Romanian Premier Ousts Finance, Economy Ministers on Criticism
Romanian Premier Ousts Finance, Economy Ministers
Daniel Mihailescu/AFP/Getty Images
Romanian Prime Minister Emil Boc.
Romanian Prime Minister Emil Boc. Photographer: Daniel Mihailescu/AFP/Getty Images
Romanian Prime Minister Emil Boc ousted his finance and economy ministers as he faces a confidence vote after raising taxes and slashing public-employee pay to qualify for international aid.
Boc named Gheorghe Ialomitianu, 51, an economist who served as vice-president of the Chamber of Deputies’ budget and finance committee, to replace Finance Minister Sebastian Vladescu. Ion Ariton, 54, head of the Senate’s budget and finance committee, will succeed Economy Minister Adriean Videanu. Four other ministers were also fired late yesterday.
“With these planned changes we aim to continue reforms and see Romania post economic growth in 2011,” Boc told reporters in Bucharest. “We’re going to use the experience of our nominated lawmakers gained while they were part of specialized committees in Parliament.”
The European Union’s second-poorest member is relying on a 20 billion-euro ($26 billion) bailout led by the International Monetary Fund to stay afloat after the country’s worst recession. Romania’s economy will probably contract again in 2010 as government austerity measures damp consumer demand, IMF Mission Chief Jeffrey Franks said Aug. 4.
The government has faced months of criticism from unions and opposition leaders as it implements austerity measures, including a 5 percentage point increase in the value-added tax and a 25 percent cut in public employee wages, to meet conditions for the international rescue program. It survived a June no-confidence motion by eight votes.
‘Pretty Effective Ministers’
“My worry about Romania is that these pretty effective ministers are being removed for solely political reasons, yet we are meant to believe the new appointees won’t change the policy stance,” said Peter Attard Montalto, an emerging-market economist at Nomura International Plc in London. “The chances of early elections after the fall of the government are very significant.”
The Romanian leu fell 0.4 percent to 4.2841 per euro as of 10:17 a.m. in Bucharest, while the Bucharest Stock Exchange’s benchmark BET index dropped 0.1 percent to 5100.90.
Two opposition parties, the Social Democrats and Liberals, said on Sept. 1 that they planned to file a new motion of no- confidence by year-end as they seek to form a government that will reverse Boc’s VAT increase and revive the economy. The two parties have 214 votes in the 471-seat legislature.
‘Negative News’
In addition to Ialomitianu and Ariton, Boc named Anca Boagiu as the new the transport minister, Ion Botis as labor minister, Valeriu Tabara as agriculture minister and Valerian Vreme as communications minister. All six new ministers will be sworn in today after President Traian Basescu signed off on the changes.
The cabinet reshuffle “is obviously negative news, but it depends on whom you put in and that could turn out to be positive news,” Christian Tegllund Blaabjerg, chief equity strategist at Saxo Bank A/S, said today in a phone interview from Copenhagen. “Generally, political instability affects the currency and bonds in the short term and we will probably see increased volatility in intraday trading.”
To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net Andra Timu in Bucharest at atimu@bloomberg.net.
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