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Published: Friday February 7, 2014 MYT 10:20:02 PM
Updated: Friday February 7, 2014 MYT 10:21:14 PM

Romania's Liberal Party reshuffles ministers ahead of elections

BUCHAREST (Reuters) - Romania's Liberal Party reshuffled its ministers in the ruling coalition government on Friday, replacing the finance minister and three other posts to shore up its strength ahead elections in 2014.

The move comes a day after Finance Minister and Deputy Prime Minister Daniel Chitoiu resigned, amid what senior party sources said was a row about a proposal to reschedule the bank debts of low income borrowers.

The changes, which must first be approved by the prime minister and the president, signal the rising political temperature in the European Union's second-poorest member ahead of presidential and European elections this year.

But they are unlikely to result in any dramatic shift in economic policy, nor unnerve investors even at a time of turbulence in emerging markets.

Leftist Prime Minister Victor Ponta, who governs Romania in alliance with the Liberals, this week secured an extension of a 4 billion euro aid deal with the International Monetary Fund (IMF) - key to Romania's credibility with investors.

Ponta "will likely follow the established economic policy lines agreed with the IMF under Romania's stand-by arrangement," Otilia Dhand, a vice president at Teneo Intelligence, said in a note.

"Despite the cabinet reshuffle, overall economic policy (including the privatisation of energy sector companies and the restructuring of sovereign owned enterprises) is unlikely to change," Dhand added.

The office of finance minister wields less power ever since the portfolio was diluted in 2012 with the creation of a separate budget ministry, which is controlled by Ponta's party.

Chitoiu will be replaced by Health Minister Eugen Nicolaescu, an accountant, the Liberal Party chief told reporters on Friday. Cristian Busoi will take over as health minister. Economy Minister Andrei Gerea will be replaced by Teodor Atanasiu, a former defence minister.

Ponta, whose Social Democrats are the larger party in the ruling alliance, is expected to endorse the nominations. Klaus Iohannis, the popular mayor of the Transylvanian city of Sibiu, will take over as interior minister and deputy premier.

"Within the party we have often wanted to be more visible in government, to see ... liberal policies," Iohannis said.

Political squabbling has set back Romania's development for most of the 24 years since the fall of communist rule. Its economy trails other emerging EU countries such as Poland and the Czech Republic.

But the Black Sea country looks more stable than in the recent past, such as in 2012 when a row between the prime minister and the president sparked a constitutional crisis.

"We believe recent events on the political scene are much less loud than previous noise and do not warrant any change to our view of no political woes at least in the first half (of the year), ahead of EU Parliament elections," ING economist Mihai Tantaru said in a research note.

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