Wednesday, October 27, 2010

Romanian govt likely to survive no-confidence vote

Tue, Oct 26 2010

* Opposition trying to topple government over austerity

* Debate starts 0800 GMT, vote could be several hours later

* Doubts remain over adherence to terms of IMF-led bailout

By Sam Cage

BUCHAREST, Oct 27 (Reuters) - Romania's centrist government looks likely to survive a no-confidence vote in parliament on Wednesday over its deep spending cuts and tax hike, needed to maintain a 20-billion-euro IMF-led bailout.

Investment is pouring back into central Europe, but Romania is struggling to attract funds because of its rocky politics and the vote comes at a bad time for the government as the International Monetary Fund is reviewing the aid deal.

"A political crisis is not the sort of thing that can help Romania," said Ionut Dumitru, chief economist at Raiffeisen Bank in Bucharest. "Most probably, nothing will happen tomorrow."

Prime Minister Emil Boc's loose coalition has only shaky control over parliament and is struggling to make tough austerity measures stick to narrow Romania's budget deficit and keep the aid money flowing.

It is the second no-confidence vote Boc's government has faced in just 10 months in office and shaky politics has hit asset prices in the European Union's second-poorest country.

Unions are hoping about 80,000 people will demonstrate against the government outside parliament during the debate, which starts at 0800 GMT, though numbers at previous protests have fallen well short of expectations.

The government has imposed strict discipline on its sometimes unruly deputies and those from allied groups, a development that has supported the leu currency this week EURRON=.

Coalition partners are under instructions not to cast votes, which effectively means backing the government because the onus is on the leftist opposition to gain a majority.

The Social Democrats and Liberals, the two main opposition parties, have 213 representatives in parliament and need another 23 votes to topple the government.

There is still a slim chance the government could lose the vote, which would leave the country politically rudderless for several weeks and cast serious doubts over the entire aid programme.

An IMF team is in Bucharest to review the bailout, which requires Romania to cut its budget deficit to 6.8 percent of gross domestic product this year from 7.2 percent in 2009, and discuss a possible new deal once this one expires in March.

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