Romanian government talks hampered by demand for fiscal clarity

BUCHAREST - One of the four Romanian parties due to join a coalition government demanded clarity over taxation and spending plans on Monday, hampering the talks as the country races to stem the political chaos after the presidential election was annulled.

The four pro-European parties reached a firm commitment to form a governing majority after the Dec. 1 parliamentary election in which three ultranationalist and hard-right groupings, some with overt pro-Russian sympathies, won more than a third of the seats.

But on Monday the opposition centrist Save Romania Union (USR) said it needed transparent discussions over the budget plans before the government talks could continue. The party and the current ruling Social Democrats (PSD) have forecast the fiscal deficit will reach 8.6% of economic output this year, the EU's highest.

The talks between the USR, PSD, their current coalition partners the centre-right Liberals, and the ethnic Hungarian party are due to continue on Monday, but with the parliamentary term due to end on Saturday, the pressure is on to reach a deal.

"There is no fiscal space left to continue with this type of governing," USR negotiator Cristian Ghinea told reporters. "The discussion was ... we want to join a government in which we know exactly what the spending is, what the taxes will be."

Ghinea added that PSD Prime Minister Marcel Ciolacu had said forming the government should come first, with budget talks to follow, which USR disagreed with.

"After much insistence on our part they presented possible tax hike scenarios, which we think is unacceptable," Ghinea said. "We must not lie to people, that is why people voted for extremists and radicals, because this political class has permanently lied."

While the current government could stay on in an interim capacity, it would not be able to approve a budget plan for 2025 or put forward a calendar to hold a new presidential election after Romania's top court annulled the vote after accusations of Russian meddling.

Far-right, pro-Russian candidate Calin Georgescu surged to a first-place finish that raised questions over the result after he had scored single-digit numbers in opinion polls before the first round vote on Nov. 24. Russia has denied any interference. Georgescu has called the court ruling an "official coup".

Outgoing President Klaus Iohannis will stay on until a new president is sworn in and will nominate a prime minister from an agreed governing majority.

The three other parties could barely scrape together a majority without the USR.

(Reporting by Luiza Ilie; Editing by Alison Williams)