Nov. 23 (Bloomberg) -- Romanian President Traian Basescu will face opposition leader Mircea Geoana in a Dec. 6 run-off election that will determine who selects the next government and helps pull the nation out of recession.

Basescu took 32.8 percent of the vote and Geoana, head of the former communist Social Democratic Party, took second with 31.7 percent, eliminating 10 other candidates and setting the stage for a second round, according an exit poll conducted by the INSOMAR polling institute. Liberal leader Crin Antonescu was third with 21.8 percent, and was eliminated.

“Today was a victory we obtained in the first stage of the presidential race,” Basescu said in a speech to supporters yesterday after the exit poll results were released. He said voter turnout was “a big motive for joy and satisfaction.”

The winner will name a prime minister to replace Emil Boc, whose 10-month-old government collapsed in the wake of Cabinet infighting over budget cuts. A new Cabinet with a majority in Parliament will be needed to counter the worst effects of a recession and work to preserve a 20 billion-euro ($30 billion) international loan led by the International Monetary Fund.

Almost 50 percent of the 18 million eligible voters in the Balkan nation of 22 million turned out at polling stations, electoral authorities said, based on a count two hours before polls closed. A final vote count is expected over the next few days.

Presidential Duties

The president, who has the power to nominate the prime minister, has some power to veto laws, signs international accords and weighs in on international affairs. This time around, economists and political analysts are mainly looking at the candidates for their ability to unite lawmakers behind a premier.

Romania’s leu fell to a seven-month low and bonds plunged after the government collapsed on Oct. 13. The currency has strengthened about 0.2 percent since then, while the yield on the benchmark international sovereign debt due June 2018 is up 16 basis points at 6.367 percent, according to Bloomberg data.

Basescu, 58, a former tanker captain supported by the Liberal Democratic Party, has tried twice to push proposed premiers through Parliament this month. Lucian Croitoru, a central bank adviser, was rejected 250 to 189 and lawmakers have refused to vote on a second candidate, Liviu Negoita, a mayor of a sector of Bucharest.

Geoana’s Edge

He would lose to Geoana, 51, in the run-off, with 46 percent to his rival’s 54 percent, according to a Nov. 18 survey by the INSOMAR polling institute. The survey has a margin of error of plus or minus 3 percent.

“We have worked hard in the last few years, months and hours to get here,” Geoana said to supporters after the exit poll results were announced. “We will work harder in the next two weeks and we will win on Dec. 6.”

The Liberal Democrats hold 167 of Parliament’s 471 seats while the Social Democrats have 158 and the National Liberal Party 79.

“I can’t really support any of the candidates because I can’t see any of them solving our problems,” George Mihailache, 67, a retired high school teacher, said as he prepared to vote yesterday alongside his wife at a school in northern Bucharest. “I think Geoana has the best chance of forming a government so that’s who we’ll vote for. Even a bad government is probably better than no government.”

If the winner of second-round elections fails to garner enough support in naming a premier, he has the power to dissolve Parliament and call new elections, meaning the country would be without an effective government until March or April. Boc remains in power as a caretaker prime minister, albeit with limited powers.

Third Attempt

“I will designate a third candidate if Negoita fails and this prime minister will reflect the right wing,” Basescu said in a campaign speech. “Romania can’t afford another round of parliamentary elections.”

While the country struggles for a stable government, the IMF is demanding spending cuts and investors await tax changes that only a new government can make.

Romania is the European Union’s second-poorest country and needs IMF funds to protect its currency and cover a widening state budget deficit. The Washington-based lender has already stalled payments on the loan until a new budget plan for 2010 is passed.

The economy, the fastest growing in the EU last year, shrank an annual 7.1 percent in the third quarter and unemployment doubled.

Voters will also be asked to indicate whether to reduce the number of lawmakers to 300 and create a unicameral Parliament, eliminating the distinctions between the Senate and the lower house, known as the Chamber of Deputies. Basescu proposed the referendum, which is not binding.

To contact the reporter on this story: Adam Brown in Bucharest at abrown23@bloomberg.net;

Last Updated: November 22, 2009 17:00 EST