UPDATE 2-Romania president picks PM, faces stiff opposition

* Romanian PM nominates cbank adviser for prime minister

* Lucian Croitoru helped negotiate IMF deal

* Faces tough battle to win parliamentary approval

(Adds details)

By Radu Marinas

BUCHAREST, Oct 15 (Reuters) - Romania's President Traian Basescu nominated respected central bank adviser Lucian Croitoru as prime minister on Thursday, in a move likely to meet stiff opposition in parliament and prolong a government crisis.

Economists warn that without a stable government in place quickly, Romania risks slipping on its committments to the International Monetary Fund and the European Union and face delays in disbursements of its 20 billion euro loan package.

Croitoru was part of Romania's team that negotiated the IMF aid package and is seen as a bold central banker with strong policy-making background.

Vital for the economy, the loans are conditional on deep fiscal reforms and painful budget cuts, which the IMF says are key to ensuring long-term policy stability.

These concerns intensified after the IMF postponed a review mission to Bucharest, due in the coming weeks, on the grounds it wanted to see a functioning government before it arrives.

The Fund said it saw no interruptions to aid from political developments. But observers say wrangling over who creates Romania's next government may take months, or until after the Nov. 22 presidential election that has polarised all parties.

A parliamentary deadlock lasting beyond the vote would leave legislators just weeks to pass crucial IMF-prescribed laws.

The crisis began this month, when the Social Democrats (PSD) stormed out of a coalition government. This week they teamed up with the Liberal opposition to bring down the minority government.

Both groups, which control just over 50 percent of the legislature, said they would oppose Croitoru in parliament, which has final say under Romanian law, despite his strong credentials.

"The Liberal Party will not give a single vote to the president's proposal," said Crin Antonescu, who heads the PNL.

DAMAGING POLITICS Commentators say economic policy, although prominent in debate, is not the main issue driving political warfare now.

Most say the crisis is a result of positioning by main groupings ahead of the presidential election, which pits Basescu, closely allied to the outgoing prime minister, against PSD leader Mircea Geoana and the PNL's Antonescu.

Basescu, the frontrunner, argued Croitoru's nomination would boost the country's response to recession and ensure aid.

The opposition accused him of being irresponsible to reject their candidate, an ethnic German provincial politician with no economic background, who enjoyed wide parliamentary support.

Commentators said Basescu's dilemma was that choosing Klaus Johannis could have weakened his re-election bid if the politician, a respected city mayor from Transylvania, was perceived as a sucessful government leader.

"Basescu does not want the (political) crisis to end," said political commentator Stelian Tanase.

Croitoru has 10 days to propose a cabinet and win approval from parliament. A history of feeble political alliances in Romanian legislature means that Basescu could still finagle sufficient backing.

If not, Romania would face the risk of early parliamentary elections if Croitoru or another candidate fail to be approved by the middle of December.

A recent opinion survey showed Basescu winning 37 percent of votes, against Geoana's 24 percent and Antonescu's 13 percent.

Financial markets gave Croitoru's nomination a mixed review.

"He is a specialist so the nomination is good," said Nicolaie Alexandru-Chidesciuc from ING Bank in Bucharest.

"But ... it is likely the political crisis will intensify.

Damage to the economy from political woes is already showing. The Romanian leu traded near this week's seven-month lows against the euro, while a government official said on Wednesday a planned eurobond issue would likely be postponed.

A relatively poor Balkan state of 22 million people, Romania went through a sharp economic reversal in the last year, because of the global financial crisis and weak economic policies.

(For a FACTBOX on five facts about Romanian PM designate Croitoru please click on [ID:nLE251620]; for an INSTANT VIEW please click on [ID:nLF575793]) (Additional reporting by Luiza Ilie and Marius Zaharia) (Writing by Justyna Pawlak; Editing by Ralph Boulton)