BUCHAREST, Sept 18 (Reuters) - Romania's top court said on Wednesday that President Klaus Iohannis must appoint interim ministers after the ruling Social Democrat Party lost its junior coalition partner, even though the government has yet to win a confidence vote in parliament to stay in office.
Junior coalition party ALDE withdrew from the government in late August, and Social Democrat Prime Minister Viorica Dancila has 45 days to get a new cabinet line-up approved by parliament.
Iohannis has refused to appoint interim ministers until Dancila does so.
But the Social Democrats asked the Constitutional Court to rule on whether his refusal had led to a conflict between the two state institutions.
While the ruling does not alter Dancila's obligation to win approval in parliament, it sets a procedural precedent for interim appointments to avoid policy blockages in future.
Capital markets have been unfazed by the political crisis, with investors already expecting uncertainty and stalled policymaking ahead of a presidential election in November and local and parliamentary polls in mid- and late 2020.
EU and U.S. officials have criticised the governing alliance for an overhaul of the judiciary that they see as a threat to the rule of law, and for watering down anti-graft legislation. Expansionary fiscal and wage policies meanwhile have widened the country's budget and current account deficits.
"There isn't much policymaking to be stalled, let's be real," said Sergiu Miscoiu, a political science professor at Babes-Bolyai University.
"Politically, today's ruling does not change anything. The gain is that in the future blockages will be prevented."
Iohannis said he will appoint interim ministers to replace the three ALDE cabinet members who quit only after the Constitutional Court releases its explanation for Wednesday's ruling at a later date.
"If, however, Prime Minister Dancila wishes to put an end to this government crisis, the solution is ... simple: Go to parliament at once for a confidence vote," Iohannis said on Wednesday.
The Social Democrats are trying to cobble together a majority by recruiting lawmakers from other parties - including from ALDE.
ALDE withdrew from government days after its leader Calin Popescu Tariceanu lost a bid to become the sole pro-government candidate in November's presidential vote. The Social Democrats instead picked Dancila to challenge incumbent Iohannis, who is tipped to win based on opinion surveys. (Reporting by Luiza Ilie; Editing by Hugh Lawson)
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