Romania govt survives austerity confidence vote
BUCHAREST Wed Oct 27, 2010 4:15pm BST
Oct 27 (Reuters) - Romania's centrist coalition government survived a no-confidence vote in parliament on Wednesday over its deep spending cuts and tax hike, needed to maintain international aid for its recession-hit economy.
The final count showed 218 parliamentarians voted for the opposition motion, compared to the 236 votes needed for a majority. Official results are expected shortly.
The vote had attempted to topple Prime Minister Emil Boc, who has slashed public wages by a quarter and hiked value added tax by five percentage points. (Reporting by Luiza Ilie; Writing by Sam Cage; Editing by Jon Boyle)
The final count showed 218 parliamentarians voted for the opposition motion, compared to the 236 votes needed for a majority. Official results are expected shortly.
The vote had attempted to topple Prime Minister Emil Boc, who has slashed public wages by a quarter and hiked value added tax by five percentage points. (Reporting by Luiza Ilie; Writing by Sam Cage; Editing by Jon Boyle)
Snap analysis - Romania still struggling to meet IMF terms
By Sam Cage
BUCHAREST Wed Oct 27, 2010 6:42pm BST
BUCHAREST (Reuters) - Romania's Prime Minister Emil Boc will still struggle to keep the country's IMF lifeline on track and maintain investor confidence, even after surviving a no-confidence vote on Wednesday.
It seems likely Romania's chaotic politics will continue into 2011, as a split parliament makes it difficult for any grouping to pull together a stable majority.
Neighbours like Poland and the Czech Republic are attracting more investment, but Romania's rocky politics act as a major deterrent. Boc's fragile coalition has now narrowly survived two no-confidence motions in just 10 months in office.
"This is not the end of the road -- we expect further no confidence votes to come periodically and the chances of early elections are still material," said Peter Attard Montalto at Nomura International.
Boc was able to defeat the motion only by imposing strict discipline on sometimes unruly coalition deputies, indicating he will still have problems pushing through fresh measures to cut Romania's budget gap and maintain the 20 billion euro bailout.
It was also awkward timing. An International Monetary Fund team is currently reviewing the bailout and Bucharest still needs the remaining funds from the current deal to fund its budget gap and prevent debt yields from spiralling.
Speaking after the vote, opposition leader Victor Ponta vowed to try and topple the government again.
Elections are currently scheduled for late 2012 and there is still a chance they may be brought forward, given the split parliament, though President Traian Basescu may prefer to avoid that given his links to Boc's Democrat-Liberal party.
Boc has slashed public salaries and hiked value added tax to comply with the deal, which requires cutting the budget deficit to 6.8 percent of gross domestic product this year from 7.2 percent in 2009. Polls put his popularity at just 10 percent.
Analysts say the IMF is probably concerned about two measures passed by parliament earlier this month -- apparently by mistake -- to cut VAT on basic foods and eliminate tax on small pensions. They are still awaiting presidential approval.
Those measures could cost more than 1 billion euros in lost revenues, if enforced, and government claims that its deputies had misunderstood and voted the wrong way by accident do little for its credibility, analysts said.
FOCUS ON IMF REVIEW
Uncertainty over Romania's government and its austerity drive has hit the leu currency in recent weeks. It did not move on the vote, as markets had largely priced in government survival.
"It's a positive signal for foreign investors, especially considering the ongoing IMF mission review and the absolute need for predictability, stability and coherence in economic policies," said Georgiana Constantinescu, analyst Credit Europe.
Romania is considering a new, precautionary aid deal that would likely be worth much less than the current bailout, which ends in March, an IMF official said this week
Bucharest has received about 75 percent of funds from its current deal but still needs the remaining money on time because it is struggling to sell debt at yields it deems acceptable and faces a funding crunch next month.
Investors have demanded higher returns because of the shaky nature of Boc's government and higher inflation after the VAT hike, but the finance ministry has repeatedly rejected almost all bids to buy its debt at yields of more than 7 percent.
Senior officials from Boc's party have also suggested cutting income tax next year to shore up its popularity ratings -- a measure unlikely to be welcomed by the IMF.
That means markets will pore over comments at an IMF press conference expected early next week -- not only for whether Romania receives the next tranche of loans but also potential warnings on fiscal policy.
(Editing by Ruth Pitchford)
Investors have demanded higher returns because of the shaky nature of Boc's government and higher inflation after the VAT hike, but the finance ministry has repeatedly rejected almost all bids to buy its debt at yields of more than 7 percent.
Senior officials from Boc's party have also suggested cutting income tax next year to shore up its popularity ratings -- a measure unlikely to be welcomed by the IMF.
That means markets will pore over comments at an IMF press conference expected early next week -- not only for whether Romania receives the next tranche of loans but also potential warnings on fiscal policy.
(Editing by Ruth Pitchford)
Romania government faces new no-confidence vote
BUCHAREST Fri Oct 29, 2010 3:12pm BST
BUCHAREST (Reuters) - Romania's opposition filed a no-confidence motion against the coalition government's education reform plans on Friday, a move with almost no chance of success, just two days after a similar bid had failed. The cabinet of Prime Minister Emil Boc survived a no-confidence vote in parliament on Wednesday over its deep spending cuts and tax increases, needed to maintain an IMF-led bailout for its recession-hit economy.
A vote in parliament could take place as early as next week, but analysts said there was no danger of a government collapse.
"Given this week's failure and the subject involved we see very low chances to succeed," independent political analyst Cristian Patrasconiu said. "This is just an image exercise."
Wednesday's vote count showed 218 parliamentarians voted for the leftist opposition motion, short of the majority of 236 needed to topple Boc, who has slashed public wages by a quarter and hiked value added tax by 5 percentage points.
Boc thwarted the motion by imposing tight discipline on coalition deputies, forcing them to abstain from voting. Since the onus was on the opposition to achieve a majority, abstentions effectively counted as votes for the government.
(Reporting by Radu Marinas; Editing by Angus MacSwan)
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