Romania Country Profile

The Government of Romania has identified the following as key priorities for its relationship with and assistance from the World Bank:  completing EU accession reforms, infrastructure, health, education, and agriculture.  Accordingly, the Bank’s new Country Partnership Strategy for Romania for the period FY2006-2009 will have four main areas of support: (a) achieving sustainable private sector led high growth; (b) enhancing governance and the quality of public institutions; (c) promoting social and economic inclusion; and (d) upgrading transport and environmental standards.  Consistent with these main areas of support, ECSSD is carrying out a comprehensive program of assistance to Romania.  Of particular importance is its help to Romania in preparing for EU accession by developing the institutions needed to meet the environmental and rural/agricultural development adquis, developing a comprehensive approach to disaster management and mitigation, and addressing the natural resource management needs in rural areas where poverty is concentrated.   Since 1993, ECSSD has managed investments in Romania totaling US$468 million.

Agriculture and Rural Development

Land privatization began early in the transition process (1991) through the restitution of land used by large cooperatives to the former owners.  Almost two-thirds of the land transferred through restitution went to elderly farmers, while the remainder was transferred to younger, generally poorer households.  Most of the farms today are small semi-subsistence units of about two hectares, run by owners with limited farming skills and weak integration into factor and commodity markets.  The productivity of many households is further reduced by the limited physical capacity of elderly household heads.  These structural problems require public and private investment in rural marketing infrastructure, and increased research and extension aimed at integrating small households into the commodity and input markets.  

Rural Development Project.   As part of its assistance to the rural development sector, ECSSD is working with the Government of Romania in implementing the Rural Development Project, the main objective of which is to strengthen the institutional capacity of local administration, community/user groups, and private service providers to:  (a) plan, implement, operate, and maintain small infrastructure investments in a participatory and accountable manner; and (b) increase the access of rural inhabitants in pilot areas to markets and social services, as well as improved water and sanitation.   The project finances two main components.  One component finances technical assistance and training to build the capacity of local stakeholders, primarily communes and their constituents (including likely project beneficiaries), but also private service providers, county council technical staff, and other stakeholders. The second component provides funding for demand-driven investments for communes and community-based organizations, a public environmental health promotion campaign, a rural water/sanitation strategy study, and studies aimed at improving the broader legal, institutional, and regulatory framework for rural transport and roads.

Irrigation Rehabilitation and Reform Project.  As part of its overall assistance to Romania’s rural and agriculture sector, the World Bank is supporting the country’s irrigation sector to make the facilities economically efficient.  The primary objectives of the Irrigation Rehabilitation and Reform Project are to achieve and increase the economic use of irrigation through changes in the Land Reclamation Agency's (LRA's) practices and policies aimed at increasing agricultural productivity in the project area.   The project’s three main components will:  (a) rehabilitate the main irrigation distribution systems in two stages, within which the schemes to be rehabilitated would be chosen based on the likely long-term economic viability; (b) support for institutional reform in land reclamation, specifically through technical assistance and equipment to develop an appropriate management information system (MIS) system, support by international and national specialists for the LRA staff, preparation of a business and asset disposal plan, and support to the Land Reclamation Directorate within the Ministry of Agriculture by assisting the development of procedures to review service charges, performance monitoring, developing a database for monitoring Water User Association (WUA), and   training and TA provided to WUAs; and (c) support for a technical study to confirm the economic and financial viability of technologies designed for reducing energy consumption for irrigation.  The project will include project management support in procurement, monitoring and evaluation, financial management, institutional restructuring, and engineering.

Agricultural Support Services Project.  Within a strategic context, this project will promote public, and private services, to support the development of research, and extension services for private farmers. Agricultural productivity, and sustainability will be increased, providing needed technology, information, and training for private farmers, and agro-processors. The two main components: 1) applied research, and extension, will support agricultural research, and extension on priority problems, by means of a Competitive Grant Scheme (CGS). It will ensure a close association between research scientist/extension specialists, and the needs of newly emerged private farmers, particularly in the formulation, and evaluation of research, and extension proposals. CGS will extend the range of research and extension grant participants, to include universities, NGOs, private industry, and extension services. Funding will be provided to meet priority needs, marketing, and efficient input, and low cost options, for production, and processing. Proposals' evaluation criteria will include farm utility, experience, and transfer of technology, as well as environmental impacts; 2) institution building, will administer the CGS, and implement a rapid impact program to deliver extension messages, and conduct applied research. Technical assistance, and training will be delivered for capacity building, and future restructuring services.

Rural Finance Program.  The project seeks to promote economic growth and reduce poverty in rural Romania.  To pursue this objective, the project assists in accelerating the economic transformation of the rural economy by increasing the flow of investment capital to the sector; augmenting the private sector's role in the rural economy; facilitating accession to the European Union; and alleviating rural poverty by financing farm and off-farm investments for poor segments of the rural population which currently have no access to credit.  There are two main project components. The first component finances sub-loans on-lent through private intermediary banks (PIBs) to eligible private sector borrowers; micro-loans disbursed through participating non-governmental and/or private service providers (SPs) to rural entrepreneurs; and leasing of depreciable capital assets by PIBs and leasing companies to final beneficiaries. The second component finances incremental expenditures incurred in (a) developing suitable technologies to provide retail financial services to medium, small, and micro enterprises and entrepreneurs in rural localities through participating private retail banks (PRBs) and microcredit service providers; (b) establishing and operating a network of pilot retail banking offices; (c) operating a network of microcredit retail points; and (d) training and providing technical assistance in retail banking and micro-lending to PRBs and SPs, respectively.

Afforestation of Degraded Agricultural Land Project.  The project concerns the afforestation of degraded agricultural lands in the south-west and south-east of the Romanian Plain, and the ecological reconstruction of part of the lower Danube floodplain (Braila and Olt Counties) through the planting of native species, and the sale of the carbon sequestered by newly established forests.  The range of forest activities is related to a combination of soil type, existing land use, and the presence or absence of competing vegetation.

General Cadastre and Land Registration Project.  This project aims to:  (1) establish an efficient system for securing land titles of real estate owners which can be expanded nationwide; (2) create a general cadastre system providing clear and current definition of real estate parcels forming the basis for real estate registration; and (3) set up a simple, safe, and cost effective procedure for land transactions. There are three project components. The first develops cadastre by supporting aerial photography, base map development, cadastral surveys, and a Land Information System; by strengthening national and local cadastre offices; and by supporting the Cadastre Implementation Group that manages the cadastre component. The second component establishes and operates a land book system, trains staff, and provides institutional support for local land book offices and the land book implementation group. The third component provides institutional strengthening by supporting the project coordination unit; providing technical assistance to guide implementation and enhance planning and management capacity of the project agencies; and information system design and development and assistance in carrying out cost recovery studies.

Environment and Natural Resources

Romania is a country particularly prone to natural disasters - earthquakes, floods and landslides.  Deficiencies in environmental management poses further risks.  While legislation is being aligned to conform to EU requirements, enforcement has been lagging, and environmental management is largely delegated to the enterprises that focus primarily on achieving production targets without due consideration to environmental standards. In this context, the country is ill-prepared to deal with the challenges posed by toxic spills and other environmental hazards to which Romania is prone, especially in mining areas in the Danube River Basin.  ECSSD is assisting Romania in strengthening environmental management and hazard mitigation which will become particularly important over the next several years as the Government completes enterprise privatization and land restitution.

Hazard Risk Management and Emergency Preparedness Project.  The project’s objective is to assist the Government in reducing the country’s environmental, social, and economic vulnerability to natural disasters, and catastrophic accidental spills of mining pollutants.  The project will achieve this objective by strengthening the institutional and technical capacity for disaster management and emergency response, through upgrading communication and information systems; implementing specific risk reduction investments for floods, landslides and earthquakes; improving the safety of selected water-retention dams; and, improving, on a pilot basis, the management and safety of tailings dams, and waste dump facilities.   From a global perspective, the project also will be able to demonstrate and provide a replicable model for reducing catastrophic accidental spills of trans-boundary pollution loads, from mine operations flowing into the Danube and Black Sea basins.

Agricultural Pollution Control Project.   ECSSD is working with the Government of Romania to implement this project which is designed to increase significantly the use of environmental-friendly agricultural practices in the project area and thereby reduce nutrient discharge from agricultural sources in Romania to the Danube River and Black Sea. The project has three main components.  The first component has four sub-components: (1) incentives for the installation of improved manure storage facilities and equipment for manure collection and application in the seven comunas; (2) support for promoting the adoption of better agricultural practices to improve agricultural production while reducing nutrient discharge pollution for agriculture; (3) support for the development of a specific land use management plan for the Boianu-Sticleanu Polder and ecological restoration of the Calderasi-Raul Polder; and (4) strengthening of capacity in Calarasi Judet and the public health directorate to monitor soil and water quality and environmental impacts.  The second component finances the strengthening of national policy and regulatory capacity.  The third component finances a broad public information campaign of the project's activities and benefits at the local, national, and regional levels for replicating project interventions.

Biodiversity Conservation Management Project.  The Biodiversity Conservation Management Project aims to establish effective, inter-sectoral, participatory planning, and sustainable management of natural ecosystems and associated landscape at three demonstration sites in the Carpathian Mountains, and mechanisms to support replication of these activities at other priority conservation sites. The project contains three main components.  The first component will strengthen the National Framework for Biodiversity Conservation by participatory review and revision of the legal and regulatory framework for protected area management.  The second component will develop models for protected areas and forest park management through establishing systems for planning and management of biodiversity at the three demonstration sites.  The third component will build public support for biodiversity conservation through preparation and implementation of both national park level strategies and targeted action plans for raising the awareness of specific stakeholder groups and the general public about the importance of biodiversity conservation. 

Forest Development Project.  ECSSD is working with the Government to implement this project, the objective of which is to improve the environmentally sustainable management of the State and private forests, in an effort to increase benefits to the national and rural economies, derived from the country's forest resources. To this end, project components will: (1) establish new systems to ensure sustainable management of private forest lands; (2) mitigate the State's forests management restitution, and its consequences, by supporting reform, and strategic development of the National Forest Administration; (3) support the increased productivity, and competitiveness of forest industries, through the establishment of the Forest Sector Business Information Center, to coordinate, and assist timber, and related forest industries; (4) build public support for sustainable forest management, through public awareness campaigns; and (5) support project management, and financial activities, and oversee monitoring and evaluation aspects.

Social Development

Romania’s economic growth has been uneven and segments of the population have fallen behind, especially in rural areas. The World Bank is working with the Commission for Poverty Reduction and Social Inclusion (CASPIS) to identify pockets of poverty, improve social services, and create jobs.  World Bank-supported projects are contributing to employment creation by community driven investments, micro-credit programs, and financing skills training. 
 

Mine Closure and Social Mitigation (1999-2006). The mining sector is a major recipient of government subsidies.  This pilot project and the follow-up investment project described below provide assistance to the Government in implementing its Mining Sector Strategy, which involves the elimination of subsidies to the sector by 2007 (2010 for coal mines).  Through this project, ECSSD is working with the Government in mitigating the environmental and social impacts of 31 mine closures throughout the country.  The project is supporting physical closure works and environmental clean up which will allow the land on former mine sites to be returned to such other economic uses as small industry and agriculture.  The project is addressing the social impacts of the mine closures by, among other measures, providing assistance to the workers affected by the mine closure process.  It is envisaged that the social component will have created over 20,250 jobs for these workers by the end of the project.

Mine Closure, Environmental and Socio-economic Regeneration Project (2005-2010). This project scales up the activities piloted under the first project in mitigating the social and environmental impacts of the closure of another 20 mines, including large and more environmentally complex mines, requiring the rehabilitation of over 930 hectares of land.  This investment project also supports institutional strengthening and policy development related to mine closures and environmental management.  The scope of the social assistance under this project has been expanded to give greater focus to community impacts.  The range of instruments includes workspace centers (business incubators), enterprise support, employment incentive schemes (whereby employers receive incentives to hire the unemployed), micro credit, the extension of the Romanian Social Development Fund’s program to the mining regions, small grants, and provision of municipal infrastructure identified as high priority in a participatory local development planning process.  The social component is expected to result in the direct creation of 25,000 jobs as well as improvements in the socioeconomic environment in ex-mining communities.