Romania’s new government sealed parliamentary backing yesterday with a comfortable majority, giving it a mandate to keep an International Monetary Fund-led deal on track until an election in November.
Romania’s left-leaning opposition ousted prime minister Mihai Razvan Ungureanu’s cabinet last month after a wave of public anger against spending cuts and tax rises, the second government to fall in just over two months.
The fate of austerity-minded governments in Romania is a warning signal to other central European countries that are cutting costs and face the wrath of voters.
Although the new prime minister, 39-year-old Victor Ponta, says he is committed
to the €5 billion agreement with international lenders, investors are still wary of his proposals to ease austerity by restoring wages.
The government says raising wages should not have a significant impact on Romania’s finances and it has an agreement with the IMF to do so in two steps from June as it seeks to ease the unpopular austerity programme.