UPDATE 2-Romanian coalition MPs to abstain in confidence vote

* Government more likely to survive Wednesday’s motion

* Currency and stocks rise; cost of insuring debt falls

(Adds analyst comment, markets, IMF visit)

By Marius Zaharia

BUCHAREST, Oct 25 (BestGrowthStock) – All deputies from Romania’s
main ruling party and allied ethnic Hungarians will abstain from
a no-confidence vote in the government, a senior politician said
on Monday, improving its chances of surviving the motion.

For Wednesday’s vote, called over austerity measures to
comply with terms of an International Monetary Fund-led bailout,
the government needs only to stop the opposition gathering a
majority, meaning abstentions effectively count as support for
Prime Minister Emil Boc.

“The coalition has decided, the Democrat-Liberal party has
decided: the coalition’s parliament members will not participate
in the vote,” said Gheorghe Flutur, vice president of the ruling
Democrat-Liberal party.

The government hopes abstentions will help it maintain
discipline over sometimes unruly coalition MPs, some of whom
might otherwise be tempted to vote for the no-confidence motion
in what is effectively an anonymous ballot.

The opposition has 213 representatives in parliament and
would need another 23 votes for a majority to topple the
government in the 470-seat parliament.
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Graphic on party blocs http://r.reuters.com/cew68p

Analysis on Romania’s government [ID:nLDE624075]

Factbox on Romania’s austerity measures [ID:nLDE69L1LL]
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A group of independent parliamentarians will also probably
abstain from the vote, their leader Liviu Campanu told Reuters.

It is far from good timing for Boc, with an IMF team in
Bucharest to review the 20 billion euro ($28 billion) deal.

“Chances for the opposition to succeed are slimmer than they
might have been in the past … but popular dissent is quite
high and it might still be a close call,” said Elisabeth Gruie,
emerging markets strategist at BNP Paribas in London.

“However, whether or not the government remains in place,
people will still be focusing on the IMF meetings, what reforms
will be enacted and on whether the central bank will manage the
currency or not to support the economy.”

PLUNGING SUPPORT

Investment has begun pouring back into central Europe. But
Romania is struggling to attract funds because of its rocky
politics.

Support for Boc’s Democrat Liberal party has plunged to just
10 percent as public pay cuts and a hike in value added tax hike
hit home and unions are organising demonstrations in Bucharest
on the day of the vote.

Uncertainty over the government has hit the leu currency
(EURRON=: ) and bonds, which the finance ministry is underselling
because it generally refuses to meet investor demands for
interest of more than 7 percent.

The leu and blue chip stocks (.BETI: ) rose on Monday on
growing confidence the government would survive and the cost of
insuring Romania’s sovereign debt edged lower.

Analysts say defeat cou1d push the leu back towards the
all-time lows of around 4.40 per euro it hit in June, and may
push the finance ministry to abandon its 5-month-old bond yield
cap as funding needs reach a peak next month. [ID:nLDE68E1AT]
(Additional reporting by Ioana Patran; writing by Sam Cage;
editing by Andrew Roche)

UPDATE 2-Romanian coalition MPs to abstain in confidence vote