ANALYSIS - Romanian vote looks set to prompt aid delay

By Radu Marinas

BUCHAREST (Reuters) - The Romanian opposition's rejection of a new cabinet on Wednesday will likely prompt the IMF to hold back a badly-needed aid package, as politicians are unlikely to approve a budget before a deadline next month.

Analysts expect parties to focus on winning votes ahead of a presidential poll this month rather than pushing through a tough 2010 budget by Dec. 10 as demanded by the International Monetary Fund in order for it to release a 1.5 billion euro loan tranche.

"There's no way we can get the (aid) tranche," said political commentator Mircea Marian. "What's next? I see more political wrangling and uncertainty on the horizon, bad for reforms and harmful to a quick recovery."

The election on Nov. 22 is widely expected to have no clear winner and so result in a run-off on Dec. 6, further complicating efforts to achieve consensus on the budget.

Before rejecting centrist President Traian Basescu's candidate for prime minister, Lucian Croitoru, the opposition gave a mandate for a budget to his predecessor Emil Boc, who has stayed on since his government fell last month.

But the Social Democrats (PSD) and the Liberal opposition have said they would oppose planned mass sackings of 150,000 state workers in 2010 and cuts to pensions, which are a condition of IMF aid and likely to be key to next year's budget.

"(Parties) will impose their own amendments. I expect these to be numerous and the final vote to be delayed until after Dec. 10," said Cristian Mladin, analyst at BCR bank in Bucharest. "So the budget could be passed by the end of the year, but it will be late and the tranche could be delayed until next year too."

He said the turmoil could result in an increase in CDS spreads, which represent the cost of insuring debt against default, and more expensive financing for Bucharest. The leu could also weaken to around 4.35 per euro, from 4.29 now.