Romanian lawmakers will vote on a new government as Premier-designate Mihai-Razvan Ungureanu looks to revive support for the coalition with an injection of youth after a public outcry over wage cuts and tax increases.
Lawmakers will convene at 11 a.m. in Bucharest to discuss the governing program and ministerial candidates backed by the ruling coalition, which holds a majority in parliament. The opposition plans to boycott a vote that will follow the debate.
Ungureanu, 43, has turned to a new generation of politicians to resuscitate the government’s fortunes after austerity measures mandated under a bailout loan sparked protests that turned violent last month. He nominated Bogdan Dragoi, 31, as finance minister and Lucian Bode, 38, to guide the economy as Europe’s debt crisis damps demand for the Balkan nation’s exports and limits credit flows.
“An easy and fast vote would provide some relief, but the market will remain cautious until it has confirmation, or not, that the new government remains committed” to the loan program,’’ said Gaelle Blanchard, a London-based economist at Societe Generale SA. “For now, uncertainty prevails and I’m afraid a certain level of uncertainty will remain until the parliamentary election.”
The Romanian leu, the seventh-worst performer among 25 emerging-market currencies tracked by Bloomberg so far this year, was little changed at 4.3542 per euro as of 10:49 a.m., after rising 0.1 percent yesterday to 4.3523 per euro. The leu had posted two days of losses following the resignation of the government on Feb. 6. The Bucharest Stock Exchange’s BET index rose 0.6 percent to 5,059.89.
“The new government will likely be approved by Parliament today” after the ruling Liberal Democrats “replaced all the ministers with low-profile young politicians in an attempt to gain support after falling in polls,” Erste Group Bank AG analysts wrote in a note to clients today. “The continuation of the IMF and EU agreement and an increase in the living standards of the population are key elements of the new government’s program.”
Europe’s debt crisis has roiled financial markets, sparked protests and taken a political toll as well. Former Premier Emil Boc, who resigned on Feb. 6, is among seven European Union leaders who have already given up power, while Slovakia will hold snap elections in March. Romanians are scheduled to cast ballots in a nationwide vote later this year.
Romania’s government has pledged to narrow the budget deficit to 1.9 percent of economic output this year from 4.35 percent in 2011 to meet the terms of the loan accord with the International Monetary Fund and the European Union.
The coalition is trying to regain voter support, after accusations of corruption and two years of tax increases and government spending cuts, including a 25 percent reduction in public-sector wages, under an IMF-led agreement. The austerity measures prompted the most-violent protests in a more than a decade, leaving 60 people injured.
The EU said yesterday that Romania needs to take “stronger action” to ensure transparency and revamp its judiciary, though “progress is visible.”
Romania relied on a 20 billion-euro ($27 billion) loan from the IMF and the EU from 2009 to 2011 to help it emerge from the deepest recession on record. The government secured another 5 billion-euro precautionary accord with the lenders to reassure investors it will keep fiscal discipline ahead of the elections. It doesn’t plan to draw on the money set aside.
The country’s economic growth will probably slow to as low as 1.5 percent this year, after output grew an estimated 2.5 percent in 2011, on declining exports to western Europe and weak domestic demand, according to IMF forecasts.
“Our top priority is to ensure economic growth through investments and European-fund absorption,” Dragoi said yesterday. “We’ll seek to attract 6 billion euros in European funds this year, which roughly means about 5 percent of GDP.”
If Ungureanu, a former foreign minister and head of the Foreign Intelligence Service, fails to get the backing of lawmakers, President Traian Basescu will nominate another candidate for the post of prime minister. A second failure to win support in 60 days may trigger early elections, according to the constitution.
Basescu nominated Ungureanu on Feb. 6 as a candidate for premier, hours after his political ally and Liberal Democrat leader Emil Boc said he was resigning “to ease political and social pressure.”