Saturday, October 24, 2009

Romania's Croitoru unveils cabinet lineup

By Radu Marinas

BUCHAREST, Oct 23 (Reuters) - Romania's designated Prime Minister Lucian Croitoru unveiled a cabinet lineup on Friday intended to reassure international lenders propping up the shaky economy, but he faced an uphill battle in parliament.

Romania's powerful opposition, united behind a different candidate, has made it clear it would not back the former central banker in his bid to become prime minister, in a tactical game ahead of a Nov. 22 presidential election.

Bucharest must convince an upcoming IMF mission starting Oct. 28 that it is able to put together a broad-based political commitment to approve a tight 2010 budget to stave off financial crisis and safeguard the recession-hit economy.

The Washington-based lender relented on Thursday on previous plans to postpone its mission until a new government was formed. However, the Fund said a follow-up visit may be needed once a new cabinet was in place. 

Pending the review, Bucharest is counting on disbursement of a third tranche, worth 1.5 billion euros ($2.25 billion), of an IMF-led financial package worth 20 billion euros.

'There will be complex, difficult negotiations with ... international financial institutions in which the prime minister together with the central bank will play a key role,' Croitoru, who has the backing of centrist president Traian Basescu, said.

His cabinet, backed by the ruling Democrat-Liberal party, aims to streamline and downsize the government to 14 from 19 posts.

It retains seven ministers from the outgoing cabinet of acting prime minister Emil Boc, ousted by parliament earlier this month.

The closely contested presidential vote, likely to go into a second round on December 6, pits the opposition groupings who control 65 percent of seats in parliament against Basescu, who nominated Croitoru last week.

Analysts said the IMF's decision to hold a review in October will help calm market jitters. But they said the lenient stance may undermine the resolve of politicians to enact unpopular cost-cutting measures.

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