By Jan Strupczewski
BRUSSELS (Reuters) -Euro zone finance ministers recommended on Thursday that Bulgaria become the 21st member of the euro zone starting January 1, 2026, backing earlier positive assessments of the country’s readiness from the European Commission and the European Central Bank.
“The Eurogroup agreed today that Bulgaria fulfils all the necessary conditions to adopt the euro,” Paschal Donohoe, who chairs meetings of euro zone finance ministers, told a press conference.
The recommendation will now be formally adopted by all 27 EU finance ministers on Friday and then by EU leaders on June 26.
The exchange rate at which the Bulgarian lev will be converted into euro will be set by EU finance ministers at their meeting in early July, giving Bulgaria six months to prepare the technical transition for the start of the year.
Bulgaria has been striving to switch its lev to the euro since it joined the European Union in 2007.
But after such a long wait, many Bulgarians have lost their initial enthusiasm, with 50% now sceptical about the euro, according to a Eurobarometer poll in May. Some Bulgarians fear the currency switch will drive up prices.
CRITERIA
To get the positive recommendation, Bulgaria had to meet the inflation criterion, which says that the euro candidate cannot have consumer inflation higher than 1.5 percentage points above the three best EU performers.
In April, the best performers were France with 0.9%, Cyprus with 1.4% and Denmark with 1.5%, which put Bulgaria with its 2.8% just within the limit.
The euro candidate country also cannot be under the EU’s disciplinary budget procedure for running a deficit in excess of 3% of GDP. Bulgaria meets this criterion with a budget deficit of 3% in 2024 and 2.8% expected in 2025.
The country’s public debt of 24.1% of GDP in 2024 and 25.1% expected in 2025 is well below the maximum level of 60%, and its long-term interest rate on bonds is well within the two-percentage-point margin above the rate at which the three best inflation performers borrow.
Finally, Bulgaria had to prove it had a stable exchange rate by staying within a 15% margin on either side of a central parity rate in the Exchange Rate Mechanism II.
This was easily done because Bulgaria has been running a currency board that fixed the lev to the euro at 1.95583 since the start of the euro currency in 1999.
Bulgaria’s euro adoption will come three years after the last euro zone expansion, when Croatia joined the single currency grouping at the start of 2023.
The accession of Bulgaria into the euro zone will leave only six of the 27 EU countries outside the single currency area: Sweden, Poland, Czech Republic, Hungary, Romania and Denmark.
None of them have any immediate plans to adopt the euro either for political reasons or because they do not meet the required economic criteria.
(Reporting by Jan StrupczewskiEditing by Rod Nickel)
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