Bulgaria on track to win EU approval to join the euro in 2026
Bulgaria would be the second country to adopt the euro in the past decade. PHOTO: REUTERS
Bulgaria on track to win EU approval to join the euro in 2026
Bulgaria is close to clearing a major hurdle toward euro adoption, putting the Black Sea nation on course to join the currency area i n 2026 .
The minority government of Prime Minister Rosen Zhelyazkov is awaiting an assessment of its readiness on June 4, when the European Commission and the European Central Bank (ECB) release their convergence reports.
Based on the latest forecasts from the European Union's executive, Brussels is increasingly confident that Bulgaria will meet the criteria for fiscal prudence and currency stability, according to EU officials familiar with the matter. A positive assessment may open the path for adopting the euro from the beginning of 2026.
The decision has not been finalised and could still change, but officials are optimistic the assessment will be a positive one, especially given Bulgaria's recent progress on inflation.
Once that happens, EU leaders would give their blessing at a summit in June, people familiar with the matter said. The final conversion rate between the lev and the euro would be set by the bloc's Finance Ministers – something that could happen as early as July.
A European Commission spokesperson told Bloomberg that the executive arm is now concluding its assessment of Bulgaria's convergence criteria in coordination with the ECB, and intends to adopt its convergence report in early June.
They did not comment on possible results of that assessment. A spokesperson for the ECB declined to comment.
Adopting the euro would be a rare victory for Bulgaria's government, whose predecessors have all argued that joining the single European currency will help the bloc's poorest country close the gap with richer member states.
But their efforts had faced resistance from euro-area leaders, who were skeptical of approving new members after Greece's sovereign debt crisis and a series of money-laundering scandals in the Baltics.
Still, governments and businesses have argued euro adoption will help Bulgaria get closer to the EU's inner circle of decision makers as the bloc seeks to demonstrate unity at a time of geopolitical turbulence.
It would also lower transaction costs and may help attract foreign investment, which for years has been suffering due to political instability and the country's rule of law troubles – Transparency International ranks it as one of the EU's most corrupt.
Bulgaria would be the second country to adopt the euro in the past decade and one of only a handful to do so since the start of the debt turmoil that nearly caused the currency zone to implode. The last economy to join was Croatia in 2023.
Other EU nations have been less eager to join, opting instead to retain their independent monetary policy and the greater latitude that offers in managing a crisis.
With the lev pegged to the euro for more than quarter of a century under a currency board agreement – a tool the country used to escape a hyperinflation crisis in the late 1990s – Bulgaria does not have an active monetary policy, and the switch is unlikely to have major implications.
With a history of narrow deficits and one of the EU's lowest debt-to-GDP levels, Bulgaria has for years fulfilled most formal criteria, and has now managed to bring inflation within the target limits after Russia's full-scale invasion of Ukraine triggered a spike in prices.
While the majority of political parties in Parliament back the euro adoption, inflation fears have divided Bulgarians. Only a fifth of them approve the 2026 target date, according to a poll published on May 22 .
'We're familiar with what's being done with regard to the so-called convergence reports,' Bulgarian Central Bank Governor Dimitar Radev told reporters in the city of Pleven on May 20 .
'The assessment is positive,' he said. 'Our assessment is that we're completely ready.' BLOOMBERG
Join ST's Telegram channel and get the latest breaking news delivered to you.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
40 minutes ago
- Straits Times
Romanian president could nominate a prime minister this week
Romania's President Nicusor Dan attends a press conference, on the day of the NATO Bucharest Nine (B9) meeting, in Vilnius, Lithuania, June 2, 2025. REUTERS/Ints Kalnins/ File Photo BUCHAREST - Romanian President Nicusor Dan said on Tuesday he could nominate a prime minister this week provided pro-European parties reach an agreement on measures needed to lower the European Union's highest budget deficit and prevent a ratings downgrade. Centrist Dan, who won a divisive presidential vote in May that saw the far right gain ground, must form a ruling majority that has until the end of June to approve deficit cutting measures to avoid a downgrade to below investment grade. The European Commission, ratings agencies and analysts have said Romania cannot reduce its shortfall over seven years to the EU's 3% threshold as agreed without hiking taxes, but Dan and the four pro-European parties have proved reluctant to enforce unpopular measures, focusing instead on cuts to state spending. "There is a hierarchy of priorities, first cutting useless state spending, then merging some institutions, rescheduling some investments to 2026 and lastly possible tax hikes," Dan said during a visit to neighbouring Moldova. "I hope we will reach to the tax side as least as possible." Dan said the parties had identified a list of 60-80 possible measures, but had yet to agree on any. The president, who has a semi-executive role, added that pending the talks he could nominate a PM this week. Two sources told Reuters ratings agencies had told a London panel in May they were ready to downgrade Romania from the last rung of investment grade unless they saw convincing measures including tax hikes. The next rating review is in August. Earlier this month the European Commission opened the possibility of freezing some EU funds for Romania next year. 'SOLID PLAN' NEEDED Brussels, ratings agencies and the IMF have said hikes to value added tax or changes to Romania's flat 10% tax on income would be the most effective. "It needs to be a solid plan, two big measures that everyone can price are better than 50 that nobody can evaluate," one of the London sources said. "How can anyone trust you that you'll do what's needed in the 7-year adjustment plan?" Claudiu Nasui, a lawmaker from the centre-right Save Romania Union, one of four pro-EU parties engaged in talks, is a strong proponent of state spending cuts inspired by Argentinian President Javier Milei. He told Reuters that he had identified 34 billion lei ($7.73 billion) worth of cuts that could be made in the second half of the year without cutting healthcare, education and defence. However, they included cutting state-funded investment schemes that were easier to tap than EU funds with little oversight, a political instrument for mayors that parties were unlikely to approve cutting. "Any measure to cut the deficit will make parties unpopular, spending cuts or tax hikes, you just need political will," Nasui said. "I often look at a street trash bin outside my office, there are always people rummaging in it. Hiking taxes will not hit us, but it will hit those poor people." REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
2 hours ago
- Straits Times
EU's new Russia sanctions to target energy sector and banks
European Commission President Ursula von der Leyen speaks during a press point on 18th package of sanctions against Russia, in Brussels, Belgium June 10, 2025. REUTERS/Yves Herman BRUSSELS - The European Commission has proposed an 18th package of sanctions against Russia for its invasion of Ukraine, aimed at Moscow's energy revenues, its banks and its military industry, European Commission President Ursula von der Leyen said on Tuesday. The new package proposes banning transactions with Russia's Nord Stream gas pipelines as well as banks that engage in sanctions circumvention. "Russia's goal is not peace, it is to impose the rule of might ... strength is the only language that Russia will understand," von der Leyen told a news conference. The Commission has also proposed lowering the Group of Seven nations (G7) price cap on Russian crude oil to $45 a barrel from $60 barrel in a bid to cut Russia's energy revenues. Von der Leyen said that the oil price cap will be discussed at a G7 meeting this week. "My assumption is that we do that together as the G7. We started that as G7, it was successful as a measure from the G7, and I want to continue this measure as G7," she said. The proposal also lists more vessels that make up Russia's shadow fleet and oil trading companies. "The next round of EU sanctions against Russia will target Russia's energy revenues including the shadow fleet, its military industry and its banking sector," EU chief diplomat Kaja Kallas said. EU countries will start debating the proposal this week. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
2 hours ago
- Straits Times
Slovak PM seeks control of 'national identity' issues in potential clash with EU law
FILE PHOTO: Slovak Prime Minister Robert Fico inspect a guard of honour prior his meeting with Milos Vucevic Serbia Prime Minister, in Belgrade, Serbia, November 21, 2024. REUTERS/Zorana Jevtic/ File Photo Slovak leader Robert Fico is seeking to change the country's constitution and install what he calls "a dam against progressivism" by declaring that Slovakia has legal precedence on "national identity" issues, such as family and gender. Critics of populist Prime Minister Fico, including some legal experts, fear the amendment will threaten Slovakia's commitments to European Union laws and international treaties. Fico has taken an increasingly anti-liberal stance in rights issues, building on his pro-Russian and pro-Hungarian international policy position. He has promoted closer relations with Russia and China and criticised sanctions on Moscow and the EU's military aid for Ukraine. The amendment states that only male and female will be recognised as genders, and that school curriculums must respect the constitution, including its cultural and ethical positions. It will also tighten adoption rules. "The Slovak Republic maintains sovereignty above all in issues of national identity," the amendments say, in particular on cultural and ethical issues. A report accompanying the bill states it is fully in line with EU law, including the issues of precedence of European law. Some opposition lawmakers however, as well as a group of lawyers including five former judges of the constitutional court, warn it could have far-reaching consequences. "The proposed amendment is contradictory to the commitments resulting from European Union law and international law and creates a legal basis to diverge from values of the European Union and the Council of Europe," the group said. "The amendment would weaken or even preclude enforcement of international law and European Union law in Slovakia," it said, adding that it included vague language, creating legal uncertainty and room for extensive interpretation. Fico's fractious leftist and nationalist coalition has a thin majority dependent on independents, but the amendment has won backing from the opposition conservative Christian Democrats as well as two members of the opposition Slovensko party. This may be enough for the amendment to reach the required 90 votes in the 150-seat parliament when it comes before lawmakers in the next days. "This is not a defence of identity or sovereignty, this is a conscious and deceitful act aimed at severing Slovakia from the system and structure of international protection of human rights," Amnesty International said in a statement. "The proposal threatens all people in Slovakia, but above all the most vulnerable - children, women, the poor, who are exposed to discrimination or inequality based on age or gender identity." Fico's government has accused liberal protesters of planning a coup, changed laws to tighten rules for non-governmental organisations, increased control over public broadcasters, and attacked independent media as foreign agents. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
