Tuesday, December 18, 2012

Romania President Nominates Ponta for Second Term as Premier

By Irina Savu & Andra Timu - Dec 17, 2012

Romanian President Traian Basescu nominated Victor Ponta as prime minister for the second time this year after the ruling coalition won a Dec. 9 election.

Basescu, who has been embroiled in a power struggle with Ponta since June, made the announcement in a statement published on the presidential website today. The 40-year-old Ponta, who has been premier since May, will control more than two-thirds of Parliament’s seats and must seek a vote of confidence within 10 days.

“We have entered a period of normality,” Ponta told reporters in Bucharest today. “I will have my Cabinet and the governing program ready by Dec. 20, so that the Parliament can hold the confidence vote on Dec. 21.”

The election win strengthened Ponta’s hand in his political feud with Basescu. The premier-designate plans to bolster the ruling coalition’s 67 percent majority in the legislature to about 75 percent with the help of the ethnic Hungarians’ party, in a bid to change the constitution.

The Liberals, part of Ponta’s coalition, opposed a plan to include the ethnic Hungarians in a new government and prompted Ponta to announce today that they won’t be part of his future cabinet, while continuing talks on constitutional changes.
‘Sigh of Relief’

The power struggle between the Ponta and Basescu, which led to a 52-day suspension of the president and a failed impeachment referendum earlier this year, pushed the country’s currency, the leu, to a record low of 4.6520 per euro on Aug. 3 and boosted borrowing costs.

The leu appreciated to the strongest in almost four months to 4.4652 by 11 a.m. in Bucharest and declined 0.05 percent to 4.4716 per euro at 5 p.m. on bets that Ponta’s nomination will ease political uncertainty.

“There’s a general sigh of relief as Basescu nominates incumbent Premier Ponta to go to Parliament for a confidence vote,” Simon Quijano-Evans, ING Groep NV’s London-based head of emerging-market research for Europe, the Middle East and Africa, said in e-mailed comments. “Ponta should have absolutely no problem in winning the vote, given the coalition supports him.”
International Guidance

After winning a confidence vote in Parliament, the new Cabinet must prepare the 2013 budget under the guidance of the International Monetary Fund and the European Union, which will probably start a review of the Balkan nation’s loan in early January, Ponta said on Dec. 10.

The country plans to start talks on a new agreement with the lenders as the current 5 billion-euro ($6.6 billion) precautionary accord expires at the end of March.

“A swift solution to the political uncertainty could support Romanian markets in the short term,” analysts at Vienna-based Erste Group Bank AG (EBS) wrote in a note today. “We continue to see the euro at 4.52 lei in June 2013 and 4.5 in December 2013 and see risks coming from a heavy repayment calendar to the IMF.”

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