones under Payment Request No. 3, considered partially fulfilled, the Ministry of European Investments and Projects (MIPE) said.The decision regarding the partial disbursement confirms the recognition of the efforts made by the Romanian government and marks a clear step towards the full unblocking of Payment Request No. 3, which is worth a net 2.02 billion euros, MIPE said on Thursday.Romania has one month to answer the Commission's letter and six months to implement all the necessary measures to fully unblock the payment request and entirely meet the milestones and targets in Payment Request No. 3."It is important to emphasize that this procedural step does not imply the loss of the funds related to Payment Request No. 3. The amounts remain allocated to Romania and the collaboration with the European Commission aims to fully complete the payment authorization process," MIPE specifies.Following the assessment of the achievement of the targets and milestones included in Payment Request No. 3, the European Commission communicated to Romania on 15 October 2024 that 68 out of the 74 milestones and targets have been positively assessed and another 6 were considered partly fulfilled. The preliminary assessment approval was issued on November 8, 2024.The payment procedure was suspended following the amendment of the legal framework on special pensions (milestone 215), as the Commission informed Romania that it had found issues with the fairness in establishing certain categories of special pensions in relation to the general public pension system. The amount suspended until the milestone is satisfactorily met is 230 million euros.The following elements also remain under review: improving the corporate governance of state-owned energy companies (suspended amount - approximately 300 million euros), operationalizing corporate governance policies for state-owned enterprises and appointing a management at the National Agency for Monitoring and Assessing Public Enterprises' Performance - AMEPIP (suspended amount - approximately 400 million euros).During this period, Romania took additional measures to remedy several deficiencies signalled out by the European Commission at the examination of Payment Request No. 3. Thus, regarding corporate governance of state-owned companies, steps have been taken to resume the AMEPIP management selection procedure and update the legal framework to facilitate the replacement of members appointed to the boards of directors, especially for companies in the transport and energy sectors.Another measure is the modification of the special tax regime applicable to micro-enterprises, following the adoption by Romania of OUG No. 156/2024.Regarding milestone 215, the Ministry of Labor, Family, Youth and Social Solidarity together with World Bank representatives identified a new mechanism to replace the progressive over-taxation of the non-contributory part of the pension, which ensures the same budgetary impact and complies with the fair contribution and equity principles set forth under the NRRP. These measures helped avoid the application of a maximum suspension related to the failure to implement this reform.Romania has 28.5 billion euros earmarked under the NRRP, of which 13.6 billion euros in the form of grants and 14.9 billion euros in the form of loans.