Thursday, September 2, 2010

Romanian Premier Plans Cabinet Reshuffle Amid Confidence Vote

Sept. 2 (Bloomberg) -- Romanian Prime Minister Emil Boc plans to reshuffle his cabinet as his government faces a motion of no-confidence from two opposition parties.

Boc announced the plan late yesterday in Bucharest after meeting with lawmakers from his Liberal Democrat Party. The premier said he will meet with President Traian Basescu and party leaders before making the changes. He provided no details on what the changes would be or when they would take place.

The opposition Social Democrats and the Liberals said earlier that they plan to file a no-confidence motion by year- end as they seek to form a government that will reverse Boc’s increase in the value-added tax and revive the economy. The two parties have 214 votes in the 471-seat legislature.

Boc’s government cut public-employee wages by 25 percent and raised VAT by 5 percentage points to help meet conditions for a 20 billion-euro ($26 billion) bailout led by the International Monetary Fund. Those moves triggered a June no- confidence motion that the ruling coalition won by 8 votes.

“We aim to end Boc’s incompetent government,” Liberal leader Crin Antonescu said yesterday at a news conference. “We agreed to file the motion as soon as possible, but we’ll choose the appropriate timing.”

Under Romanian law, the opposition may file one no- confidence motion during each parliamentary session.

The European Union’s second-poorest member is relying on the bailout from the IMF, EU and other international lenders to stay afloat. Romania’s economy, mired in the worst recession on record last year, will probably contract again in 2010 as government austerity measures damp consumer demand, IMF Mission Chief Jeffrey Franks said Aug. 4.

Ponta said the Socialists and Liberals will try to form a government that will seek to introduce a separate 5 percent value-added tax on food and construction and cancel Boc’s VAT increase, bringing the rate back to 19 percent on other items. A new government could be led by an independent prime minister who would take other steps to bolster the economy, Antonescu said.

--With assistance from Andra Timu in Bucharest. Editors: Alan Crosby, Willy Morris

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

To contact the editor responsible for this story: James M. Gomez in Prague at jagomez@bloomberg.net

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