He was appointed prime minister in 1997, after a UDF-led coalition won snap parliamentary elections in April that year, triggered by a political crisis and street protests against the Bulgarian Socialist Party's (BSP) government.
Kostov je izabran za premijera 1997. godine, pošto je koalicija predvođena UDF-om pobedila na vanrednim parlamentarnim izborima u aprilu iste godine, prouzrokovanim političkom krizom i uličnim protestima protiv vlade Bugarske socijalističke partije (BSP).