BUCHAREST (Reuters) - Romania's prime minister is heading for victory in parliamentary elections on Sunday that could set off another round of a power struggle with the rightist president and complicate talks for a new IMF deal.
Prime Minister Victor Ponta's leftist Social Liberal Union (USL) will win most votes and possibly a clear majority, according to opinion polls. But analysts say President Traian Basescu may use his powers to ask one of his own allies to try to form a government.
Any prolonged period without a new administration in place would unnerve markets and raise questions about how the country would obtain a new International Monetary Fund deal once the current agreement expires in early 2013.
The leu fell to a record low against the euro in August, during an attempt by Ponta to remove the conservative Basescu from office, using tactics which the European Union and United States said undermined the rule of law.
At the time, Basescu said he would never again name Ponta as prime minister. Last week, he said only that he would appoint someone in the best interests of the country.
One possibility would be for Basescu to ask someone other than Ponta from within the Social Liberal Union to become prime minister, using the argument that the USL is not a party, but rather a coalition of different political groups, according to analysts.
If the USL falls short of a majority, he could also ask one of his allies from the Right Romania Alliance (ARD) - in second place in polls with about 20 percent - to try to form a coalition.
"Even if Ponta is elected by voters and nominated by Basescu with a secure majority, scope for damaging discord with Basescu in the medium term remains," said James Goundry, an analyst with IHS Global Insight.
The USL has scored at least 57 percent in three opinion polls published in December.
The former communist country has made progress in some areas since the 1989 revolution that overthrew communist dictator Nicolae Ceausescu, but lags regional peers Poland, Hungary and the Czech Republic and struggles to supply running water and reliable electricity to some of its 19 million people.
Long-term reforms such as privatizations and an overhaul of the health sector have failed to materialize, as the economy struggles to recover from a deep recession.
Romania's complicated electoral system - combining constituencies and proportional representation - favors large parties. The USL has benefited from disenchantment with Basescu and the previous government which pushed through unpopular austerity measures such as salary cuts and higher sales tax.
Less than half of the electorate is likely to vote, according to analysts, due to a deep dissatisfaction with Romania's political class that many voters view as corrupt.
"Romania's political class is all horrible," said Anton Popescu, who lives off a pension of 900 lei ($250) each month. "I have no hope for better times after the election, I just hope it won't be worse than it already is."
Reporting by Sam Cage; Editing by Jason Webb