Romania’s pro-EU establishment parties have reached a heavily-anticipated agreement to form the country's next grand coalition government. Led by former interim President Ilie Bolojan as Prime Minister, the new government is supported by the Social Democratic Party (PSD), the centre-right National Liberal Party (PNL), the centrist-liberal Save Romania Union (USR), the Democratic Alliance of Hungarians in Romania (UDMR) and the MPs representing national minorities.

The inauguration of the new government follows weeks of tense negotiations and comes a month after the second round of Romania’s Presidential election re-run, in which Bucharest’s (now former) Mayor Nicușor Dan secured a surprising and comfortable victory over his run-off rival, George Simion, leader of the main opposition Alliance for the Union of Romanians (AUR).

In line with the coalition agreement, the PSD – also the largest party in parliament – will control the largest number of ministries, including those responsible for justice, health, labour, energy, agriculture and transport. The centre-right PNL will have control over ministries responsible for finance, education, EU funds and interior affairs, while the centrist-liberal USR will be in charge of defence, foreign affairs, economy and digitalization, as well as the environment. The Hungarian minority UDMR will have a limited role, controlling the Ministry of Development and Ministry of Culture.

In view of growing fiscal concerns over the high budget deficit, the government's immediate priority will be to stabilize public finances, with the Bolojan Cabinet widely expected to present a series of fiscal and tax policy changes.