Romanian president Traian Basescu nominated on December 17 caretaker prime minister Emil Boc to retake the job on a permanent basis, with the European Commission and the International Monetary Fund (IMF) urging the country to quickly adopt a budget for 2010 to release the next tranche of the international bailout funding for the country.

Boc's cabinet became the first Romanian government in 20 years to lose a motion of no-confidence in parliament in October after coalition partner Social Democrats left government over Boc's decision to sack Social Democrat interior minister Dan Nica.

Basescu refused to nominate Sibiu mayor Klaus Johannis for the job, despite the wide parliamentary backing for his nomination, leaving Boc to carry out the head of government duties on a caretaker basis.

Boc's nomination will have the support of his own Democrat-Liberals and the National-Liberal party, which has opposed Basescu's two previous nominations, but the National-Liberals will not join the government and would remain in opposition.

Following his nomination, Boc said: "We need quickly a government that would give the country stability. We need the state budget for 2010 to be voted by parliament at the beginning of January. The budget has to be within the commitments Romania has, which means a budget deficit of 5.9 per cent of gross domestic product (GDP)."

The budget deficit ceiling was imposed by the terms of the 20 billion euro bailout deal Romania signed in May 2009 with the IMF and EU. Romania needed the funds to cover public sector wages after the economic recession hit tax revenues harder than expected. In exchange, Bucharest agreed to reform the public administration and reduce public spending.

A joint team of IMF and EC staff visited Bucharest on December 14-16 to resume talks suspended in October because of the political instability in Romania.

The mission said on December 17 that it "found that good progress had been made to reach the 2009 budgetary target of a cash deficit of 7.3 per cent of GDP."

"Regarding 2010, the mission and the authorities agreed at technical level a set of fiscal consolidation measures amounting to about 2.5 per cent of GDP, mostly on the expenditure side of the budget. Taking into account the better than expected macroeconomic outlook for 2010, these measures seem sufficient to achieve the government cash deficit target of 5.9 per cent of GDP set in the programme," the EC said in a statement.

"The new government is encouraged, when it is in place, to rapidly endorse the draft budget and to submit it to Parliament for adoption. To achieve a sustainable economic adjustment, it is also important to continue progress with important structural reforms such as the fiscal responsibility law and the pension reform," the statement said.

If Romania's parliament passes the budget within the agreed constraints in January, that would release the next tranche of funding under the bailout deal, with the EU funds alone amounting to one billion euro.