Bulgaria's government has resigned after less than a year in power, following weeks of street protests over its economic policies and its perceived failure to tackle corruption.
Prime Minister Rosen Zhelyazkov announced the decision in a televised address just minutes before parliament was due to vote on a no-confidence motion.
"Our coalition met, we discussed the current situation, the challenges we face and the decisions we must responsibly make," Zhelyazkov said, confirming that the government would step down.
"Ahead of today's vote of no confidence, the government is resigning," he said.
Bulgaria's largely ceremonial head of state, President Rumen Radev, had called for Zhelyazkov to resign.
The resignation is likely to usher in a period of prolonged political instability on the eve of the nation's entry into the euro zone on January 1.
Here's what we know about the situation in Bulgaria, which remains the most corrupt member state in the European Union.
Protests over latest budget
The reaction was muted on the streets of Sofia after the resignation but some were quietly optimistic on one point: the government had listened to the protesters.
Earlier this week, thousands of Bulgarians rallied in Sofia and dozens of other towns and cities, in what was just the latest in a wave of demonstrations highlighting public anger over endemic graft in government.
"We realise that the protest was against arrogance and conceit, this is not a social protest, but a protest for values," the outgoing prime minister said.
"It was not a meeting of political opponents over policies but over attitudes, and therefore it unites different components of Bulgarian society."
Many of the protesters are younger, urban professionals who strongly support Bulgaria's accession to the euro zone and want it to become more part of the European mainstream.
Bulgaria is the poorest member state in the EU, which it joined in 2007.
The protests began in late November when Zhelyazkov's government, composed of three parties, proposed a draft budget that included an increase in social security contributions and taxes on dividends to finance higher state spending.
Some of that spending was earmarked for police, security services and the judiciary — the very bodies that many Bulgarians have grown to despise over recent years.
The budget was withdrawn, but popular anger has persisted.
Many were already upset by other government actions, including a perceived crackdown on the liberal, pro-EU opposition that saw Blagomir Kotsev, mayor of the coastal resort of Varna, jailed for months on allegations of corruption, which he strongly denies.
Dimitar Markov, director of the Law Program at the Center for the Study of Democracy in Sofia said it was "an accumulation of things".
"The tension has been growing over time, and the budget was the tipping point," Markov said.
Euro membership looms
Some analysts said the protests could lead to real change.
"People realise that their will, when they express it, matters," said Vessela Tcherneva, deputy director at the European Council on Foreign Relations in Sofia.
"Whoever the next government is will be more aware and will need to be more accountable."
The president will now give the largest party in parliament, GERB, the mandate to form a new government but it is likely to struggle to find wider support.
If GERB fails, or rejects the mandate, two other parties will be given the opportunity. If they fail or refuse, President Radev will appoint an interim government and call a snap election.
This could pitch Bulgaria back into a cycle of repeated polls if no-one can form a functioning coalition.
Bulgarians remain split over the euro, polls show, and there is some concern that without strict government oversight, retailers will take advantage of public confusion over the conversion to jack up prices.
"The state has a critical role to make sure there are no major shocks to the system," said Mario Bikarski, senior Europe analyst at risk consultancy Verisk Maplecroft.
"In the absence of a budget and the absence of a government, the risks to the system are increasing quite a bit."
Asen Vassilev, leader of the opposition Continue the Change — Democratic Bulgaria (CC-DB) said this is "the first step towards Bulgaria becoming a normal European country".
"The next step … is to hold fair and free elections, not elections marred by electoral manipulation, as was the case with the last parliamentary elections," he added.
ABC/Reuters
