The European Commission has identified the key problems of Romania’s 2014 national reform and convergence programmes, including tax evasion and frauds and the risk of a significant deviation from the required structural adjustment in 2015. The conclusions comprise a document drafted in response to Romanian government papers submitted with the EC on May 5 and May 6.

The EC’s recommendations – also included in the document, are supposed to be endorsed by the European Council on July 8. Enhancing administrative capacity, fighting corruption at all levels, and ensuring the effective implementation of court decisions are among the key recommendations made by the Commission.

Among the key problems identified by the Commission:

• Inefficient use of resources and poor management increase the fiscal sustainability risk in the health sector.
• A national Active Ageing Strategy to support an increase in the employment rate of older workers has been delayed and now is due by the end of 2014.
• The Education Reform of 2011, which set a long-term agenda for upgrading the quality of education at all levels, is not yet fully operational.
• Despite the relatively stable employment situation, gross household incomes have been declining and income inequalities have been growing. Families with children are particularly exposed.
• The weak capacity of the public administration to develop and implement policies remains a core challenge for Romania
• The EU funds' absorption rate remains one of the lowest in the EU.
• Poor quality of regulations and the lack of transparency and predictability of the regulatory framework hinder businesses and citizens.
• The integration of Romania's electricity and gas markets in the EU markets remains incomplete and substantial barriers remain for the implementation of cross-border connections.
• High growth of the vehicle fleet and the low quality of the road infrastructure hamper businesses and the economy.

Besides observing the on-going programme with the IMF/EU, the Commission makes recommendations including;

• Improve tax collection by continuing to implement a comprehensive tax compliance strategy, stepping up efforts to reduce VAT fraud. Fight undeclared work. Reduce tax burden for low- and middle-income earners in a budget-neutral way.
• Strengthen active labour-market measures and the capacity of the National Employment Agency.
• Step up efforts to strengthen the capacity of public administration, in particular by improving efficiency, human resource management, the decision-making tools and coordination within and between different levels of government.
• Continue to improve the quality and efficiency of the judicial system, fight corruption at all levels, and ensure the effective implementation of court decisions.