Bulgaria defies presidential pushback to embrace euro by 2026
Bulgaria is returning to a path expected to allow it to join the eurozone in 2026, reports the "Financial Times". The ruling authorities are disregarding clear opposition from the president, who warns of a potential price shock and the loss of some citizens' savings.
Bulgaria's adoption of the euro was postponed last year when inflation in the country exceeded the permissible threshold required for membership. Now, with inflation having dropped to 3.5% in April, Bulgaria expects the European Commission to confirm at the beginning of June that the country meets the criteria for joining the eurozone.
Bulgaria aims to join the eurozone by 2026
Bulgarian Prime Minister Rosen Zhelazkov said last week that they expect a positive convergence report. "Joining the euro will only strengthen sovereignty for Bulgaria — we will participate in the decision making process of the European Central Bank," Bulgarian economist and former Deputy Prime Minister Atanas Pekanov told "Politico".
However, Bulgarian President Rumen Radev has distanced himself from the euro, proposing to hold a referendum, which in practice is intended to delay Bulgaria’s entry into the eurozone. Given the current parliament, which supports the common currency, this scenario is extremely unlikely.
The European Commission announced on Tuesday that it is concluding its assessment of Bulgaria's convergence and plans to adopt a report at the beginning of June. Every member of the European Union that has not yet adopted the common currency must demonstrate economic alignment with other member states. This means, among other requirements, controlling inflation, which should be within 1.5 percentage points of the three eurozone countries with the lowest inflation. It is also necessary to meet other criteria regarding currency and economic stability.
For many years, Bulgaria maintained low inflation, but in 2021, inflation sharply rose when Russia cut off gas supplies to the country, followed by Moscow's invasion of Ukraine in 2022. It was only at the beginning of last year that Sofia managed to bring inflation closer to the EU target of 3%.
Prime Minister Zhelazkov is trying to reassure Bulgarians, ensuring that eurozone membership will not negatively impact their savings denominated in levs. In his view, Bulgaria's president and "a few ultra-nationalist parties" openly criticise the common currency, fuelling fears of "price shocks" and the loss of some citizens' savings. Zhelazkov assured that the state will guarantee the safety of Bulgarian consumers even after the introduction of the euro.
Previous experiences of countries that joined the eurozone show that price increases do indeed occur, but they can be controlled. In Croatia, inflation remains around 4% this year. It stabilised after the adoption of the common currency in 2023.
