June 25, 2010 / 9:08 AM / in 8 years

UPDATE 1-Romania court rejects austerity measures - agency

* Some measures on pensions against constitution - Agerpres

* Savings required for resumption of IMF aid

* Leu currency and blue chip stocks fall

(Adds analyst and market reaction, details on politics)

BUCHAREST, June 25 (Reuters) - Romania’s top court rejected some parts of a key austerity package related to pensions on Friday, endangering an IMF-led aid deal, local news agency Agerpres reported, citing judicial sources.

Disbursement of about 2 billion euros in aid from the International Monetary Fund and the European Union depended on the court’s approval of a government move to cut state wages by a quarter and reduce pensions by 15 percent.

The 20-billion-euro IMF-led aid package is vital for the recession-hit economy, and the court ruling hit the country’s currency and stocks. The court said an official announcement would follow shortly.

“This decision is a defeat for the government as it wasn’t able to make a constitutional law,” said Mircea Marian, political commentator at daily Evenimentul Zilei. “The letter of intent will not reach the IMF board by June 28 for sure.”

“The government will not be able to take a decision until the court explains the rationale behind its decision, which could take at least 10 days...”

Romania’s leu fell after the decision was reported and was down 0.6 percent on the day at 4.261 per euro by 0846 GMT EURRON=. The blue-chip stocks index also fell and was down 3.4 percent on the day .BETI.

The reported court ruling raises further questions over the government’s ability to push through reforms, after it narrowly survived a no-confidence vote earlier this month, showing its majority remained fragile. [ID:nLDE65E06I] (Reporting by Luiza Ilie, Sam Cage and Ioana Patran) ($1=.7453 Euro)

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