UPDATE 2-Romanian president nominates Liberal Party leader Ilie Bolojan as PM

Centrist President Nicusor Dan on Friday nominated Liberal Party leader Ilie Bolojan to be Romania's prime minister, clearing the way for the formation of a government after weeks of stalemate following a divisive presidential election.

Bolojan's cabinet, which has yet to be announced, will ask for a vote of confidence next week. Provided it gets parliamentary backing, the incoming government will then start to tackle the highest budget deficit in the European Union and has until the end of the month to approve fiscal measures or risk losing EU funds. It could also face a ratings downgrade from the last rung of investment grade.

Senate speaker Bolojan, 56, is a widely respected former mayor and county council head with a track record for carrying out reforms. "It will not be an easy ... but I am convinced that we can overcome this difficult situation and put Romania back on the right path," he said.

His cabinet will likely include his Liberals, centre-right Save Romania Union, ethnic Hungarian party UDMR and centre-left Social Democrats, or PSD, the country's biggest party. It initially baulked at supporting another party's leader as premier, but gave its backing following a deal that could mean Bolojan gives up his post in 2027, before parliamentary elections the following year.

"It is in Romania's interest that the government is supported by a solid majority, and the parties have understood this," Dan said. Dan's election win defeated the far right, but with the country highly polarised, parties are expected to struggle to agree on tax hikes needed to contain the deficit.

Dan had promised before the May presidential election not to increase value added tax, the main rate of which stands at 19%, with two other rates at 5% and 9%. As Romania's rating hangs in the balance, Fitch and S&P were expected to visit Romania in June-July.

A source with knowledge of talks between Romania, the European Commission and ratings agencies told Reuters at least one agency was looking for credible tax and spending cuts measures worth at least 2% of GDP.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)