Czech President Vaclav Klaus has appointed a conservative leader to become the country's new prime minister.
Following last month's parliamentary elections, Petr Necas's Civic Democratic Party and two new parties - the conservative TOP 09 and the centrist Public Affairs - agreed to form a centre-right coalition that would hold 118 seats in parliament's 200-seat lower chamber.
"We need a stable, hard-working cabinet that will quickly deal with the state budget," Mr Necas said.
His party wants to gradually eliminate the deficit, which is expected to reach 5.3% this year.
The coalition wants to carry out healthcare and pension reforms and fight corruption. It also proposes to reduce social benefits and charge tuition at universities.
It has no target date for adoption of the euro currency. Mr Klaus asked Mr Necas on June 4 to lead coalition talks. The discussions are expected to conclude soon, and the president is expected to appoint Mr Necas's new government by mid-July.
The administration must seek a confidence vote in parliament within 30 days.
The Czech Republic has been run by a caretaker government since a three-party coalition led by the Civic Democrats lost a confidence vote in March 2009, in the middle of the Czech EU presidency.
Mr Necas was social affairs minister in the previous government.
The caretaker government formally resigned on Friday but was asked by Mr Klaus to govern until the new government is appointed.