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Romanian Prime Minister Sorin Grindeanu speaks during a no-confidence motion in Bucharest, Romania, June 21, 2017. Inquam Photos/George Calin via REUTERS

(reuters_tickers)

By Luiza Ilie and Radu-Sorin Marinas

BUCHAREST (Reuters) - Romania's ruling Social Democrats will nominate a new prime minister on Monday, their leader said, after ousting their six-month-old cabinet and edging closer to ending political deadlock.

With opposition parties abstaining, the Social Democrats (PSD) and their junior coalition partner ALDE voted 241-7 to topple Prime Minister Sorin Grindeanu in a no-confidence motion on Wednesday.

They withdrew their support from him a week ago, saying he had failed to uphold an ambitious governing programme that had won the coalition a sweeping election victory in December and a comfortable parliamentary majority.

A push by Grindeanu's government to decriminalise some corruption offences triggered massive street protests in February, the biggest in Romania since the collapse of Nicolae Ceausescu's communist rule in 1989.

The unrest forced the government to rescind its decriminalisation decree.

Observers say many Social Democrats have been unhappy with Grindeanu's failure to relax the anti-corruption rules, and want a new premier to do more to protect party seniors facing graft charges, including PSD leader Liviu Dragnea.

Grindeanu refused to resign, accusing Dragnea, who holds the party in a tight grip, of trying to centralise all power.

Centrist President Klaus Iohannis, who has said he will only approve a candidate for prime minister who does not face pending investigations or trials, has called political parties for consultations on Monday.

Romania's president endorses a premier after consultations. The appointee then needs to secure a vote of confidence from parliament.

"BACK TO NORMAL"

"Concerns over potential attempts to weaken anti-corruption legislation could return to the forefront," said Sergiu Miscoiu, political science professor at Babes-Bolyai University.

"Protesters' vigilance remains high."

Coalition infighting has delayed policymaking in a country which is the European Union's fastest-growing economy but one of its poorest.

"Romania is back to normal," Dragnea told reporters.

"I'm absolutely convinced the president will continue to be interested in Romania’s stability and that ... on Monday he will accept our ruling coalition's nomination for a prime minister. If he have a PM designated on Monday, we may have new cabinet approved by the end of next week."

The leu currency <EURRON=D2> eased away from a four-and-a-half-year low against the euro and rose 0.3 percent after the vote, reflecting market relief that policy gridlock could soon end.

"Some political uncertainties have dissipated," ING Romania chief economist Ciprian Dascalu said.

"The no-confidence vote revealed that there is a parliamentary majority that can support a new government, theoretically."

The PSD's governing programme envisions further tax cuts and public sector wage and pension cuts. The leu could come under further pressure this year over concerns about overshooting the EU's 3-percent budget deficit ceiling.

"We maintain our current view of a 2017 deficit at 3.4 percent of GDP," Erste Bank said in a note.

(Editing by Andrew Roche)

Reuters