Romanian government wins confidence vote after split

Reuters News
Posted: Mar 04, 2014 12:01 PM

By Luiza Ilie and Radu Marinas

BUCHAREST (Reuters) - Romanian Prime Minister Victor Ponta won a confidence vote in parliament on Tuesday, as expected, securing a new mandate to push through a series of IMF-backed reforms aimed at speeding up growth in the European Union's second poorest country.

Ponta's Social Democrat-led (PSD) government won a vote in both houses by a combined 346 votes to 192, having partially restored its majority with new allies following the departure last week of the Liberal party.

The Liberals' exit had sparked worries about Romania's ability to implement commitments it made under a 4 billion euro aid deal with the International Monetary Fund, including tackling losses at state-owned companies, in an election year.

Having won the vote, Ponta faces a new threat to his government from his arch-rival, President Traian Basescu, who has questioned Ponta's constitutional right to form a new administration and threatened to mount a challenge in court.

This could prolong a bout of political instability that, along with emerging market jitters about the Federal Reserve's tapering of its monetary stimulus program and continuing turmoil in neighboring Ukraine, pressured Romanian assets.

The leu, one of the region's most stable currencies, has fallen about 1.1 percent since Feb 6., the day when the Liberal finance minister resigned in a policy dispute that helped to precipitate his party's exit from the government. Dealers say the central bank could intervene to stem sharp falls.

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"Stability is essential for what we have to do," Ponta told parliament before the vote. "Romania must remain an attractive country for investors."

(Reporting by Luiza Ilie and Radu Marinas; writing by Matthias Williams; Editing by Kevin Liffey)