Thursday, May 14, 2009

Romania government wins parliament confidence test

BUCHAREST, May 13 (Reuters) - The Romanian government on Wednesday survived a parliamentary vote of no confidence that tested its resolve to restrain budget spending ahead of a presidential election later this year.

The opposition centrists criticised the coalition government of Prime Minister Emil Boc for cutting back state pay and stifling local companies with new taxes at a time when global financial turmoil is pushing the economy towards recession.

Boc faces tough policy dilemmas in coming months because fiscal restraint is a key condition of a 20 billion-euro aid package granted Romania by the International Monetary Fund and the European Union to help it ride out global turmoil.

At the same time, social protection and state wages are likely to dominate campaigns for the June 7 European parliament election and a presidential ballot in the fourth quarter.

'The elections are vital here. The opposition is trying to seize the social agenda while the population is unhappy with the consequences of the IMF deal,' said political analyst Bogdan Teodorescu.

The parliamentary vote failed with 130 deputies voting for and 272 against.

Romania was the EU's fastest-growing economy early last year but with domestic lending frozen and low foreign demand hurting exports it was forced to seek foreign aid and implement unpopular wage freezes to prevent a financing crisis.

Opinion surveys showed Boc's Democrat-Liberals running almost neck-and-neck at 30 percent with their Social Democrat partners, followed by the opposition Liberals with 18 percent.

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