Monday, May 16, 2011

Romanian Prime Minister Wins Internal Ruling Party Elections

Romanian Prime Minister Emil Boc has won an internal election held by his ruling Democrat-Liberal Party, confirming support for his Cabinet.

Boc, 45, won with more than 60 percent of the vote, according to a preliminary count, Sulfina Barbu, the Liberal Democrat who oversaw the elections, said in a phone interview from Bucharest today.

The Democrat-Liberals, part of the ruling coalition and facing general elections next year, saw their public support cut in almost half in a year to 20 percent over measures taken to keep funds from the International Monetary Fund and the European Union flowing in 2009 and 2010, a poll conducted between May 11 and May 13 by the Bucharest-based polling company CURS showed.

Boc’s government, which survived five no-confidence votes in the past year, has embarked on a budget austerity program to reassure investors it will maintain fiscal discipline ahead of elections, after signing a new two-year precautionary agreement with the international lenders, worth 5 billion euros ($7 billion). It plans to narrow the budget deficit to 3 percent of gross-domestic product next year, from 6.5 percent in 2010.

“Romania will have difficulties meeting this pledge, without reforming the unprofitable state-owned enterprises,” IMF Mission Chief Jeffrey Franks said May 9.

The administration cut public wages 25 percent and raised the value-added tax 5 percentage points to 24 percent last year to narrow the budget shortfall, boosting inflation and prompting the central bank to halt its rate-cutting cycle aimed at shoring up the economy.

The Balkan nation’s economy is poised to recover from a two-year recession and grow as much as 1.5 percent this year, according to the IMF.

To contact the reporters on this story: Andra Timu in Bucharest at atimu@bloomberg.net; Irina Savu in Bucharest at atimu@bloomberg.net

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

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