Monday, December 15, 2008

Romanian Socialists, Liberal Democrats Form Coalition

By Irina Savu

Dec. 14 (Bloomberg) -- Romania’s Social Democrat and Liberal Democrat parties agreed to form a coalition which will govern with a parliamentary majority after a tie in Nov. 30 elections forced them to seek allies.

“We’re starting down a road now with this partnership to form a stable and efficient government during difficult times,” Emil Boc, the head of the Liberal Democrats, told reporters in Bucharest today. “We have agreed on the most urgent measures needed to help the country go through the crisis.”

The coalition will have a two-thirds majority in Parliament. The agreement leaves unclear the fate of a 10 billion-euro ($13.4 billion) economic stimulus plan announced last month and intended to take effect in January as the global economic crisis hammers Romanian stocks and the currency.

The government will exclude the incumbent National Liberal Party, placed third in elections. The Liberal Democrats won 115 seats in the 334-member lower house while the Social Democrats took 114. The National Liberals have 65 seats.

The Social Democrats and Liberal Democrats said they ruled out coalition talks with the National Liberals after the party insisted on keeping a Liberal as prime minister.

The leu has weakened almost 12 percent against the euro and more than 23 percent against the dollar in the past year as international investors withdraw money from countries seen as carrying higher investment risk. The benchmark BET stock market index has declined about 69 percent.

Unemployment Concern

In the past two months, companies including carmaker Dacia SA, food processor Kraft Romania SA and steel manufacturer Arcelor Mittal Romania announced cutbacks or layoffs, raising concern of rising unemployment and falling foreign investment in Romania next year.

The Liberal Democrats and Social Democrats said they agree on economic policies including keeping the 16 percent flat tax and boosting spending on infrastructure and social areas.

“Our goal is to secure jobs, keep the flat tax and continue the justice and healthcare reforms,” Boc said.

Romanian President Traian Basescu, which backs the Liberal Democrats, named on Dec. 10 his political ally Theodor Stolojan as prime minister. Stolojan, 65, who served as prime minister in 1991 and 1992 after the fall of communism, will forge the government program with the Socialists. His government needs confirmation in Parliament this month.

“We have agreed on the most ambitious governing program ever, which will assuage the effects of the global crisis in Romania,” Mircea Geoana, the head of the Social Democrat Party, said in the same news conference as Boc. “The new government will win the confidence vote in Parliament on Dec. 22.”

To contact the reporter on this story: Irina Savu in Bucharest at at

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