Monday, December 10, 2012

Romania’s Ponta Vows New Cabinet by Year-End on Victory

By Irina Savu & Andra Timu - Dec 10, 2012 

Romanian Prime Minister Victor Ponta vowed to form a new government by the end of the year and build a super majority in Parliament after his ruling coalition won yesterday’s general elections.

The ruling Social Liberal Union, or USL, got 58.6 percent, the Central Electoral Commission said today in Bucharest, with 99.6 percent of votes counted. The opposition Right Romania Alliance, aligned with President Traian Basescu, got 16.5 percent. The People’s Party of media owner Dan Diaconescu received 14 percent of the votes, while the ethnic Hungarian party got 5.15 percent, according to the partial results.

“I take the responsibility for leading a new government and we plan to have a Cabinet in place by the end of this year,” Ponta said last night. “We will negotiate with the ethnic Hungarians to get their backing for a constitutional majority. We will concentrate on creating jobs and securing the country’s fiscal stability.”

Ponta, who took power in May, persuaded voters to help him secure his first election victory with promises to undo wage cuts and tax increases passed by the opposition in 2010 to counter Europe’s debt crisis. He must now convince Basescu, a rival who survived Ponta’s effort to impeach him July, to designate him again for the top government job, sharpening a feud between the two leaders.

Leu Impact
The turmoil boosted borrowing costs and pushed the leu to a record low of 4.6520 against the euro on Aug. 3. It weakened 0.4 percent last week ahead of the elections, one of the worst- performing currencies in the region. The leu strengthened as much as 0.4 percent before trading little changed at 4.5337 per euro by 6 p.m. in Bucharest.

“Taking into consideration the bitter rivalry between Basescu and Ponta, there is a risk that the president will not name Ponta as prime minister and this could trigger political volatility, with implications on financial-market developments,” Florentina Cozmanca, a Bucharest-based economist at Royal Bank of Scotland Group Plc’s Romanian unit, said in a note today.

The ruling USL got about 62 percent of the seats in Parliament, while the opposition alliance got 22 percent of the seats, according to a forecast by private television Romania TV yesterday. Under Romania’s voting system based on constituencies and party representation, USL may get a higher percentage of seats than indicated in their vote total because of distribution rules.

Turnout at yesterday’s ballot was 41.8 percent, according to the electoral commission. The commission will probably announce final data tomorrow around 2 p.m. in Bucharest, spokesman Marian Muhulet said today.
Growing Tension
“We expect a couple of weeks of negotiations and it is quite likely that the tensions between President Basescu and Ponta will lead to some surprises on the appointments,” said Raffaella Tenconi, an economist at Bank of America Merrill Lynch in London. “We expect the National Bank of Romania to continue to manage the leu, supporting a stable trend.”

Romania earlier this year was engulfed in a power struggle between Ponta and Basescu that culminated in a 52-day suspension for the president, followed by an invalidated nationwide impeachment vote on July 29. Basescu returned to office at the end of August.

Market Relief

“Although we will need to wait for the official individual party results, there is likely to be a sense of relief that the exit polls for the alliances are in line with opinion polls,” said Simon Quijano-Evans, ING Groep NV’s London-based head of emerging-market research for Europe, theMiddle East and Africa.

Three other polling companies, including Geopol and CCSB showed similar results for USL’s score, while the opposition ARD gained between 15 percent to 18 percent of the votes.

Under the constitution, the party that wins more than 50 percent of parliamentary seats is entitled to negotiate the nomination of prime minister with the president. If no party has a majority, the president chooses a premier after consulting with all the parties.

“I voted for a change and I hope things will get better, though I doubt they can be worse than now after this terrible period of uncertainty and political struggle,” said Oana Hoarda, a 35-year-old accountant.

Premier Designate
After the failed impeachment attempt, Basescu said he won’t designate Ponta as prime minister again. He has since declined to repeat that statement in public. Ponta said he is the only candidate for prime minister should his political alliance win.

The premier-designate has 10 days to draw up a governing program and pick his ministers before seeking a confidence vote in Parliament.

Ponta and Basescu agree that Romania needs to reach a deal with the IMF and the EU next year, once the current 5 billion- euro ($6.5 billion) precautionary accord, signed in 2011, ends. The nation has drawn no money from the facility. Romania also got a 20 billion-euro bailout from the IMF and the EU in 2009.

To contact the reporters on this story: Irina Savu in Bucharest at; Andra Timu in Bucharest at

To contact the editor responsible for this story: James M. Gomez at

No comments: