Related News:
Romanian Finance Minister Says He Will Be Replaced in `Political' Decision
Romanian Finance Minister Sebastian Vladescu said he will be replaced in a Cabinet shuffle amid criticism over austerity measures aimed at meeting international bailout conditions.
Vladescu said in a phone interview from Bucharest that he will be replaced by Prime Minister Emil Boc as part of a “political decision.” He said he does not know who will replace him and would not comment on what his departure means for plans to implement a loan agreement with the International Monetary Fund.
The opposition Social Democrats and the Liberals said yesterday that they plan to file a no-confidence motion by year- end as they seek to form a government that will reverse Boc’s increase in the country’s value-added tax and revive the economy. The two parties have 214 votes in the 471-seat legislature.
The replacement is “disappointing from a market perspective, but the price of giving the current government at least a chance of surviving a confidence motion being threatened still by the opposition,” said Tim Ash, head of emerging market research at Royal Bank of Scotland Group Plc in London.
The Romanian leu fell 0.3 percent to 4.2684 per euro as of 5:16 p.m. in Bucharest today, while the Bucharest Stock Exchange’s benchmark BET index erased part of earlier gains and closed at 5107.51, posting a 1 percent increase.
Vladescu, 52, who had been serving as finance minister for nine months, said he believes he is leaving a stable ministry behind.
Price of ‘Faith’
“The government has succeeded where the Hungarians have thus far failed in terms of keeping their IMF program on track,” Ash said. “Ultimately the price of this ‘faith’ in the implementation of the program, and the tough austerity demanded as part of the program, is that the government could still fall.”
Boc said yesterday he planned to change ministers as his Cabinet faces the motion of no-confidence and after months of criticism of the government’s performance by unions and the opposition.
Boc’s government raised a value-added tax by 5 percentage points and cuts in public-sector wages by 25 percent to meet international bailout conditions. Boc will meet with his Liberal Democrat party leaders later today to discuss the changes.
Agriculture Minister Dismissed
Agriculture Minister Mihai Dumitru told Antena 3 television station today that he will also be replaced, after meeting Boc earlier today. Labor Minister Mihai Seitan also said today in a televised speech that he will be replaced as part of the political decision to reshuffle the cabinet.
Seitan has been closely implementing one of the IMF’s key conditions, a pension law aimed at streamlining the sector and increasing the retirement age, which must be approved by the end of September to unlock the next payment of about 900 million euros to Romania from its international lenders.
“The Prime Minister thanked me and said he’s sorry we won’t be working together anymore because of the current political situation, which we must accept as it is,” Seitan told journalists in Bucharest today.
Contraction Expected
The European Union’s second-poorest member is relying on a 20 billion-euro ($26 billion) bailout from the IMF, EU and other international lenders to stay afloat. Romania’s economy, mired in the worst recession on record last year, will probably contract again in 2010 as government austerity measures damp consumer demand, IMF Mission Chief Jeffrey Franks said Aug. 4.
Social Democrat leader Victor Ponta said yesterday that his party and the Liberals aim to form a government that will seek to introduce a separate 5 percent value-added tax on food and construction and cancel Boc’s VAT increase, bringing the rate back to 19 percent on other items. A new government could be led by an independent prime minister who would take other steps to bolster the economy, Antonescu said.
“We aim to end Boc’s incompetent government,” Liberal leader Crin Antonescu said yesterday at a news conference. “We agreed to file the motion as soon as possible, but we’ll choose the appropriate timing.”
Under Romanian law, the opposition may file one no- confidence motion during each parliamentary session.
To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net. Andra Timu in Bucharest at atimu@bloomberg.net.
Rate These Stories
Rate this Page