Bucharest: Romania`s Social Democrats quit the coalition government on Thursday in protest at the sacking of a minister, raising the risk of the country failing to meet IMF conditions for aid.
The centrist Democrat-Liberals (PD-L), the Social Democrats` coalition partners, can rule alone for a few weeks but will have to seek Parliament`s approval for new ministers and their survival will depend on support from the opposition.
The centre-left coalition went into crisis this week after Prime Minister Emil Boc suddenly sacked interior minister Dan Nica and proposed a replacement from his own PD-L party before a November 22 Presidential Election.
On Thursday, President Traian Basescu, who has links to the PD-L, approved Nica`s dismissal.
"All PSD ministers, supporting Dan Nica, are announcing their resignation from government," PSD leader Mircea Geoana told reporters after an emergency party meeting. "The President succeeded in triggering a political crisis."
Economists said the break-up of the coalition put in question Romania`s ability to meet fiscal targets set by the IMF in return for the EUR 20 billion aid package it led for Romania this year.
"It`s still very early days and one should be careful in jumping to conclusions. But of course one needs to see how a minority government, if that`s what we do get, can continue to adhere to the IMF programme. That`s key," said Koon Chow, strategist at Barclays Capital.
"The worst that could happen is that the next tranche will be delayed for a few months, I don`t think the next government will walk out of the programme," said Raffaella Tenconi of Wood & Co in Prague.
Observers said the political standoff reflected tactical manoeuvring by the two ruling parties before the presidential ballot, rather than policy differences.
Boc`s PD-L and their leftist partners have ruled since they took power in December, sparring over cost-cutting reforms and trading blame for economic woes.
"The crisis is theirs now," Nica told reporters.
The Presidential Election pits incumbent Basescu against PSD leader Geoana.