The present research aims at depicting the main drivers and bottlenecks in the process of structural and cohesion funds absorption in Romania. As these funds are important inflows for the Romanian economy it is highly important to have a clear picture of the current situation, by analyzing the number of projects and corresponding amounts that have been submitted, contracted and reimbursed, respctively. Main conclusions of the study can be used by researchers and practitioners in the field of structural and cohesion funds.structural funds, cohesion funds, funds absorption

Cristi SPULBAR

Oana GHERGHINESCU

Paul RINDERU

English

Research Papers in Economics

222                                                                       Finance – Challenges of the Future   
 
ANALYSIS OF STRUCTURAL AND COHESION FUNDS 
ABSORPTION IN ROMANIA 
 
Lect. Oana GHERGHINESCU, PhD 
Prof. Paul RINDERU, PhD 
Assoc. Prof. Cristi SPULBĂR, PhD 
Universitatea din Craiova 
 
Absorption of structural funds is 
one of the main challenges for public 
administration, for the business 
environment and the non-governmental 
sector. European integration itself 
depends on optimizing the absorption of 
structural funds allocated to Romania for 
2007-2013. Romania will be receiving 
cohesion and structural funds amounting 
for over 19 billion euro. Money will be 
directed to projects in the field of basic 
infrastructure (60% of the total amount), 
economic competitiveness (15%), human 
capital (20%) and administrative capacity 
(5%). National co-financing in this period 
is estimated for approx. 5.53 billion euro, 
both from public sources (77% out of the 
total) and private ones (23%).  
According to data made available 
by the Ministry of Public Finance, the 
overall amount paid by Romania to the 
European budget in 2007 was 3.97 billion 
lei (1.2 billion euro) and in 2008 it was 
approx. 4.23 billion lei.  
Main bottlenecks faced by new EU 
member states, Romania herewith 
included, are reflected in the weak 
capacity of making efficient use of the 
allocated funds, the lack of experience in 
elaborating large scale projects at 
European standards, the deficit in 
transparency in organizing public 
tenders, as well as a low comprehension 
degree of the methodology of using 
European funds.   
The use of European funds is a big 
opportunity of economic development in 
Romania given the fact that full 
absorption would mean an annual inflow 
of approx. 5% of the country’s GDP. 
Moreover, by absorbing the post-
accession funds, Romania could become 
a favorite destination for foreign 
investors, by increasing its potential to 
develop investment projects, especially in 
the field of infrastructure.  
However, the weak programming 
policies and the delays in taking 
decisions on the budget made that the 7 
operational programmes would only be 
sent to Brussels in 2007, after Romania’s 
accession to the EU. The degree of 
structural funds absorption in the first 
post-accession year was almost half as 
compared to other Member States such 
as Czech Republic, Poland, Hungary or 
Slovak Republic, according to a study 
published by the National Bank of 
Romania in March 2008. The absorption 
rate for Romania was 21.7% as 
compared to 42.9% in Hungary and 
42.8% in Poland. Structural and cohesion 
funds have been absorbed up to the level 
of 32.7%, while funds for agriculture and 
rural development have only been 
absorbed up to 3%.  
In order to significantly improve 
this process, several measures have 
been adopted, such as: 
- a priority was set for the national 
budget to allocate the necessary 
resources for co-financing investments 
that are financed with European money. 
The maximum pre-financing threshold 
was increased from 15% to 20% of the 
projects total value; 
- pre-financing is also granted to 
beneficiaries falling under the scope of 
state aid rules, up to 35% of the total 
grant; Year VIII, No.9/2009                                                                                                   223 
- for private beneficiaries, the 
option was given to open their project 
accounts in commercial banks, not only 
in the State Treasury; 
- VAT can be reimbursed following 
each invoicing. 
In the same time simplified 
procedures were introduced to submit 
project documentation. Thus, it has been 
established that not all supporting 
documents need to be submitted at the 
moment of the application submission 
and they could be brought in a later 
phase (usually in the sub-contracting 
phase). At the moment of the application 
submission, copies certified by the 
beneficiary are also accepted instead of 
copies legalized by a public notary. 
Legalized copies are only requested in 
the pre-contracting phase. Project 
guidelines were revised and they much 
clearer in stating the list of documents 
that need to be submitted by the 
applicant in the contracting phase. 
Other measures targeting the 
financing of the economy and the 
increase in liquidity were also designed 
such as: 
- adopting the legislation regarding 
public-private partnerships in view of 
increasing the dynamics of private 
investments in infrastructure; 
- the possibility to compensate 
VAT to receive with VAT to be paid or 
other taxes in the months to come after 
the month in which the reimbursement 
claim will be submitted as well as after 
the expiry of the legal period of 45 days 
for reimbursement; 
- chance will be given to take part 
in public tenders for projects financed 
from the structural funds even to 
companies which have debts towards the 
state budget as long as they are less 
than the debts to the state budget. A 
government ordinance is planned in this 
respect. 
Against the background of the 
desire to absorb structural funds to the 
highest degree possible, we can 
ascertain that this was not achieved until 
present. If we analyze the statistics of 
submitted applications, approved 
projects, signed contracts and payments 
made to beneficiaries at the end of 
February 2009, we can see that Romania 
should work more on accelerating and 
optimizing this process.  
We will further on present an 
empirical analysis of the current situation 
in Romania. Judging on the amounts of 
money that are allocated to the 7 
operational programmes, we can assess 
that they are significant as compared to 
pre-accession funds. What we could 
notice was a higher degree of 
concentration for the Regional 
Operational Programme (ROP), the 
Environment Operational Programme 
(EOP) and the Transport Operational 
Programme (TOP), which aim at 
rehabilitating specific infrastructure in the 
country. 
Other programmes which share 
moreover the same degree of 
attractiveness are the Sectoral 
Operational Programme Increasing 
Economic Competitiveness (SOP IEC) 
and the Sectoral Operational Programme 
Human Resources Development (SOP 
HRD) and, to a lower extent, the 
Operational Programme Administrative 
Capacity Development (OP ACD) – also 
see figure 1. 
  
 
 
 
 
 
 224                                                                       Finance – Challenges of the Future   
 
Figure 1 
Alocare UE 2007-2009 (cumulat)
 
 
As regards submitted 
applications, we could notice that the 
highest numbers were recorded for SOP 
IEC (2963 projects), SOP HRD (2845 
projects) and ROP (1447 projects), while 
for the other operational programmes, 
the numbers were smaller. For example, 
in the case of TOP a number of 19 
projects were submitted by the end of 
February 2009, 3 more than at the end of 
January 2009.  
This can be explained by the 
interest of main stakeholders in various 
programmes – both public authorities and 
other stakeholders (businesses, NGOs, 
employers’ organizations, employees’ 
unions, SMEs etc). 
 
Figure 2 
Proiecte depuse
0
1000
2000
3000
4000
5000
6000
7000
8000
POR
POS Mediu
POS Transport
POS CCE
POS DRU
PO DCA
PO Asistenta Tehnica
TOTAL
N
u
m
a
r
 
e
f
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c
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28/2/2009
31/1/2009
 
 
 
 
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28/2/09
31/1/09
EU cumulative allocation 2007-2009 
Submitted project applications Year VIII, No.9/2009                                                                                                   225 
 
 
Figure 3 
Proiecte depuse - valoare totala
02 0 4 0 6 0
POR
POS Mediu
POS Transport
POS CCE
POS DRU
PO DCA
PO Asistenta Tehnica
TOTAL
mld lei
31/1/2009
28/2/2009
 
Subm otal value  itted project applications – t
 
Analyzing the statistics of approved 
projects, we could notice that their 
number was much smaller than the 
submitted project application. This shows 
the fact that in Romania there is not yet a 
solid expertise in this field.  
For example in the case of ROP, 
out of a total number of 1447 submitted 
project proposals, only 310 were 
approved, 550 were rejected and the rest 
of 587 are still under evaluation. As 
regards SOP IEC, out of a total number 
of 2963 submitted applications, 968 were 
rejected, 385 were approved and 887 are 
still undergoing evaluation procedures.  
Out of an overall number of 7565 
submitted projects, only 1046 were 
approved and 2137 were already 
rejected. It means that approximately one 
third (27%) of the submitted applications 
were declared ineligible and this number 
could increase taking into account that 
3659 projects are still to be evaluated.  
The total value of these projects is 
proportional to the number of approved 
projects which will enter their 
implementing phase (see figure 5).  
This rather disproportionate trend 
can be also explained by several 
mismatches as regards the capacity to 
manage these funds as well as the 
internal evaluation and contracting 
procedures. 
Several changes in the national 
legislation have been forwarded for 
approval to the European Commission. 
They mainly target decreasing the 
evaluation period of projects from more 
than 80 days to approximately 30 days.   
This is expected to be reflected 
in an increase in effectiveness of the 
Management Authorities of all the 
operational programmes as well as of the 
applicants, which will certainly foster 
increased absorption. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 226                                                                       Finance – Challenges of the Future   
 
 
Figure 4 
Proiecte aprobate
0
200
400
600
800
1000
1200
POR
POS Mediu
POS Transport
POS CCE
POS DRU
PO DCA
PO Asistenta Tehnica
TOTAL
N
u
m
a
r
 
e
f
e
c
t
i
v
28/2/2009
31/1/2009
 
Approved projects 
 
Figure 5 
Proiecte aprobate - valoare totala
02468 1 0 1 2
POR
POS Mediu
POS Transport
POS CCE
POS DRU
PO DCA
PO Asistenta Tehnica
TOTAL
mld lei
31/1/2009
28/2/2009
 
Approved projects – total value 
 
The total number of signed 
contracts by the contracting authorities 
with the beneficiaries was 360 at the end 
o February 2009 as compared to only 
190 at the end of January 2009. This 
shows significant progress, taking into 
account that the number almost doubled 
in only one month (see also figure 6). 
   Year VIII, No.9/2009                                                                                                   227 
  
Figure 6 
Contracte/Decizii de finantare cu beneficiarii
0
50
100
150
200
250
300
350
400
POR
POS Mediu
POS Transport
POS CCE
POS DRU
PO DCA
PO Asistenta Tehnica
TOTAL
N
u
m
a
r
 
e
f
e
c
t
i
v
28/2/2009
31/1/2009
 
Contracts/Financing decisions 
 
The overall amount of contracted 
projects shows different trends 
depending on the operational 
programme. For example the highest 
values were recorded for projects 
submitted under the ROP, EOP and SOP 
HRD with amounts ranging from 
1.554.079.020 lei and 3.308.039.947 lei. 
As regards the other operational 
programmes, the total value of 
contracted projects was much smaller 
and it was even 0 for OP ACD as for this 
particular programme no contracts have 
been signed up to the moment (see 
figure 7). 
 
Figure 7 
Contracte/Decizii de finantare cu beneficiarii - Valoare 
totala
02468
POR
POS Mediu
POS Transport
POS CCE
POS DRU
PO DCA
PO Asistenta Tehnica
TOTAL
mld lei
31/1/2009
28/2/2009
 
Contracts/Financing de tal value  cisions – to
  228                                                                       Finance – Challenges of the Future   
 
  
If we also analyze payments to 
beneficiaries up to the moment, we can 
notice that there are significant 
discrepancies between the operational 
programmes. Total payments until the 
end of February 2009 range from 
218.121 lei to 402.020.000 lei, with a 
cumulative total of 784.184.756 lei for all 
the operational programmes. The largest 
amount was paid to beneficiaries of SOP 
IEC projects, followed by EOP and SOP 
HRD, while payments for the Technical 
Assistance Operational Programme were 
0. In line with the above mentioned 
updated procedures, there is hope that 
improvements and increased effective-
ness will also apply to payments towards 
the beneficiaries in order to implement as 
many successful projects as possible.    
From December 2008 until mid-
March 2009, Romania absorbed 
structural funds amounting for 
approximately 400 billion lei. The total 
amount absorbed until present is 900 
billion lei. In order to improve the 
process, the Romanian state adopted 
several measures, among which 
increasing the pre-financing from 15% to 
20% and reimbursing VAT with each 
invoice submitted with the payment 
claims. 
Figure 8* 
 
 
0
100
200
300
400
500
600
700
800
mil lei
  Plati catre benegiciari
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*Interval 1 shows the values recorded at the end of January 2009, while interval 2 
shows the values recorded at the end of February 2009. 
 
 
POR
POS Mediu
POS Transport
POS CCE
POS DRU
PO DCA
PO Asistenta Tehnica
TOTAL
POR 63.52 50.89
POS Mediu 191.31 191.31
POS Transport 00
POS CCE 402.02 402.02
POS DRU 127.1 101.76
PO DCA 00
PO Asistenta Tehnica 0.21 0.21
TOTAL 784.18 746.21
12
Payments to beneficiaries 
 Year VIII, No.9/2009                                                                                                   229 
 
 To conclude we can assess that, 
according to our analysis, absorption of 
funds allocated from the structural funds 
was limited and had several gaps, both 
from the legislative point of view and the 
management point of view.  
However, in the same time, a 
positive trend could be noticed, resulted 
from an increasing number of projects 
which are already being implemented, as 
well as of approved projects.  
Perspectives are also positive, especially 
that the process is facilitated in the 
context of the global economic crisis, 
which drastically reduced access to 
financing resources for most of the 
players in various markets. 
 
 
 
 
 
 
 
REFERENCES 
Gherghinescu, O. 
Rinderu, P. 
Neagoe-Bacanu, D. 
Management of projects financed by the structural funds, Universitaria 
Publishing House, 2008, Craiova; 
European 
Commission 
Fourth progress report on cohesion – The Growth and Jobs Strategy 
and the Reform of European cohesion policy, 2006, Brussels; 
Romanian 
Government 
National Development Plan 2007-2013; 
National Strategic Reference Framework 2007-2013; 
*****  www.fonduri-ue.ro 
www.inforegio.ro 
www.fonduri-structurale.ro 
 

Analysis of structural and cohesion funds absorption in Romania

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