Romanian prime minister resigns to 'defuse' strain: official

(BUCHAREST) - Romania's centre-right Prime Minister Emil Boc resigned on Monday amid public anger at austerity measures and despite praise from the IMF and the EU for piloting drastic economic reforms.

"I have decided to tender the resignation of my government in order to defuse political and social tension and preserve Romania's hard-won stability," Boc told a cabinet meeting that was broadcast live.

Romanian president Traian Basescu quickly named justice minister Catalin Predoiu as the new premier, tasked with forming a government to be presented to parliament for approval.

Basescu "has taken note of prime minister Emil Boc's resignation and named Catalin Predoiu as interim prime minister," a statement issued by the president's office said.

Boc, 45, has been Romania's Prime minister since 2008, when the Balkan country plunged into severe recession after years of solid growth.

His government was forced to call on the International Monetary Fund (IMF) and the European Union for a 20-billion euro ($26.0-billion) lifeline in 2009. In exchange for the loan, Boc's government took drastic measures to curb public spending, cutting public wages by 25 percent and freezing pensions in 2010.

Tens of thousands of jobs were axed in the public sector.

Last year, Romania concluded a second, precautionary-type agreement with the IMF and th EU on a credit line of five billion euros to be drawn only in case of emergency.

After two years of recession, Romania registered economic growth in 2011 while the public deficit is expected to be under three percent of GDP.

On Sunday, a mission of the IMF and the EU praised Boc's government for the reforms carried out over the last two years.

"The authorities have made good progress in implementing programme policies in a very difficult external environment," the IMF and the EU said in a press release.

"Continued fiscal consolidation has improved Romania's credibility," they added, citing a successful placement last week of a 10-year dollar bond.

But two years of austerity have impoversihed the population and sent thousands of people in the streets across the country in January.

Boc admitted that even if the spending-cutting measures started to bear fruit, the population has not felt the benefits yet.

On Monday, he called on lawmakers to vote for a new government rapidly to secure Romania's stability at a time when recession is looming in the eurozone.

The IMF and the European Union said on Sunday that they had trimmed Romania's 2012 growth forecast to 1.5-2.0 percent, owing to international economic turbulence.

The president is expected to meet the country's political parties later Monday to discuss the domestic political situation.

Analysts say he may choose a technocrat to run the country until general elections scheduled in November.

The social liberal opposition has repeatedly called for early elections and last week decided to boycott parliament works until its demand is met.

"We are ready to accept any responsible solution leading to early elections," one of the opposition leaders, Victor Ponta, told reporters.