WOOD Flash – Romania politics: everything has been quiet, until…

Today (17 August), PSD (Social Democrat Party) is expected to initiate a motion of no confidence. The motion will most likely be voted on within the next two weeks, but it could be delayed until early-September. If the motion goes ahead, we believe there is a realistic chance that it could be passed, and the government would fall. While this would not necessarily result in an immediate change in the government (the current government could be in place until the elections, with limited powers), a successful vote of no confidence would increase the risk of policy noise up until the elections, which could complicate the already uncertain macro environment. An extended period without a government with full powers would also limit the ability to implement measures to contain the pandemic, as well as measures to ease the economic impact, in the context of an increasing number of new cases of COVID-19. Romania has reported the second-highest figure for cumulative new cases per 100,000 people over the past 14 days amongst the larger European countries, after Spain. Local elections are due to take place on 27 September 2020, while general elections should take place towards the end of the year, in December. Both could be delayed, depending on the evolution of the pandemic, but we would not expect a delay of more than a couple of months. A centre-right coalition led by PNL still appears to be the most likely scenario, after the general elections, based on the most recent polls.