BUCHAREST (Reuters) - Romania’s President Klaus Iohannis said on Friday he intends to appoint a prime minister-designate by Oct. 15 to form a transitional government, likely to be led by the main opposition party, until a parliamentary election in 2020.
Prime Minister Viorica Dancila’s Social Democrat government collapsed on Thursday after losing a no-confidence vote in parliament, raising the prospect of a government with limited support from a fragmented opposition.
Policymaking will be further complicated by a busy election cycle. Romania holds a presidential vote in November, and local and parliamentary elections scheduled in mid- and late-2020.
“I prefer a political government, and will not look for another solution,” Iohannis said after consultations with political parties.
Romania previously had a government led by technocrats for a year in the run-up to the 2016 parliamentary election.
“It is fairly clear we are headed towards a government by the Liberal Party (PNL) or centered around PNL, the nuances will be clarified in coming days,” Iohannis said.
The prime minister-designate must win a vote of approval from parliament to take power, which most analysts expect to happen.
The centre-right PNL, a rival of the Social Democrats which spearheaded Thursday’s no confidence vote, supports its leader Ludovic Orban for the prime minister job.
The new government will have to draft a 2020 budget plan that adheres to already strained deficit targets, and organise several rounds of elections.
While it may be installed fairly quickly, its powers would be limited by a highly fragmented opposition. Several party leaders said on Friday that while they would vote for the new government, their support was not a “blank cheque.”
Financial markets held steady on Friday, with investors accustomed to rapid-fire cabinet changes.
Dancila, who remains interim prime minister until a new government gets parliament’s vote of confidence, is the third Social Democrat premier in as many years.
EU and U.S. officials have strongly criticised the Social Democrats for an overhaul of Romania’s judiciary that they see as a threat to the rule of law, and for watering down anti-graft legislation. Expansionary fiscal and wage policies have increased Romania’s budget and current account deficits.
“Further depreciation potential is likely to be limited by the fact that there is now hope of a new direction being taken in politics though, in particular as regards fiscal policy, which would reduce the potential for conflict with the EU,” Commerzbank said in a research note.
“Moreover, changes in government really are nothing new in Romania.”
Reporting by Luiza Ilie; Editing by