Bulgaria's centre-right GERB party refused on Thursday to form a new government, bringing the Balkan country closer to snap polls in the autumn.
Bulgaria is embroiled in a political crisis after the coalition government of reformist Prime Minister Kiril Petkov was toppled in a no-confidence motion last month and his PP party failed to muster enough support to form a new cabinet.
"A successful formula for support in this parliament cannot be found," Desislava Atanasova, a senior member of GERB told reporters after the party declined to form a government.
GERB is led by long-serving premier Boyko Borissov and is the second largest political faction in the parliament.
Amid high inflation, war in Ukraine and uncertainty in gas supplies, President Rumen Radev said he would now hold a new round of talks with political parties before a third and final attempt to form a government be made.
If the third attempt fails, as largely expected, Radev will have to appoint a caretaker government and call fresh elections, most likely in October.
The prolonged political gridlock is likely to imperil access to billions of euros in EU recovery funds for the European Union's poorest member state and hurt its prospects of joining the euro zone in 2024.
It could also to impact Bulgaria's efforts to secure stable natural gas supplies after Moscow cut off gas deliveries to the country, which was almost completely reliant on Russian gas, over Sofia's refusal to pay in roubles.
Petkov's shaky coalition government came to office last December on pledges to uproot widespread corruption. It has taken a strong pro-EU and pro-NATO stance against Russia following its invasion of Ukraine.
An eventual caretaker administration might seek to weaken Bulgaria's position against Moscow and seek to restart gas deliveries from Russia. It may also seek ways to ease diplomatic tensions after Petkov's government expelled 70 Russian diplomatic staff over espionage concerns.
(Reporting by Tsvetelia Tsolova; Editing by Frank Jack Daniel)
