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Reforms and Investments

Intergovernmental transfers from the state budget to local budgets

Supporting reforms to ensure efficient and effective revenue administration and public financial management

Funding Programme
Year
  • 2021

Intergovernmental transfers from the state budget to local budgets

The European Commission supported Romania to address the sustainability of public finances, while improving the system of intergovernmental transfers from the central government to the local governments budgets. The project implemented measures to remedy structural deficiencies of intergovernmental transfers from the state budget to local budgets.

Context 

There have been exemptions from the Law on Public Finance 273/2006 that have affected the predictability and effectiveness of the public financial system, as well as sound budget planning and the funding of local services. This action aimed to support the Romanian Ministry of Finance (MoF) in improving the efficiency, predictability, and transparency of the intergovernmental transfer system.

Support delivered

The World Bank, as provider of this project, delivered the following components in order to support Romania with the reform:

  • Increasing efficiency of public finance through the reform of intergovernmental transfers from the state budget to local budgets, 
  • Supporting the efficiency of the Romanian public procurement system,
  • Support for integrated interventions to improve the situation of people.

Results achieved  

Component 1 evaluated the intergovernmental fiscal system, collecting local data to assess revenue capacity, expenditure needs, and fiscal gaps. It recommended improvements to transfer mechanisms and included stakeholder training and an implementation action plan. Component 2 analyzed Romania’s public contract review procedures and procurement data in the transport sector to identify competition drivers and causes of project delays, offering targeted recommendations. Component 3 used existing datasets to help ministries prioritize informal settlements for interventions, proposing a settlement typology and national action recommendations. It also developed methodological guidance for local governments to implement integrated interventions in these communities.

More about the project

You can read the documents related to the project here: