Bloomberg News

IMF, EU Delay Romanian Review to Avoid Referendum Campaign

July 16, 2012

The International Monetary Fund and the European Union delayed a planned review visit to Romania by one week to avoid political campaigning before a presidential impeachment vote on July 29, Premier Victor Ponta said.

The IMF and the EU missions, which were initially scheduled to start a review of Romania’s loan program on July 24, will arrive in Bucharest on July 31, Ponta told reporters during a news conference today. The review will last for seven to nine days, Finance Minister Florin Georgescu said at the same briefing today.

Romania, which is counting on a 5 billion-euro ($6.1 billion) precautionary accord as a shield against the European sovereign-debt crisis, will hold a nationwide referendum on whether to impeach President Traian Basescu amid a power struggle with the ruling coalition.

“The IMF and the EU delegations have always thought it was best to stay away from political campaigning, so practically the week of July 22 to July 29 is the last week of the campaign and the missions will arrive immediately after the referendum,” Ponta said.

The turmoil prompted European leaders, including European Commission President Jose Barroso, EU President Herman van Rompuy and German Chancellor Angela Merkel to voice “great concern” over efforts by the governing Social Liberal Union to oust Basescu and shore up power in response to austerity measures.

Romania’s currency, the leu, depreciated to all-time lows last week amid the tumult. Georgescu said today that he expects the leu to strengthen against the euro after the turmoil ends.

‘Under Pressure’

“Warnings have emerged from the European Commission that Ponta’s actions may hamper Romania’s” deeper EU integration “and it also casts doubt over IMF support for Romania,” Christian Lawrence, a London-based currency strategy at Rabobank, said in a note to clients today. “We expect the leu to remain under pressure in the lead up to the referendum.”

EU leaders also urged Ponta to restore impeachment rules eased by his government. The Romanian Constitutional Court ruled that a referendum is valid only if a majority of eligible voters take part in it, a higher bar than the government’s new rule requiring only a majority of those who cast ballots. The ruling last week may give the unpopular Basescu a chance to keep his job should turnout prove low during the summer holiday.

Ponta said last week that he will abide by the ruling, even as Ilie Sarbu, a Social Democratic leader, told Radio France International on July 13 that the ruling coalition is considering lengthening the referendum to two days to increase turnout. Parliament is due to meet this week to discuss the referendum rule changes.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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