**Romania remains in political deadlock more than three months after Ilie Bolojan’s pro-European coalition government fell to a no-confidence motion on May 5, 2026 (281-4 votes), backed by the Social Democrats (PSD) and far-right AUR.** Bolojan, whose PNL-led cabinet had pursued austerity to address the EU’s largest budget deficit, continues as caretaker prime minister with limited powers. Multiple presidential nominees for a successor government (including Eugen Tomac and Adrian Veștea) failed to secure parliamentary majorities amid intra-coalition splits, particularly within the PNL, and refusal by parties to repeat the prior PSD-PNL-USR-UDMR arrangement. Negotiations have stalled through summer recess, with President Nicușor Dan seeking a pro-EU minority or technocratic cabinet to avoid snap elections that could benefit AUR (leading in polls). Key near-term pressure stems from the August 31, 2026 deadline for EU recovery fund reforms and payments, though parties recently passed limited legislation to unlock portions of the funds. Traders weigh these barriers against constitutional timelines for new investiture attempts and the risk of further instability before the 2028 parliamentary elections.