Romania will be the Central and Easter European (CEE) country most severely hit by the EU funds cut in the 2021-2027 financial exercise, according to estimates by Austrian group Erste.

The group’s analysts expect Romania to lose EU funds representing about 1.2% of its gross domestic product (GDP) in the new EU budget as the European Commission plans to reduce the funds for agriculture and regional development and cohesion.

The new budget may include a 5% cut in the funds for agriculture and 7% cut in the funds for regional development and cohesion, according to the European commissioner for budget Gunther Oettinger. This will result in 14-34% lower EU fund flows to CEE countries, according to Erste.

The funds allotted to Romania are expected to drop from 3.4% of the country’s 2011 GDP, in the current financial exercise, to 2.2% of the country’s 2017 GDP, in the next one. Hungary, Poland and Slovakia will also lose EU funds representing about 0.8% of their GDPs while Croatia and Czech Republic will lose some 0.5% of their GDP and Slovenia – 0.3% of its GDP, according to Erste. However, the final figures may differ as the European Commission also plans to change the structure of its operational programs.

CEE countries are the biggest beneficiaries of EU funds in the current financial exercise, with about 40% of the allotted sums. Poland is the main beneficiary in the region, with 18.7% of the total, followed by Romania, with 6.7%.

The European Commission also plans to tie the EU fund allotment to respecting rule of law principles a measure aimed at penalizing CEE countries that may adopt undemocratic reforms.

Romania plans to reach EUR 1.9 bln EU fund absorption by year-end

editor@romania-insider.com