By Radu-Sorin Marinas and Luiza Ilie
BUCHAREST (Reuters) - Romanian Prime Minister Victor Ponta was indicted on Thursday on charges of forgery, money-laundering and being an accessory to tax evasion, in the biggest case yet in a sweeping crackdown on corruption in the country.
Ponta, who was first charged in August, has repeatedly denied the accusations against him and on Thursday hit out at a "totally unprofessional" prosecutor, saying the charges had been fabricated.
He has resisted calls to resign and so far has the backing of his leftist party and its allies to stay in power.
Ponta, who took power in 2012 as the country's youngest ever premier, will become Romania's first sitting prime minister to be tried for graft. The case will now go to Romania's top court, though no date was set. Prosecutors have said he will remain free during the hearing.
Already wounded by a shock presidential election defeat last November and facing a national election next year.
The indictment comes at a delicate time for his government, which has just pushed through a divisive tax-cutting programme and may soon start talks for a new aid agreement with the International Monetary Fund.
After touting Romania's prospects for strong economic growth in a Facebook post, Ponta said the country's only problem was "the obsession of a totally unprofessional prosecutor to assert himself in his career by inventing and imagining untrue deeds and situations from 10 years ago".
He did not refer to any prosecutor by name.
Romania has been dogged by political instability since shedding Communist rule in 1989, but markets appear to have shrugged off the corruption case so far.
Although Ponta has some right to immunity from prosecution as a lawmaker, the charges against him relate to when he was not in office, meaning he cannot claim that immunity.
The ruling Social Democrat party may let him stay in his post for now, although the party will convene for a special congress on Oct. 11 when his position may come under scrutiny.
"Markets are unlikely to react to the news as long as there is no big change in public policies," said Dan Bucsa, an economist at UniCredit Research in London. "With a new Fiscal Code in place, investors will focus on Romania's negotiations with the IMF for a precautionary loan agreement."
By 1453 GMT, the leu
"There is a wide political consensus, so if Ponta were replaced it would probably not be seen as disastrous," one trader said. "Perhaps we would see a little volatility, depreciation pressure, but not in the long term and not very strongly."
President Klaus Iohannis, who had called on Ponta to resign when the case first began, said Romania's image would suffer because of it.
"In my view, the situation is more and more problematic for the prime minister, for the government and for the Social Democrat Party," Iohannis told reporters after a meeting of the country's supreme defence council.
"But we must admit that Romania's image has the most to suffer from this issue."
The inquiry into Ponta mainly concerns his time as a lawyer and accuses him of colluding with Dan Sova, a former transport minister in his cabinet who is also being investigated for corruption.
Thanks to a comfortable majority in parliament, Ponta has survived three opposition censure motions, most recently in June. He has vowed to serve a full term, but he did resign as head of the Social Democrat party.
"In a normal country, the impact from such a move (the indictment) would be radical and the prime minister immediately would quit his job," said political analyst Cristian Patrasconiu.
"Today's indictment is not surprising and it is a new element that dramatically narrows any space of political manoeuvring by Ponta. He has no future but he will cling to power."
(Writing by Matthias Williams; Editing by Kevin Liffey and Hugh Lawson)
