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Romania-CPS-April 28-2014.Pdf The last Romania Country Partnership Strategy (CPS) Report No. 48665-RO was discussed by the Board of Executive Directors on June 12, 2009, and the last Romania CPS Progress Report No. 60255-RO was dated November 28, 2011. ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities IDF Institutional Development Fund APL Adaptable Program Loan IFC International Finance Corporation CAP Common Agricultural Policy IFI International Financial Institution CEM Country Economic Memorandum IL Investment Loan CESAR Complementing EU Support for Agriculture JRP Judicial Reform Project Restructuring Project CPS Country Partnership Strategy IMF International Monetary Fund CPSCR Country Partnership Strategy Completion Report INPCP Integrated Nutrient Pollution Control Project DDO Deferred Dropdown Option IPF Investment Project Financing DPL Development Policy Loan MAKIS Modernizing Agricultural Knowledge Information System EAFRD European Agricultural Fund for Rural Development M&E Monitoring and Evaluation EAGF European Agricultural Guarantee Fund MIGA Multilateral Investment Guarantee Agency EBRD European Bank for Reconstruction and Development MTEF Medium Term Expenditure Framework EC European Commission NBR National Bank of Romania ECA Europe and Central Asia NPL Non-performing Loan EIB European Investment Bank OECD Organization for Economic Cooperation & Development ESW Economic and Sector Work PEIR Public Expenditures and Institutional Review EU European Union PFM Public Financial Management FDI Foreign Direct Investments PPP Public Private Partnership FR Functional Review RAMP Revenue Administration Modernization Project FSAP Financial Sector Assessment Program RAS Reimbursable Advisory Services FY Fiscal Year RO Romania GDP Gross Domestic Product SASMP Social Assistance System Modernization Project GEF Global Environment Facility SDR Special Drawing Rights GHG Greenhouse Gases SIP Social Inclusion Project GSG General Secretariat of the Government SME Small and Medium Enterprise IBRD International Bank for Reconstruction and Development SOE State Owned Enterprise IACS Integrated Administration and Control System TA Technical Assistance ICR Implementation Completion Report US$ US Dollar ICR ROSC Insolvency and Creditor/Debtor Regimes Report on WBG World Bank Group Observance of Standards and Codes ICT Information Communications Technology -i- CURRENCY EQUIVALENTS Currency unit: Romanian New Lei (RON) as of February 26, 2014 US$1 = RON 3.2874 ROMANIA FISCAL YEAR WORLD BANK FISCAL YEAR January 1 - December 31 July 1 – June 30 This Country Partnership Strategy (CPS) was prepared under the guidance of Mamta Murthi (IBRD Country Director) and Tomasz Telma (IFC Regional Director). The IBRD team was led by Ismail Radwan (Country Program Coordinator) and Elisabetta Capannelli (Country Manager for Romania). The IFC team was led by Ana Maria Mihaescu (Manager, CEURO) and Kartick Kumar (Strategy Officer, CEUST). MIGA participation was led by Franciscus J. Linden (Senior Risk Management Officer). The CPS Core Team included: Allison Berg, Christian Bodewig, Cornelia Boranescu, Maya El-Azzazi, Ines Fraile, Corina Grigore, Isfandyar Zaman Khan, Daniel Kozak, Alberto Leyton, Mihai Magheru, Jean-Francois Marteau, Moritz Meyer, Alexandra Nastase, Catalin Pauna, Pedro Rodriguez, Ken Simler, Nistha Sinha, and Theo David Thomas. The entire Romania Country Team including both IBRD and IFC has been involved in the CPS preparation through intensive workshops and brainstorming events. The following team members have also made significant contributions to this strategy: Kosuke Anan, Arabela Aprahamian, Nadia Badea, Sebastian Burduja, Thierry Davy, Richard Florescu, Marcel Ionescu-Heroiu, Gabriel Ionita, Feng Liu, Mariana Moarcas, Andreia Radu, Daniel Roberge, Ionut Purica, Mircea Stoica, Mika Petteri Torhonen and Jian Xie. Special thanks are extended to colleagues in the European Commission who made themselves available for discussions and convened several country team meetings to discuss and provide feedback on the draft strategy at various stages of the process. Our counterpart team of the Government of Romania has also played an exemplary role in the process, providing excellent advice and guidance throughout the process. The Bank team appreciated meetings with the ministries of agriculture, economy, education, environment and climate change, EU funds, health, information society, justice, labor, large infrastructure, social protection, and transport. The Bank team would especially like to thank counterparts at the Ministry of Public Finance for their continuous support and cooperation. IBRD IFC Vice President Laura Tuck Dimitris Tsitsiragos Country Director Mamta Murthi Tomasz Telma (Regional Director) Task Team Leader Ismail Radwan Ana Maria Mihaescu Co-Task Team Leader Elisabetta Capannelli Kartick Kumar -ii- ROMANIA COUNTRY PARTNERSHIP STRATEGY FY14-17 TABLE OF CONTENTS I. OVERVIEW .......................................................................................................................... 1 II. ROMANIA: ECONOMIC, SOCIAL AND POLITICAL CONTEXT ............................. 2 A. ECONOMIC AND SOCIAL CONTEXT ............................................................................................ 2 B. RECENT POLITICAL DEVELOPMENTS......................................................................................... 5 C. CHALLENGES TO ACHIEVING THE TWIN GOALS .................................................................... 6 III. WORLD BANK GROUP ENGAGEMENT STRATEGY .............................................. 15 A. GOVERNMENT STRATEGY ........................................................................................................... 15 B. LESSONS LEARNED FROM FY09-13 ............................................................................................ 17 C. PROPOSED WORLD BANK GROUP CPS FOR ROMANIA ......................................................... 18 I. STRATEGIC OVERVIEW ........................................................................................................ 18 II. THE CPS PILLARS: IMPROVING GOVERNMENT EFFECTIVENESS, SUPPORTING GROWTH AND INCLUSION ........................................................................................................... 22 III. PLANNED ACTIVITIES IN CPS AREAS OF ENGAGEMENT ............................................. 23 D. IMPLEMENTING THE WORLD BANK GROUP CPS FOR ROMANIA ...................................... 28 WBG ONGOING PROGRAM ........................................................................................................... 28 PARTNERSHIP AND DONOR COORDINATION ......................................................................... 28 MANAGING THE WBG PROGRAM ............................................................................................... 29 IV. MANAGING RISKS ........................................................................................................... 29 ANNEXES Annex 1: Romania CPS 2014-2017 Results Framework ............................................................................ 32 Annex 2: Romania Macro and Micro-economic Indicators ....................................................................... 35 Annex 3: Poverty, Shared Prosperity and Gender in Romania .................................................................. 44 Annex 4: Romania – Property Rights and Climate Action ......................................................................... 54 Annex 5: Country Partnership Strategy Completion Report ....................................................................... 57 Annex 6: Romania - IBRD Indicative Financing Program ......................................................................... 91 Annex 7: IBRD Indicative Knowledge Services Program FY14/15........................................................... 93 Annex 8: Selected Indicators* of Bank Portfolio Performance and Management in Romania .................. 98 Annex 9: Operations Portfolio (IBRD/IDA and Grants) ............................................................................ 99 Annex 10: IFC – Committed and Disbursed Outstanding Investment Portfolio (Romania) .................... 100 Annex 11: Romania EU Country Specific Recommendations for 2013-2014 ......................................... 101 Annex 12: Documenting the Consultative Process ................................................................................... 102 Annex 13: List of Supporting Documents ................................................................................................ 103 Annex 14: Poverty and Shared Prosperity Indicators ............................................................................... 104 -iii- FIGURES, BOXES, TABLES Figure 1: Romania rebounding from the crises ............................................................................................. 2 Figure 2: One third of Romanians remain poor ............................................................................................ 2 Figure 3: Incomes in Romania grew rapidly from 2006 to 2008, especially for the poorest 40 percent ...... 3 Figure 4: The bottom 40 percent has lower education, employment and salaries ........................................ 8 Figure 5: Early school leaving on the rise ..................................................................................................... 8 Figure 6: The bottom 40 percent have few human capital assets in Romania .............................................. 9 Figure 7:
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