New Government in Romania: a large coalition of large challenges

On 23 June, the Romanian parliament voted a vote of assurance for the fresh coalition government led by Ilie Bolojan (read Ilie Bolojan) – the leader of the centre-right National-Liberal organization (PNL), and until late the president (February to May 2025). The Cabinet formed 4 groups: the PNL, the centre-left Social Democratic organization (PSD), the Liberal Union for the Salvation of Romania (USR), and representing the Hungarian number of the UDMR. The coalition is besides supported by Members belonging to the parliamentary group of national minorities (17 mandates). The fresh ruling majority has a full of about 2 thirds of all votes in the Chamber of Deputies and the Senate. The main opposition force will be led by George Simion, a national-conservative and Eurosceptic Union for Romanian Unity (AUR), whose members left the plenary area demonstrationally before voting on the vote of confidence.

As part of the coalition agreement, the parties besides agreed on the introduction of a rotational cast of the Prime Minister's office, which will be held by representatives of the 2 largest parties – PNL and PSD. Under the agreement in April 2027 – i.e. in the mediate of the current parliamentary word – the typical of the centre-right is to step down from his position in favour of the Social Democrat. This model besides functioned during the PSD–PNL–UDMR coalition regulation between 2021 and 2024. Both parties will besides share the chair chairs of the Chamber of Deputies and the Senate.

The fresh government will be forced to introduce many unpopular fiscal reforms, which, on the 1 hand, will lead to friction within the coalition's ranks, and on the another hand strengthen the opposition AUR. This may jeopardise the stableness of the coalition, but the possible hazard of early elections seems to be low at present.

Comment

• The establishment of the Bolojan government and the preceding election of Nicușor Dan as president end with a seven-month period of deep political instability triggered by the cancellation of the presidential election on 6 December 2024 (seeRomania: Constitutional Court nullifies presidential elections), followed by the breakdown – in May 2025 – of the following parliamentary elections in December 2024 and supported by the UDMR of the ruling coalition of PSD and PNL (see Romania: Coalition crisis as a consequence of the first circular of presidential elections).
• The fresh government majority faces the task of restoring Romanians' seriously weakened assurance in the political class and state institutions (including the Constitutional Court). Distortion of the mainstream electorate was 1 of the reasons for the spectacular success previously unknown to Călin Georgescu in the cancelled presidential election (he won the first circular with a score of 23%). Even half of Romanians believe that the decision to cancel the vote was incorrect and had political grounds.
• The key challenges for the fresh government will be to repair state finances and to stimulate the stagnation economy. In 2024 GDP growth was only 0.8–0.9%, and public debt has increased rapidly over the last 5 years – from about 35% of GDP in 2019 to 55% in 2024 (and almost surely exceeds 60% in this year). Although Romania has been subject to the EU excessive deficit procedure since 2020 (it is triggered erstwhile the country's yearly budget deficit exceeds 3% of GDP) and since then should aim for a systematic debt reduction, it reached a evidence of 9.3% of GDP in 2024.
• The fresh government has announced a comprehensive fiscal improvement programme, mainly involving a emergence in a number of taxes, including VAT (from 19% to 21%), excise duty, dividend taxation (from 10 to 16%) and property tax. It is besides planned to introduce a taxation on surplus profits in the banking sector or on profits from cryptocurrency operations. The authorities are besides announcing major budgetary cuts (including a simplification of around 20% of staff among officials) and sealing the taxation strategy (including the improvement of the taxation enforcement agency, ANAF).
• The fresh coalition will surely be subject to severe tensions, which puts its sustainability in question. Already during the protracted negotiations on the formation of the government (they began de facto after Dan's triumph in the presidential election) there were clear disputes concerning, among others, taxation issues. Moreover, USR is simply a organization programally reluctant to PSD (and to any degree besides PNL). It built its position primarily on consistent criticism of the groups holding power since the early 1990s. However, the Koalicians will combine the desire to avoid early parliamentary elections that would strengthen AUR. The connecting origin will besides be president Dan, who supported the formation of the current coalition.