Romania’s outgoing President, Klaus Iohannis, appointed left-wing Social Democrat Prime Minister Marcel Ciolacu to form a new government on Monday, following an agreement between three pro-European parties on a coalition that secured a parliamentary majority.

The coalition, which is set to receive a vote of confidence from parliament later in the day, consists of Ciolacu's Social Democrats, the centre-right Liberals, and the ethnic Hungarian UDMR party. Together, they hold about 54% of legislative seats, including minority representatives.

The country’s election process was thrown into disarray after a little-known far-right, pro-Russian candidate unexpectedly won the first round of the presidential vote on November 24, raising concerns of potential Russian interference. The top court annulled the election result.

The new government will now be tasked with setting a timeline for a new presidential election, which will be held in two rounds. The coalition has agreed to back a single presidential candidate to prevent the far-right from seizing power, with former Liberal Party leader Crin Antonescu currently nominated.

Ciolacu acknowledged the challenges ahead, emphasizing the importance of restoring investor confidence. Additionally, the new cabinet will face the difficult task of reducing Romania's budget deficit, projected to reach 8.6% of GDP this year, the highest in the EU, with plans for tax increases by 2025.