World Bank Lends Romania EUR500M For Social Assistance Reforms

05.27.2011 ZF English

The World Bank’s Board of Executive Directors on Thursday approved a EUR500 million loan to support a social assistance program of Romania’s government estimated at EUR5.5 billion.

"Through this project, the World Bank is partnering with Romania to support the implementation of Romania's Social Assistance Reform Strategy, which was adopted by the Government in March 2010," the bank said in a news release.

It said the project's objective is to improve the overall performance of Romania's social assistance system by strengthening performance management, improving equity and administrative efficiency, and reducing error and fraud.

The project will focus on the government's programs for low-income households and vulnerable groups.

The share of overall social assistance funds going to the poorest quintile is projected to increase from 37.7% in 2009 to at least 45% in 2014.

"The Government of Romania has launched an ambitious and comprehensive social assistance reform program," says Peter Harrold, Country Director for Romania at the World Bank.

"The World Bank welcomes the opportunity to work with the Government in implementing this program. We have together designed an innovative approach to achieving these ends, through the provision of financial support as each of twenty well-specified results are achieved in the Government's reform program for this key area."

The bank also said that the implementation of the Social Assistance Reform Strategy will bring the fiscal cost of social assistance programs in line with the level of the new EU member states, and will contribute to the fiscal sustainability of the social protection spending.

The approved project is a EUR500 million "results-based" specific investment loan over a three year period, supporting the Government of Romania's Social Assistance Program estimated at EUR5.5 billion.