BUCHAREST, Oct 13 (Reuters) - Romania's parliament toppled
the minority centrist government in a vote of no-confidence on
Tuesday, boosting instability ahead of a Nov. 22 presidential
poll and putting the country's IMF-led aid package at risk.
Economists warned about the impact of political standoff on
fiscal reforms and budget cuts needed to ensure the
International Monetary Fund continues to disburse aid from its
20 billion euro anti-crisis package.
The centrist and leftist opposition called the vote after
Prime Minister Emil Boc's coalition cabinet split earlier this
month, plunging the country into political crisis at a time when
it is trying to fight against recession.
Under Romanian law, the outgoing government will continue to
act as a caretaker cabinet with limited powers until a new prime
minister is endorsed by parliament, probably as early as late
December or early January.
The bluechip index BETI <> was down 1.16 percent on the
day. Following are comments from politicians and analysts:
COMMENTS:
NEIL SHEARING, EMERGING EUROPE ECONOMIST, CAPITAL ECONOMICS
"Most important is what this means for the future of the IMF
programme, in the context of Romania's previous failed IMF
programmes.
"In particular, are there going to be any signs over the
next couple of weeks that we can get a strong government out of
this?"
"Certain... reforms, sticking to the terms outlined in the
programme -- that is really what the market is going to be
focussing on."
"If we can't, then it means further fiscal slippage, a
selloff in the leu, little scope for further rate cuts --
possibly even rate hikes... It is probably too soon to tell."
ROZALIA PAL, UNICREDIT TIRIAC, BUCHAREST
"For the IMF deal, I think the budget deficit target will be
harder to meet. This is a risk that started with the collapse of
the coalition at the start of October."
"As far as the (IMF) deal goes, we don't believe tranches
will stop, but rather we hope they will be postponed if
conditions are not met in the short term."
"This is a risk we have taken into account."
RAFFAELLA TENCONI, CHIEF ECONOMIST, WOOD & CO.
"The collapse of the PDL-led government is bad news, though
not surprising given the developments of the last ten days."
"We doubt another government will be able to receive
parliamentary support in the near term, so early elections are
highly likely at the beginning of December."
"We expect the release of the next IMF loan tranche to be
delayed by a few months, until the new government is in place
and can clarify its position with the IMF."
"Although the PSD could prove a hurdle for the reforms, the
economy simply has no other option but to follow the IMF
programme. The recent balance of payments data show external
vulnerability remains elevated, despite some improvement since
the turn of the year."
LARS CHRISTENSEN, EMERGING EUROPE ECONOMIST, DANSKE BANK
"Obviously bad news for the Romanian markets -- look for
further weakness in the Romanian leu.
"It still too early to say what this will mean for the
Romanian IMF deal, but it is clearly not good news. That said,
this is not yet a Latvian style crisis and there is no imminent
risk to Romania's Standby Agreement."
(Reporting by Reuters bureaux; Editing by Michael Winfrey)
