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Published: Friday February 7, 2014 MYT 2:01:23 AM
Updated: Friday February 7, 2014 MYT 2:02:25 AM

Romania's finance minister resigns, party sources point to policy row

BUCHAREST (Reuters) - Romania's Finance Minister Daniel Chitoiu resigned from the coalition government on Thursday, a move two senior party sources said was down to him losing the support of his Liberal Party in a policy row.

The sources told Reuters that Chitoiu had failed to keep his party in the loop about a plan by its leftist partners to reschedule the bank debts of low-income borrowers for two years.

Health Minister Eugen Nicolaescu is set to take over, they said, adding an announcement on this would be made on Friday.

"He resigned, he was blamed for not discussing those plans with the party," the first source said.

Chitoiu, an economist, has also served as a deputy prime minister since 2012. After news of his exit broke, he told reporters he was leaving the government to focus on party activity for the upcoming elections.

Political squabbling has repeatedly hampered the country's development for most of the 24 years since the fall of communist rule, and the economy trails other emerging EU countries such as Poland and the Czech Republic.

But Chitoiu's exit is unlikely to unnerve investors even at a time of turbulence in emerging markets. A key aid deal with the International Monetary Fund (IMF) - crucial to the country's credibility - was secured earlier this week. Moreover, the finance minister's responsibilities were diluted in 2012 with the creation of a separate budget ministry.

Chitoiu's departure was agreed in a closed-door meeting of senior Liberal party members. It signals the rising political temperature in the European Union's second poorest member ahead of presidential and EU elections this year.

Prime Minister Victor Ponta has envisaged a scheme for Romanian borrowers who earn less than 1,601 lei ($490) per month and do not have debts older than three months, to halve their monthly instalments for two years.

The IMF mission chief to Romania told Reuters on Tuesday improved macroeconomic fundamentals have helped the Black Sea state withstand recent turbulence in emerging markets, but it must be careful to avoid market uncertainty in an election year.

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