Author: Khatia Davlianidze, UGSPN Research Fellow
Dissolution of the Government
On May 5, Romania’s coalition government dissolved as a result of a vote of no confidence brought by the “Social Democratic Party – PSD” and the “Alliance for the Union of Romanians – AUR”.
Ilie Bolojan’s cabinet, which consisted of the “National Liberal Party – PNL”, the “Save Romania Union – USR”, the “Democratic Alliance of Hungarians in Romania – UDMR/RMDSZ”, and the “Social Democratic Party – PSD”, was approved on June 23, 2025.
Context of the Approval of Bolojan’s Cabinet
Presidential elections were held in Romania on November 24, 2024, in which the majority of votes were won by ultra-nationalist Călin Georgescu. Due to illegal campaign financing by a “third party” and Russian interference in the elections, the Constitutional Court of Romania annulled the voting results and barred Călin Georgescu from participating in the repeat presidential elections.
Following the annulment of the results of the presidential elections held in November 2024, subsequent elections were held on May 4, 2025, in the first round of which the majority of votes went to the far-right, eurosceptic George Simion.
Since Crin Antonescu, the candidate nominated by the ruling coalition (“PSD” + “PNL”), failed to advance to the second round of the presidential elections, “PSD” left the alliance, and Prime Minister Marcel Ciolacu resigned from office. Following Marcel Ciolacu’s resignation, Cătălin Predoiu (“PNL”) was appointed as acting Prime Minister.
On May 18, the second round of the presidential elections was held, in which the pro-European Nicușor Dan secured victory. The composition of Romania’s future government depended precisely on the outcome of the presidential elections.
According to the Constitution of Romania, if the Parliament rejects two proposed options for the Prime Minister and the composition of the cabinet within 60 days, the President declares the legislative body dissolved and schedules parliamentary elections within a 90-day period.
Based on consultations held with political parties, Nicușor Dan nominated Ilie Bolojan (“PNL”) as the candidate for Prime Minister in June. According to the agreement reached between the parties, Bolojan was appointed as Prime Minister on the condition that he would leave the position in 2027, and a representative of the “Social Democratic Party” would take his place.
The Main Challenge of Bolojan’s Government
The main challenge for the administration approved in June 2025 was reducing the highest budget deficit in the European Union. The new government had to manage to prevent a further downgrade of its credit rating and ensure the receipt of approximately 10 billion euros from the European Union recovery funds. The situation was further complicated by the fact that Nicușor Dan had promised before the presidential election that he would not increase the value-added tax; however, according to the assessments of the European Commission and leading rating agencies (“Fitch” and “S&P”), Romania had to raise taxes in order to reduce the deficit to the 3% limit established by the European Union.
In order to avoid a fiscal collapse of the state, Ilie Bolojan’s cabinet was forced to make tough decisions, which involved increasing the standard VAT rate and the excise tax (on fuel, alcohol, and tobacco), as well as freezing state pensions and the salaries of citizens employed in the public sector. Additionally, the restructuring of state enterprises was planned – their merger, closure, and the partial listing of strategic assets on stock exchanges which was accompanied by a sharp reduction in expenditures for education, culture, and the social sphere.
In parallel with tax increases and spending cuts, the Romanian leu depreciated to a record low against the euro, which caused the inflation rate in the country to increase even further. Despite the measures taken, the country’s credit rating remains downgraded, and the fulfillment of the European Union funding criteria is also at risk. Ultimately, this extremely strict economic policy pursued by Bolojan’s government caused public protest in the country and sharp confrontation among political parties at the end of 2025 and the beginning of the current year.
Why Did It Collapse?
The dissolution of the ruling coalition and the vote of no confidence against Ilie Bolojan’s government were driven by several key political and economic factors. Although “PSD” was a member of the coalition and initially supported the strict economic measures implemented by the Prime Minister, they recently began distancing themselves from the fiscal reforms and limiting their scope. According to the plan, Bolojan was supposed to lead the country until 2027 and then hand over power to “PSD” based on a rotation principle, however, the Social Democrats likely anticipated that remaining in a government forced to implement unpopular tax measures would destroy their future electoral chances.
By passing a vote of no confidence against the government, “PSD” evaded responsibility for the existing economic difficulties and blamed them on the remaining members of the ruling coalition – “PNL” and “USR”.
The factor of the ultra-nationalist “Alliance for the Union of Romanians – AUR”, whose rating significantly increased amid its radical anti-Bolojan rhetoric, also played a crucial role in these processes. George Simion, the leader of the eurosceptic party AUR”, condemns Romania’s “submission” to Brussels and advocates for a multi-vector foreign policy course. The party’s main goal is the unification of Romania and Moldova, and the reincorporation of the historical region of Bessarabia to the country. Due to territorial claims expressed toward neighboring states, Simion has been declared persona non grata in Ukraine and Moldova. Regarding his position on the Russia-Ukraine war, he does not openly condemn Russian aggression, opposes providing military assistance to Ukraine, and considers the Ukraine’s territorial integrity to be a “matter of negotiations.”
Fearing that “AUR” would steal their middle-class voters, in the spring of 2026, “PSD” and the opposition far-right party “AUR” led by George Simion found common ground and passed a vote of no confidence against the Prime Minister. They cited Bolojan’s “impoverishment of the population” and the “fraudulent sale of state assets” as the official reasons. The Social Democrats used the depreciated national currency (leu) and the rising inflation rate to reinforce the narrative that the Prime Minister’s strict “technocratic” reforms were punishing ordinary Romanians.
Notably, the measures implemented by Bolojan directly threatened the patronage network and institutional leverage that have sustained the “Social Democratic” party apparatus for decades. Thus, the vote of no confidence initiated by “PSD” was driven not by disagreements over fiscal policy, but by an instinct for self-preservation.
What Will Happen?
The President of Romania, Nicușor Dan, called the dissolution of Ilie Bolojan’s government through a vote of no confidence an “unpleasant” fact, though he noted that this mechanism is a legitimate right of the Parliament under a democracy. At this stage, Ilie Bolojan remains as acting Prime Minister, while the President assumes the role of a guarantor of stability to prevent political chaos and economic collapse in the country.
Nicușor Dan opposes calling snap parliamentary elections because, in his view, against the backdrop of the current political and economic crisis, as well as the rising popularity of the far-right “AUR”, this would bring even greater destabilization to the country.
Currently, the President is holding consultations with political parties, and a new candidate for Prime Minister will highly likely be named in the coming days. The President’s goal is to present a figure as quickly as possible who will form a solid coalition and continue the implementation of reforms critically important for the country.
It is worth noting that the next review by rating agencies is scheduled for August of this year, which is why the country needs to approve an effective and reform-oriented government in the shortest possible timeframe. In addition, the deadline is approaching for the adoption of those reformist laws that are necessary to unlock more than 10 billion euros in financial assistance from EU funds. Under an interim government, however, initiating new legislation or issuing emergency decrees is impossible.
The “National Liberal Party – PNL” and the “Save Romania Union – USR” rule out cooperation with “PSD”. “PSD” itself, as the largest political group, demands that their candidate be nominated for the post of Prime Minister. Highly likely, this party will not support a candidate from any other political alliance. Furthermore, due to their “wavering” position regarding fiscal reforms, it is not in the President’s own interest for “PSD” to come to power.
Given the tense relations between the parties, there is a high probability that Dan will nominate a politically neutral, non-partisan figure for the position of Prime Minister and form a technocratic government. The President stated that he already has technocratic candidates in mind, though he did not name specific individuals. Thus, Romania faces a crucial challenge – the country must manage to approve a pro-European, capable cabinet in the shortest possible time. Otherwise, the created political vacuum will give far-right forces (George Simion’s “AUR”) a real chance to come to power and revise the country’s foreign policy course. Amid the crisis following the collapse of Ilie Bolojan’s government, dealing with this challenge is hindered by the fact that currently, no mainstream party wants to take upon themselves the political price of the heavy economic reforms that the future cabinet will have to implement.