Key insights
- Romania's Prime Minister faces a no-confidence vote, potentially destabilizing reforms aimed at reducing the EU's widest deficit and hindering efforts to secure EU funds for economic recovery. Government bonds sold off and the leu weakened amid concerns of reversed reform pledges if the far-right joins the next government. Limited direct impact on US equities, but highlights broader European political risks.
Investing.com -- Romania’s Prime Minister Ilie Bolojan is set to face a no-confidence vote on May 5 after the Social Democrats joined forces with the far-right Alliance for the Unity of Romanians to file a motion against his minority government.
The motion was signed by more than 250 lawmakers, representing a majority in parliament, AUR leader George Simion said on Tuesday. Such support would be sufficient to pass the vote and end Bolojan’s 10-month premiership.
"We no longer want this government and the will of the people is to return to democracy," Simion said. He added that no decision has been made for his far-right party to team up with the Social Democrats in a potential coalition. "We’re not at all nervous about the chances of this motion, it will surely pass."
The move follows the Social Democrats’ decision last week to exit a pro-European four-way coalition. The political crisis threatens reforms aimed at narrowing the European Union’s widest deficit and may complicate Romania’s efforts to obtain EU funds needed to pull the economy out of recession triggered by months of austerity.
Government bonds sold off and the leu, which is tightly managed by the central bank, weakened for a second day on Tuesday as concerns grow that Romania could reverse its reform pledges if the far-right were to join the next government.
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