Romanian President Nominates Ponta for Second Term as Premier

Romanian President Traian Basescu nominated Victor Ponta as prime minister for the second time this year after the ruling coalition won a Dec. 9 election.

Basescu, who has been embroiled in a power struggle with Ponta since June, made the announcement in a statement published on the presidential website today. The 40-year-old Ponta, who has been premier since May, will have more than two-thirds of Parliament’s seats and must seek a vote of confidence within 10 days.

“Given the fact that there was only one proposal from the political parties, President Traian Basescu designated Victor Ponta as candidate for the position of prime minister,” the president said in the statement.

The election win strengthened Ponta’s hand in the feud with Basescu. The premier-designate plans to bolster the ruling coalition’s 67 percent majority in the legislature to about 75 percent with the help of the ethnic Hungarians’ party in his bid to change the constitution.

The power struggle between the two politicians earlier this year pushed the country’s currency, the leu, to a record low of 4.6520 per euro on Aug. 3 and boosted borrowing costs. The leu appreciated to the strongest in almost four months to 4.4652 by 11 a.m. in Bucharest on bets that Ponta’s nomination will ease political uncertainty.

Loan Talks

After winning a confidence vote in Parliament, the new Cabinet must prepare the 2013 budget under the guidance of the International Monetary Fund and the European Union, which will probably start a review of the Balkan nation’s loan in early January, Ponta said on Dec. 10. The country plans to start talks on a new agreement with the lenders as the current 5 billion-euro ($6.6 billion) precautionary accord expires at the end of March.

“A swift solution to the political uncertainty could support Romanian markets in the short term,” analysts at Vienna-based Erste Group Bank AG wrote in a note today. “We continue to see the euro at 4.52 lei in June 2013 and 4.5 in December 2013 and see risks coming from a heavy repayment calendar to the IMF.”

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