Saturday, October 24, 2009

Romania Premier-Designate Croitoru Seeks Parliamentary Approval

By Irina Savu

Oct. 23 (Bloomberg) -- Romanian Prime Minister-designate Lucian Croitoru said he will seek parliamentary approval for his proposed Cabinet and has a “high chance” of success.

Croitoru, 52, named as premier on Oct. 13 following the collapse of Emil Boc’s administration, promised to implement economic reforms to meet the terms of Romania’s international bailout if he wins approval for his Cabinet of 14 ministers, he said today in Bucharest in a televised speech. Lawmakers must hold the vote within 15 days.

“I sent my program and the Cabinet list to parliament,” Croitoru said. “My government stands a high chance of winning approval because lawmakers will consider things from an economic and financial perspective not just from a political one.”

Croitoru, an economic adviser to Central Bank Governor Mugur Isarescu, failed on Oct. 20 to win support from the country’s opposition parties, which hold a parliamentary majority. The Social Democrats, the Liberals and ethnic Hungarians back their own candidate Klaus Johannis, 50, mayor of the Transylvanian town of Sibiu. Croitoru has so far secured the backing of Boc’s Liberal Democratic Party, which holds 171 seats in Parliament. He needs 236 votes to win parliamentary approval.

Experienced

President Traian Basescu, who enjoys the support of the Liberal Democrats in his race for a new five-year term on Nov. 22, said he picked Croitoru because he was Romania’s representative at the International Monetary Fund and had experience dealing with international financial institutions.

The European Union’s second-poorest member is relying on a 20 billion-euro ($30 billion) bailout from the IMF and the EU to cover its budget and current-account gaps.

If Croitoru fails to win the confidence vote in parliament, Basescu must back a new candidate. The winner of the presidential vote next month can call parliamentary elections in December at the earliest, if a second confidence vote fails. By law, the president can’t dissolve parliament or call early general elections in the last six months of his term.

The Balkan country is trying to cut spending to meet a budget deficit target of 7.3 percent of gross domestic product this year. Measures will include sending all state workers on 10 days’ unpaid leave and firing some employees next year.

IMF Mandate

Romania must also pass a pension reform bill mandated by the IMF. The proposal aims to save an annual 0.5 percent of GDP in 2010 and as much as 2.1 percent in 2020.

Boc, who will stay in office with limited powers until the end of November unless a new government is formed earlier, had sought to effect wage and pension cuts to comply with the terms of the country’s bailout.

The government last month approved a wage bill, called for by the IMF, which led to protests by about 750,000 state workers. Trade unions have also threatened to start an open- ended strike from November and boycott elections if their demands for higher pay aren’t met.

The Romanian economy contracted 8.7 percent in the second quarter, the most on record, and the IMF forecasts an 8.5 percent contraction for all of this year.

To contact the reporter on this story: Irina Savu in Bucharest isavu@bloomberg.net.

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