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Turning Crisis from Threat into Opportunity: Romania Tackles the Roots of Public Sector Inefficiencies

August 16, 2010

BUCHAREST, August 16, 2010―The economic crisis focused the Romanian Government’s attention to pursue short term fiscal consolidation, and at the same time opened a window of opportunity for public administration reforms with effects on the medium- and long-term. Several ministries and the World Bank are undertaking a Functional Review of their activity to identify actions that would improve the quality and cost-effectiveness of public services delivered.

Through the Functional Review of several key sectors, the World Bank reviews the quality of the policy making and barriers to effective policy implementation, as well as the horizontal issues with cross-cutting impact on the overall performance of the public sector. The World Bank thus supports the Government in addressing the major challenges Romania’s public administration faces today: to meet short-term fiscal needs, while creating a foundation for future sustainable and equitable growth.

Romania lags behind other countries in Europe with respect to the quality and cost-effectiveness of services delivered. Not only must Romania converge to older EU members, but it will have to work as equal partner with the others to achieve the common EU objectives.

“The Government of Romania must become an audible voice among the 27 and contribute to the EU's goals in the global economy, in the EU 2020 strategy,” says Nicolae Idu, representative of the European Commission in Romania. “It also needs to implement locally the European policies. The Functional Reviews will boost Romania's administration capacity to rise up to the challenge, as Romania is now a full member of the EU.”

Moreover, the fiscal crunch has highlighted underlying structural problems: Romania’s public sector is simply too costly within the Government’s capacity to raise revenues, which requires administration retrenchments to affordable levels.

"The WB supports the reform of the administration because it's important and urgent. It's important not just to save money now, but to foster medium-term economic growth. It's urgent because, with the crisis, the country cannot afford to keep wasting resources through inefficient and inequitable processes. Too often people do not realize how difficult some decisions are and this increases resistance to change. Therefore we will also work with the Government to find ways to explain the key reforms and build broad coalitions," says François Rantrua, World Bank Country Manager for Romania.

The Functional Review is undertaken by the World Bank based on the advisory services agreement with the Government of Romania and in collaboration with the European Commission. The activity is structured in two phases. From March to October 2010 the World Bank analyzes the Center of Government, Competition, Pre-university Education, Transport, Agriculture and Rural Development, and Public Finance. In the second phase, from October 2010 to March 2011, a new set of sectors, to be decided with the European Commission and the Government of Romania, will be included in the analysis. Overall recommendations will be included in an Action Plan that the Government will prepare, and that will be endorsed by the European Commission.

Media Contacts
In Bucharest
Daniel Kozak
Tel : (+ 4021) 2010 311
In Washington
Dorota Kowalska
Tel : +1 (202) 473-2676