Romanian Lawmakers Approve Ponta Cabinet in Parliament

Romanian Prime Minister Victor Ponta’s government won parliamentary approval, allowing the new Cabinet to push through a 2013 budget and start talks for a new international precautionary credit.

Ponta, 40, got 402 votes from the country’s newly elected lawmakers, with 120 lawmakers voting against it, according to final results. The Cabinet is backed by the Social Democrats and the Liberals with the help of the minorities and independents as he pledged to create jobs, support foreign and domestic investors and respect the judiciary and the rule of law.

“We are engaging in a four-year mandate, which will be decisive for Romania’s future,” Ponta told lawmakers before the vote. “That’s why we need stability and predictability.”

The government is counting on a two-thirds majority in Parliament to pass projects, including revising the constitution and cutting some social contribution and taxes after months of political bickering that raised the objections of the European Union and investors.

Ponta also said he would continue a 5 billion-euro ($6.6 billion) precautionary accord with the International Monetary Fund and the European Union and work to sign a new deal next year, once the current agreement expires at the end of March. The Balkan country hasn’t drawn any funds so far from the lenders.

The premier also plans to cut the budget deficit to 2.2 percent of gross domestic product this year and to 1.7 percent in 2013 after a gap of 4.3 percent in 2011. He said the government will maintain a fiscal buffer at an adequate level and secure prudent management of the public debt.

Progressive Tax

The government plans to introduce a progressive tax system with an 8 percent tax for low-income earners, a 12 percent tax for average incomes and a 16 percent tax for high incomes, according to their governing program, without mentioning the timing.

Ponta’s cabinet will also seek to cut by 5 percent some social contributions paid by employers and bring a value added tax back to 19 percent from the current 24 percent.

The previous government of Emil Boc increased the VAT in 2010 and cut state-workers’ wages to lower the budget gap and meet pledges to international lenders.

Ponta was re-designated as premier by his rival, President Traian Basescu, after his first seven-month mandate, during which his coalition tried and failed to impeach the President.

As their power struggle prompted European leaders, including German Chancellor Angela Merkel to voice concerns about the rule of law, the two leaders signed an agreement last week, pledging to abstain from political wrangling over Romania’s commitments to international institutions and respect the state’s institutions.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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