REI analysis: Romania to get EUR 100 bln. of EU funds in the financial program 2021-2027, three times more than between 2014-2020

Aurel Constantin 21/01/2021 | 13:09

Romania is to receive a total budget of EUR 100 billion in the European financing period of 2021-2027, of which EUR 79,9 billion represents non-reimbursable European funds distributed in 9 operational programs across several key sectors of the economy, as well as a budget of about EUR 20 billion non-reimbursable funds for the agriculture sector.

Leaders of the European countries and EU institutions have approved a multi-annual budget for 2021-2027, worth EUR 1.074 billion. Romania has obtained about 7,5% of the total, 79,9 billion euros respectively, which will be used in the form of an economic recovery package, aimed at improving infrastructure in our country, building new hospitals and schools, modernizing public systems, as well as allocated funds for the development of the Romanian business environment in key areas.

„In the financial program 2021-2027, Romania will receive more than twice as much of the amount obtained in the period 2014-2020, which means that more funding will be available to the Romanian companies for their own needs (development, digitization) and indirectly for infrastructure works: energy efficiency, schools, kindergartens, road rehabilitation, construction of highways, bridges, construction of new hospitals, investments that will generate horizontal development among Romanian companies. Moreover, the Romanian Government announced the availability of an additional budget of about 20 billion euros in non-reimbursable funds for the agricultural sector. In the financing period of 2021-2027, companies will be able to apply for funds directly from regional development agencies, which means a shortening of the time needed for evaluating projects and signing contracts, thus a more efficient absorption process, said Roxana Mircea, partner REI Finance Advisors, one of the biggest and most dynamic consultancy agencies specialized in attracting European funds and state aid for companies active in Romania.

Which programs will receive non-reimbursable financing in the 2021 – 2027 period

  1. The Sustainable Development Operational Program (PODD), focusing in particular on investments in key sectors, will benefit from a regional allocation, with a total budget of more than EUR 13.62 billion. In contrast to the previous financial year, in the period 2021-2027, PODD will be available and managed independently by one of the eight Regional Development Agencies (ADR) as follows: POR Bucuresti-Ilfov, POR Nord-Vest, POR Center, POR Sud-Muntenia, POR Sud-Est Oltenia, POR Nord-Est;
  2. The main challenge that the Operational Program Transport (POT 2021-2027) will have to address is to bridge the gap in the development of Romania’s transport infrastructure, including dual-use while ensuring that achieving European carbon reduction targets and moving toward sustainable and secure mobility. The estimated total budget of the POT 2021-2027 program is EUR 8.368 billion and the funds will be allocated to the main infrastructure objectives – high-speed roads, national roads, rail, urban mobility, multimodal transport, inland waterways, and ports, etc;
  3. The Education and Employment Operational Program (POEO) will benefit from an estimated budget of EUR 5.775 billion, of which EUR 3.861 billion from the European Structural Funds and EUR 1.913 billion in national co-financing. POEO 2021-2027, with a budget managed by the Ministry of Education, has a number of specific objectives, including improving the accessibility, quality of early childhood education and care, including related infrastructure, preventing early school leaving, improving the quality of vocational education and training, integrating young people into the labor market, developing an entrepreneurial culture, supporting entrepreneurship and the social economy or increasing participation in lifelong learning to ensure labor market transitions and employee labor mobility;
  4. The main objective of the Health Operational Program (POS) is to improve the accessibility, effectiveness, efficiency, and resilience of the health system and as its specific objectives are to improve the effectiveness of emergency medical services, to increase access to primary, community, and outpatient care services, to improve the accessibility and effectiveness of rehabilitation/recovery services, palliative care services, long-term care services, increasing the effectiveness of the healthcare sector through investment in infrastructure and services, improving the effectiveness and efficiency of healthcare services through investment in research and the digitalization of the healthcare system or increasing the use of modern and innovative methods of investigation, intervention, and treatment. The estimated budget allocated to POS 2021-2027 is EUR 4.7 billion, representing both non-reimbursable European funds, European structural funds, and a national contribution from the state budget;
  5. The Social Inclusion and Dignity Operational Program (POIDS) will benefit from an estimated budget of EUR 2.960 billion of European funds plus  EUR 703 million of the state budget, with a total of EUR 3.663 billion for the period 2021-2027. The measures set out in POIDS aim to address the needs of vulnerable groups in rural areas, mainly but also in urban areas, both in terms of access to services and by implementing measures that directly support members of vulnerable groups (vouchers, material support, food, etc. The strategy of the Social Inclusion and Dignity 2021-2027 Operational Program aims at several ways of support and financing palaces, part of the strategy of the Romanian Government to improve the general situation of families from disadvantaged backgrounds;
  6. The Smart Growth, Digitization and Financial Instruments Operational Program (POCIDIF) would benefit from a EUR 2.14 billion budget, with a national contribution of 30%, and will benefit from several priority axes, mainly targeting stimulating SME access to finance for innovation through digitization;
  7. The Just transition Operational Program (POTJ) shall only support activities that are directly linked to the specific objective of enabling regions and citizens to address the social, economic, and environmental impact of the transition to a climate-neutral economy. POTJ 2021-2027 has a total indicative allocation of approx. EUR 1.766 billion FEN, of which 0.766 billion JTF and 1 billion NGEU are added to 0,264 billion national co-financing, with a total of EUR 2.030 billion available;
  8. The objective of the Technical Assistance Operational Program (POAT) is to ensure the efficient and effective use and management of EU funds, supporting programming, monitoring, control, audit, evaluation, and communication on EU priorities. As the new multiannual financial framework for 2021-2027 proposes to modernize cohesion policy and change it to a simple and flexible policy, simplification and the introduction of new flexibility instruments to facilitate the final beneficiaries of the funds are envisaged. The estimated budget for 2021-2027 is 598,5 million euros, showing double as compared to the previous financing period of 2014-2020;
  9. Eight regions of Romania will benefit from Regional Operational Programs (POR) financed with European money and funds from the local budget, which are on the investment list to ensure the continuity of the strategic vision of sustainable and balanced development of regions in the period 2014-2020, based on the directions, actions and priorities of the Regional Development Plan (PDR) 2021-2027 and the 2021-2027 Smart Specialization Strategy (RIS), including the recommendations of the European Commission made in the 2019 country report on Romania;

In addition to the 80 billion euros of non-reimbursable funds available to Romania, the European Commission’s proposal for the 2021-2027 multiannual financial framework for the common agricultural policy amounts to about 20,5 billion euros. Of this amount, 13.3 billion represents direct payments, while 6.7 billion euros will be granted to the European Agricultural Fund for Rural Development (FEADR). The FEADR allocations will also be based on indicators. In addition, the co-financing rate of the Member States proposed by the European Commission is set between 65-80% of the FEADR.

The main proposals related to the lines of action for the FEADR in the multiannual financial framework 2021-2027 concern:

  • Investments in agricultural holdings, fruit trees, processing units, basic services in rural areas, and non-agricultural investments: 38%;
  • Support for environment and climate: 35%;
  • Animal welfare support and risk management tools: 9%;
  • Setting up young farmers and setting up new rural enterprises: 8%;
  • Cooperation and innovation: 6%;
  • Knowledge and information exchange and technical assistance: 4%;

“This year is expected to be rather uncertain, with not entirely favorable prospects on a global scale, with most of the economies around the world feeling the full effects of the pandemic. One solution to fight against the effects left behind by COVID-19 for the Romanian companies would be to analyze the possibility of using European funds or state aid and to submit projects to apply for financing, as far as possible from non-reimbursable sources. In the short term, funds are available through GD 807/2014, GEO 224/2020, GEO 130, digitization, and renewable energy schemes. The entrepreneurs should focus on all the news in the non-reimbursable financing sector, especially the financing lines, on the Ministry of European Funds portal, Ministry of Agriculture or Regional Development Agencies portals and prepare the projects together with specialized consultants who guarantee them the contractual submission of correct and complete projects”, added Roxana Mircea.

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