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BUCHAREST (Reuters) - Romania's President Traian Basescu ratified the latest review of a 4 billion euro aid deal with the IMF on Wednesday, ending a weeks-long standoff over a deal seen as key to the country's economic credibility.
Basescu moved swiftly to clear the agreement after Romania's ruling coalition collapsed last week, a split that had raised doubts over the government's ability to push through reforms that were agreed with the International Monetary Fund.
These include a commitment by Prime Minister Victor Ponta's government to restructure or sell off inefficient state companies that are a legacy of Romania's communist past - a policy that could prove tough to implement in an election year.
Economic growth jumped to 5.2 percent in the last quarter, but Romania remains the second poorest country in the European Union. Wages and living standards are still far below average in the bloc, which it joined in 2007.
The president had previously refused to approve the latest IMF review as it included proposals for a new excise tax on fuels and a government plan to reschedule the bank loans of low income borrowers - policies he opposed.
They will likely still be implemented, but the deal's letter of intent will not mention them.
"I do hope this accord will be implemented for the benefit of Romanians even though some of the measures don't seem to be the most pleasant," Basescu told a press conference.
Separately, Basescu also abruptly endorsed Ponta's newly formed coalition government on Wednesday, just days after he threatened to block its creation, ending another spat that could have prolonged political instability.
Under Romanian law, the president has a largely ceremonial role. But Basescu wields influence at key moments and has a big say in Romania's international agreements.
His opposition to the fuel tax was just the latest spat with his arch rival Ponta.
Romania does not plan to draw on the funds from the latest IMF deal. But their availability provides reassurance for foreign investors concerned about fiscal slippage before a European election and a presidential election later this year.
While aid deals with the IMF and the European Union since 2009 have obliged Romania to bring its budget under tighter control, government efforts to sell assets have been sporadic.
But in 2013, the leftist government launched the first initial public offerings in five years, listing minority stakes in nuclear power producer Nuclearelectrica and gas producer Romgaz.
This year, it aims to list a majority stake in power distributor Electrica and a minority holding in coal-fired power holding Oltenia with deadlines set for June-July. A plan to list hydro power producer Hidroelectrica has hit legal obstacles.
Ponta's ruling Social Democrats (PSD) cobbled together a new alliance this week after their main coalition partner quit the government. The new administration, which will govern with a reduced majority, was endorsed in a confidence vote in parliament on Tuesday.
But Basescu, a two-term president who is due to step down after the November election, over the weekend questioned Ponta's constitutional right to form a new government and threatened to challenge it in court.
The standoff had threatened to prolong instability that, along with emerging market nerves about the U.S. Federal Reserve winding down its stimulus programme and international tensions over Ukraine, has pressured Romanian assets.
"We reached an agreement," said Basescu at a press conference, adding he would now endorse Ponta's new ministers.
Opposition lawmakers, however, will still mount a separate challenge to Ponta's government in court.
Editing by Matthias Williams/Ruth Pitchford