Romania's President Traian Basescu nominated a respected central bank adviser as prime minister today in a move likely to meet stiff opposition in parliament and prolong a government crisis.
Economists warn that without a stable government in place quickly, Romania risks slipping on its commitments to the International Monetary Fund and the European Union and face delays in disbursements of its 20 billion euro loan package.
The nominee Lucian Croitoru was part of Romania's team that negotiated the IMF aid package and is seen as a bold central banker with strong policy-making background.
Vital for the economy, the loans are conditional on deep fiscal reforms and painful budget cuts, which the IMF says are key to ensuring long-term policy stability.
These concerns intensified after the IMF postponed a review mission to Bucharest, due in the coming weeks, on the grounds it wanted to see a functioning government before it arrives.
The fund said it saw no interruptions to aid from political developments. But observers say wrangling over who creates Romania's next government may take months, or until after the November 22nd presidential election that has polarised all parties.
A parliamentary deadlock lasting beyond the vote would leave legislators just weeks to pass crucial IMF-prescribed laws.
The crisis began this month, when the Social Democrats (PSD) stormed out of a coalition government. This week they teamed up with the Liberal opposition to bring down the minority government.
Both groups, which control just over 50 per cent of the legislature, said they would oppose Mr Croitoru in parliament, despite his strong credentials.