Tuesday, October 26, 2010

Romanian coalition MPs to abstain in confidence vote

By Marius Zaharia

BUCHAREST, Oct 25 (Reuters) - All deputies from Romania's main ruling party and allied ethnic Hungarians will abstain from a no-confidence vote in the government, a senior politician said on Monday, improving its chances of surviving the motion.

For Wednesday's vote, called over austerity measures to comply with terms of an International Monetary Fund-led bailout, the government needs only to stop the opposition gathering a majority, meaning abstentions effectively count as support for Prime Minister Emil Boc.

"The coalition has decided, the Democrat-Liberal party has decided: the coalition's parliament members will not participate in the vote," said Gheorghe Flutur, vice president of the ruling Democrat-Liberal party.

The government hopes abstentions will help it maintain discipline over sometimes unruly coalition MPs, some of whom might otherwise be tempted to vote for the no-confidence motion in what is effectively an anonymous ballot.

The opposition has 213 representatives in parliament and would need another 23 votes for a majority to topple the government in the 470-seat parliament.

A group of independent parliamentarians will also probably abstain from the vote, their leader Liviu Campanu told Reuters.

It is far from good timing for Boc, with an IMF team in Bucharest to review the 20 billion euro ($28 billion) deal.

"Chances for the opposition to succeed are slimmer than they might have been in the past ... but popular dissent is quite high and it might still be a close call," said Elisabeth Gruie, emerging markets strategist at BNP Paribas in London.

"However, whether or not the government remains in place, people will still be focusing on the IMF meetings, what reforms will be enacted and on whether the central bank will manage the currency or not to support the economy."


Investment has begun pouring back into central Europe. But Romania is struggling to attract funds because of its rocky politics.

Support for Boc's Democrat Liberal party has plunged to just 10 percent as public pay cuts and a hike in value added tax hike hit home and unions are organising demonstrations in Bucharest on the day of the vote.

Uncertainty over the government has hit the leu currency EURRON= and bonds, which the finance ministry is underselling because it generally refuses to meet investor demands for interest of more than 7 percent.

The leu and blue chip stocks .BETI rose on Monday on growing confidence the government would survive and the cost of insuring Romania's sovereign debt edged lower.

Analysts say defeat cou1d push the leu back towards the all-time lows of around 4.40 per euro it hit in June, and may push the finance ministry to abandon its 5-month-old bond yield cap as funding needs reach a peak next month. (Additional reporting by Ioana Patran; writing by Sam Cage; editing by Andrew Roche)

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