Romania’s four pro-European parties failed to break a 15-day deadlock in coalition talks, leaving the country without a functional government or credible deficit-reduction plan just one week before the interim cabinet’s mandate expires on 20 June, according to Euractiv.
President Nicușor Dan convened emergency talks at Cotroceni Palace (the presidential residence) on Thursday amid mounting pressure from Brussels, where failure to submit an approved austerity package by 30 June risks forfeiting billions in EU Recovery and Resilience Facility funds.
The political paralysis coincides with a spiralling fiscal crisis: Romania’s budget deficit reached 8.6% of GDP in 2025, far exceeding the EU’s 3% threshold and triggering an Excessive Deficit Procedure. The European Commission demanded a credible roadmap to slash the deficit to 7% by year-end, warning that absent “effective corrective action,” Romania faces suspension of €29.2 billion in cohesion funds and RRF allocations.
The deadlock centres on two irreconcilable visions, as the Social Democrats (PSD) advocate tax increases targeting dividends and micro-enterprises, mirroring December’s controversial “small train” ordinance that hiked dividend taxes to 10% and lowered micro-enterprise thresholds.
Conversely, USR (Renew Europe) demands public spending cuts including wage freezes, while the Hungarian minority party UDMR struggles to mediate. Tensions escalated to the point where UDMR leader Kelemen Hunor jokingly proposed “couples therapy” for the feuding PSD and USR negotiators.
Parallel disputes over prime ministerial appointments further complicate negotiations. President Dan, the Liberals (PNL), and USR back Regional Development Minister Ilie Bolojan for PM. The PSD, parliament’s largest party, insists on a rotating premiership starting with a PNL candidate followed by a PSD nominee, arguing anything less would disrespect their electoral mandate.
The impasse has triggered public unrest. Unions excluded from fiscal consultations staged protests at Cotroceni Palace on Thursday, echoing December’s demonstrations against austerity measures.
