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Romanian Prime Minister Emil Boc's resignation follows weeks of street protest against austerity.
Boc’s surprise departure came a day after the European Union and International Monetary Fund cut the country’s economic growth forecast for this year, to a maximum of 2 percent.
Boc’s support collapsed after he slashed public sector salaries by a quarter, froze pensions and raised sales taxes in order to meet the terms of an international bailout.
More from GlobalPost: Emil Boc, Romanian prime minister, resigns over anti-austerity protests
Opinion polls gave his popularity rating at below 20 percent, and demonstrators have been braving freezing temperatures to protest against low living standards in a country which, with an average pre-tax salary of around 460 euros ($600) a month, is second only to neighbouring Bulgaria as the EU’s poorest.
“I made this decision to ease the tension in the country’s political and social situation,” Boc said in a resignation speech.
Despite their unpopularity, Boc’s reforms have been praised by the IMF and the EU as helping get the economy back on track after Romania was forced to seek a 20 billion euro bailout from them in 2009. A second 5 billion euro standby loan was agreed last year.
Ahead of Boc’s resignation, the two organizations and the World Bank issued a statement which, apart from the gloomy growth forecast, was generally positive, clearing the way for them to free up 505 million euros in funds from the loan.
“Continued fiscal consolidation has improved Romania’s credibility,” their joint statement said. “Encouragingly, the government also succeeded in paying off a substantial amount of arrears and unpaid bills.”
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EU and IMF officials said they were confident the country would still meet its commitments under the loan agreement and that the deal would not be affected.
That reflects the reality that real power in Romania lies more with President Traian Basescu, the dominant figure in Boc’s center-right Democratic Liberal Party, than with the prime minister.
Basescu appointed Justice Minister Catalin Predoiu as the new head of government and seems likely to resist opposition calls to bring forward parliamentary elections scheduled for November.
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