Romanian court overturns PM nomination, upsetting plans for early election

Romania's top court overturned President Klaus Iohannis's re-nomination of ousted Liberal Party leader Ludovic Orban as prime minister on Monday, potentially derailing plans to trigger an early parliamentary election.

Earlier this month, lawmakers toppled Orban's three-month-old minority government, part of a ploy to bring on early elections. Iohannis, an ally of the centrist Liberals, promptly nominated Orban to form a new government. To trigger snap elections, parliament must reject two successive proposed cabinets within 60 days. Orban's Liberals, the PNL, are confident of winning an early election.

Parliament was supposed to vote on the first proposed cabinet later on Monday, but the opposition Social Democrat Party (PSD) asked the Constitutional Court to block Orban's nomination. The PSD argued a nominee for prime minister must be able to form a parliamentary majority and Orban, having lost a no-confidence vote, did not meet this condition. The court agreed.

"The Romanian president will proceed to designate a new candidate for the prime minister job," the court said. "Designating a candidate must have the purpose of ensuring a new parliamentary majority is developed so that a new government can be formed." Since Orban's nomination was intended to fail a confidence vote in parliament, the wording of the court's ruling casts doubt on whether snap elections could be triggered at all.

The Social Democrats - parliament's largest party - would not benefit from an early election. They have lost roughly half their support since winning parliamentary polls in late 2016. Orban's ousted cabinet is running the country on an interim basis, with limited powers, as widening budget and current account deficits put pressure on assets and rating outlooks. The Romanian leu dropped to a record low on Monday, partly driven by political uncertainty.

"We see more chances for bad news rather than for good news at the end of the day," Raiffeisen said in a daily note. "The more time passes until a new Cabinet is voted or until two PM proposals are rejected, the fewer chances are that early elections would take place until end-June."