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Several Romanian Finance Minister Will Be Replaced Due to Cabinet Reshuffling

Due to a Cabinet shuffle amid criticism over austerity measures aimed at meeting international bailout conditions, Romanian Finance Minister Sebastian Vladescu said he will be replaced.

In a phone interview from Bucharest,Vladescu said that he will be replaced by Prime Minister Emil Boc as part of a “political decision.” Vladescu said he does not know who will take his place and is not about to comment on what his departure means for plans to carry out a loan agreement with the International Monetary Fund.

By year-end, the opposition Social Democrats and the Liberals said they plan to file a no-confidence motion as they seek to bring about a government that will abate Boc's increase in the country's value-added tax and resuscitate the economy. The two parties have 214 votes in the 471-seat legislature.

The head of emerging market research at Royal Bank of Scotland Group Plc in London, Tim Ash, mentioned that the replacement is “disappointing from a market perspective, but the price of giving the current government at least a chance of surviving a confidence motion being threatened still by the opposition.”

The 4.2684 per euro value of the Romanian leu went down 0.3 percent, while the Bucharest Stock Exchange’s benchmark BET index scratched out part of earlier gains and closed at 5107.51, posting a 1 percent growth.

The 52 year old Vladescu, who had been in service as a finance minister for nine months, said he is confident he is handing over a stable ministry behind.

“The government has succeeded where the Hungarians have thus far failed in terms of keeping their IMF program on track,” Ash said. “Ultimately the price of this ‘faith’ in the implementation of the program, and the tough austerity demanded as part of the program, is that the government could still fall.”

As his Cabinet confronts the motion of no-confidence and after months of criticism of the government’s performance by unions and the opposition, Boc said he is determined to change ministers.

The value-added tax was raised by 5 percentage points by Boc's government, which also gave the public-sector wages a 25 percent reduction to accommodate international bailout stipulations. Boc met with his Liberal Democrat party leaders

Boc’s government raised a value-added tax by 5 percentage points and cuts in public-sector wages by 25 percent to meet international bailout conditions. Boc discussed the changes with his Liberal Democrat party leaders.

Two more Ministers were being replaced one is Agriculture Minister Mihai Dumitru. He told Antena 3 television station that after meeting Boc, he learned that he will also be replaced. In a televised speech, Labor Minister Mihai Seitan revealed that he is one of the Ministers to be replaced as part of the cabinet reshuffling.

One of the IMF’s crucial conditions was being closely put into action by Seitan. It is a pension law focusing at streamlining the sector and raising the retirement age. To unlock the next payment of about 900 million euros to Romania from its international lenders, the said pension law must be approved by the end of September.

Seitan told journalists in Bucharest, “The Prime Minister thanked me and said he’s sorry we won’t be working together anymore because of the current political situation, which we must accept as it is".

IMF Mission Chief Jeffrey Franks said in Aug. 4, as European Union’s second-poorest member, Romania, is heavily depending on a 20 billion-euro ($26 billion) bailout from the IMF, EU and other international lenders to stay afloat. Its economy, bogged down in the worst recession on record last year, will probably weaken again in 2010 as government austerity measures damp consumer demand.

Victor Ponta, a Social Democrat leader, said yesterday that his party and the Liberals aim to form a government that will seek to introduce a separate 5 percent value-added tax on food and construction. It will cancel Boc’s VAT increase, bringing the rate back to 19 percent on other items. Antonescu said, that a new government could be led by a prime minister who is independent and who would take other measures to boost the economy.

“We aim to end Boc’s incompetent government,” Liberal leader Crin Antonescu said yesterday at a news conference. “We agreed to file the motion as soon as possible, but we’ll choose the appropriate timing.”

During each parliamentary session the Romanian law allows the opposition to file one no- confidence motion.

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