The strategy is selective in its approach to tackle Romania’s ongoing challenges and aims to address key issues affecting inclusive and sustainable growth, the World Bank said in a press release.
Romania’s economic growth has been one of the highest in the European Union since 2010, with an average growth rate of 2.8% during 2010-2017, but despite 11 years of membership in the EU infrastructure is in a poor state, constraining investment and productivity in sectors such as manufacturing, agriculture and tourism. The private sector, while dynamic, is small, with limited access to finance, particularly for micro, small and medium enterprises.
Most worryingly, despite strong growth, average incomes have not converged with the EU, poverty reduction has been lackluster, and social and regional divides are substantial and widening. Over a quarter of Romania’s population lives on less than US$ 5.50 a day, the highest poverty rate in the EU, the World Bank said.
“Stronger and more efficient public institutions are at the very heart of sustaining Romania’s long-term growth,” said Tatiana Proskuryakova, World Bank Country Manager for Romania and Hungary. “Eradicating poverty and ensuring greater and shared prosperity for all Romanians will necessitate more and smarter investments in education, a modern health system and better jobs. Our Country Partnership Framework for 2018-23 will support critical areas to enable Romania to fully capitalize on its tremendous potential and ensure that no one is left behind.”
The partnership for Romania will have three focus areas targeting improvements in human capital, private sector growth and competitiveness, and resilience to shocks. The specific objectives include improving transition to tertiary education for the poor and vulnerable; improving access to modern healthcare; connecting the poor and vulnerable to jobs; strengthening capacity to build transport infrastructure; boosting subnational capacity to attract private investment; accelerating capital market development and access to finance; and improving preparedness to natural disasters and climate change.
“IFC will continue supporting Romania’s private sector through investments and mobilization of other funding from both domestic and international sources to encourage economic growth and job creation in the country,” said Thomas Lubeck, IFC Regional Manager for Central and Southeast Europe. “IFC will develop new engagements to strengthen the financial sector and develop further capital markets to diversify financing options and improve access to long term capital, particularly for MSMEs. IFC will also support private sector participation in development of infrastructure in Romania, explore new investment opportunities in agribusiness, manufacturing and services.”
The World Bank opened its office in Romania in 1991. Since then, the Bank has provided over US$13.6 billion in loans, guarantees and grants in all sectors of the Romanian economy.