government ousted in vote of no confidence

The government was ousted yesterday in a vote of no confidence, following an internal conflict between Prime Minister Sorin Grindeanu and the leader of the social democrats, Liviu Dragnea, with the Social Democrats withdrawing support for their own government. Consultations with President Klaus Iohannis for the new PM nomination will follow next week, with President Iohannis and the minority parties now having an increased role in the decision. We see no major changes in the key economic policies, while the devaluation of the local currency visible over the past few days is likely to be contained by central bank interventions, in our view. We do expect, however, potential further delays in some decisions (e.g., the selection of the boards of some SOEs, and listings). Still, the other scenario, of the current government staying in place without the support of its own party, would have probably led to even more uncertainties and delays, in our view.