The first official results in Romania's elections have indicated a narrow win for the right wing Liberal Democrat party.
With 71% of votes counted, the Liberal Democrat (PDL) party, close to President Traian Basescu, has won 34% of the vote for both parliament and the senate.
This compares to nearly 33% for the Social Democrat PSD, which is heir to the communist leadership overthrown in a 1989 revolt.
The official results have come as a surprise, after exit polls late last night indicated a five-point win for the Social Democrats over the Liberal Democrats.
The two parties are now set to wrestle over who will head the next government, although the PDL has an upper hand because of its close links with President Basescu.
Coalition talks may depend on outgoing Prime Minister Calin Tariceanu's Liberal Party (PNL), likely to play the role of kingmaker if it forges an alliance with one of the bigger parties.
The PNL is projected to win 18%.
Prolonged wrangling over the next government threatens to delay crucial decisions on the 2009 government budget, which economists say needs to calm market jitters about the Romanian economy with decisive belt-tightening measures.
A policy deadlock in recent months has heightened concerns about potential financial crisis in the poor Black Sea state of 22 million people, which depends on foreign cash to finance development.
Economists say Romania is now more vulnerable than many of its neighbours and may need foreign support, such as the funding help sought by Hungary from the International Monetary Fund.
Already, in response to a policy logjam, two rating agencies have downgraded Romania's debt to sub-investment grade in recent weeks, making Romania the only EU member with such status.
