By Andra Timu
February 24, 2014
Romania’s governing coalition is on the brink of breaking up as the Liberal Party, a junior member, may quit amid a row over personnel changes.
The Liberals are meeting today to decide whether to recall the party’s ministers from the alliance that won a two-thirds majority in December 2012 elections. While Prime Minister Victor Ponta would still be able to count on two smaller parties to pass laws without them, he called that majority “fragile.”
Economic expansion of 5.2 percent in the fourth quarter was among the fastest in the European Union, beating forecasts. Bickering between the two largest parties over a proposed cabinet shuffle led to a deepening political crisis as they jostle for position before presidential elections in November.
“The current tensions serve as a reminder that Romanian politics is notoriously volatile, and continue to cast a cloud over investors’ decisions and the broader economic outlook,” William Jackson, emerging-markets economist at Capital Economics Ltd, said by e-mail. “Although growth in Romania last year was faster than most expected, the economy remains fragile.”
The leu was little changed at 4.512 per euro at 7 p.m. in Bucharest yesterday. It has lost 1 percent this year, the ninth-worst performance among 24 emerging-market currencies tracked by Bloomberg. The yield on the government’s dollar bonds maturing in 2024 fell 3 basis points, or 0.03 percentage point, to 4.69 percent, according to data compiled by Bloomberg.
The ruling coalition won the 2012 election amid public anger over austerity measures imposed by President Traian Basescu. Three weeks ago, Ponta and Liberal leader Crin Antonescu started bickering over a plan to change the government’s structure, with the Liberals seeking to replace four ministers and a deputy premier.
If the Liberals withdraw from the government, Ponta will appoint interim replacements while continuing talks to search for a solution to maintain the current coalition, he told reporters in Bucharest yesterday.
A new government may be in place by March 8, when a current 45-day interim mandate for the interior minister expires, Ponta said, adding that his Social Democrats will meet on March 3 to asses the political development and make “the needed decisions.”
Ponta may also seek the support of a minorities party and the ethnic Hungarian alliance for his cabinet.
Once allies, Ponta and Antonescu, selected as the coalition’s presidential candidate, are accusing each other of having separate plans for the Nov. 2 presidential election.
Ponta said he thinks Antonescu wants to run for the presidency by opposing the government to boost his chances, while Antonescu said the Social Democrats, Romania’s biggest party, plan to push their own candidate, without giving any names.
Antonescu is leading in presidential polls with about 26 percent of the vote, according to an Avangarde poll of 1,500 people in January. Ponta would get 22 percent if he decided to run. The survey has a margin of error 2.5 percentage points.
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