Coalition party leaders in Germany have reached a breakthrough in talks to form a new government, according to Reuters who cited party sources.

Germany’s Chancellor Angela Merkel entered into talks with a rival party earlier this week in a last-ditch effort to form a coalition government. This after months of political uncertainty and deadlock in the euro zone’s largest economy.

Merkel, the head of a conservative alliance made up of the Christian Democratic Union (CDU) and its Bavarian sister-party the Christian Social Union (CSU), met with Martin Schulz, the head of the Social Democratic Party (SPD), for preliminary talks.

The SPD had previously refused to enter into another coalition government given that its voters punished it in the last election for its previous alliance. But after coalition talks between Merkel and two other parties failed to find an agreement, the SPD has changed its stance.

Merkel sounded optimistic ahead of the talks, commenting last Sunday that she believed an agreement “can be done,” but the SPD’s Schulz vowed to extract concessions from the CDU/CSU on many of its key policies.

If the parties do find enough common ground this week to proceed, the SPD must then get backing for the deal from its members at the party’s congress later in January. If that succeeds, then the parties will proceed to full-blown coalition talks.

At best, a government could be sworn in late March or early April, according to some experts.

Talks between Germany’s political parties have taken place since an election last September failed to produce an overall majority for any party, although coalition governments are common in Germany.

The latest talks come after months of failed negotiations between Merkel’s conservative alliance and smaller parties, the Greens and pro-business Free Democrats, failed to form a coalition government.

The stakes for the latest talks are high given the changing political landscape in Germany, however. The election in September saw the far-right Alternative for Germany (AfD) become the country’s third largest party and enter the German Bundestag for the first time, unsettling the political establishment and many voters.

The center-left SPD has been reluctant to re-enter a coalition with Merkel’s conservative bloc as its previous alliance seems to have put voters off with the party garnering just 20 percent of the vote in the September election, its worst result since World War II.