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The new Bulgarian government has relaunched a rapid entry into the Eurozone as a strategic priority for the country: Sofia meets the formal criteria, but for experts and public opinion the adoption of the Euro remains a controversial issue
After a significant slowdown due to the ongoing political instability in the country in recent years, Bulgaria's new government has once again made entry into the Eurozone one of its strategic priorities.
"Bulgaria's accession to the Eurozone is a key priority of the new government, on which we are working hard and in close coordination with our partners from the European Commission", said the new Prime Minister Rosen Zhelyazkov, shortly after taking office on January 16th.
Zhelyazkov, former president of parliament and an important figure in the centre-right GERB movement, leads a heterogeneous coalition, which emerged with difficulty after the October 2024 elections.
The new majority, formed by GERB, the Bulgarian Socialist Party and the populist movement "There is a people like this", found common ground in the need to form a government and put an end, at least for now, to the political instability which in the space of four years has led Bulgaria to six early elections.
Predictably, Bulgaria's membership in the Eurozone was placed at the top of the priorities of the new majority. Like all EU countries that are not yet part of it (with the exception of Denmark), Bulgaria has also committed to introducing the Euro when economic conditions allow it.
Of all the EU countries that still use their own national currency, Bulgaria has been the one that has most consistently pursued the objective, and is the only one currently part of the ERM II mechanism (since July 2020), which aims to stabilise exchange rates and which represents one of the convergence criteria for entry into the Euro area.
However, those who expected that the government, perhaps encouraged by the recent complete inclusion of Bulgaria in the Schengen area, would take advantage of the macroeconomic data to immediately push towards the adoption of the euro, were at least partially disappointed.
In her first public interview, Finance Minister Temenuzhka Petkova dampened the enthusiasm of those who wanted Sofia to immediately ask the European Central Bank for an exceptional convergence report, a necessary assessment to certify the country's preparation to become the 21st member of the "Euro club".
Petkova said she still had high hopes that Bulgaria would adopt the Euro on January 1, 2026, but added that the government would seek the ECB's opinion only after presenting the budget for 2025, which should happen no earlier than February 18th.
“I hope it is just a short slowdown, and that the report will be requested within the next few weeks”, Daniel Smilov, professor of political science at Sofia University "Sv. Kliment Ohridski" and programme director at the Center for Liberal Strategies in Sofia, told OBCT.
“This hesitation from my point of view is strange, as GERB has always placed entry into the Euro as a central and strategic priority for the country”. According to Smilov, which considers Bulgaria perfectly ready for the single currency, GERB’s hesitancy could be part of a “political theatre” to cast a bad light on the past management of finances by the main opposition movement, the reformist "Let's continue the change" (PP) and to present itself as the political entity responsible for the recovery of public finances.
Speaking to the press, Minister Petkova mentioned a budget hole of 18 billion leva (around 9 billion Euros) and blamed it on former PP Finance Minister Asen Vasilev.
However, not everyone is convinced that Bulgaria is really ready to join the Eurozone. According to economist Garabed Minasian of the Economic Research Institute in Sofia, the adoption of the single currency is not without risks.
According to Minasian, although the macroeconomic indicators largely respect the conditions for the Eurozone, “Bulgaria still lags significantly behind in terms of the degree of real convergence”. “For example”, Minasian told OBCT, “for 2023, the latest Eurostat data available, the Bulgarian GDP is only 38.5% of the average level in the EU, and prices are only 59.2% of the European average”.
These indicators, concludes Minasian, show that Bulgaria “has not yet reached an acceptable degree of real convergence to the Eurozone, and it is not ready for the adoption of the Euro”.
In its current pursuit, Sofia currently appears alone. Romania, which in recent years has often proceeded in parallel with Bulgaria on the path of European integration, has taken a different path on the Euro chapter.
Bucharest already missed several Euro adoption targets, and financial-banking analysts in Romania expect the country to join the Eurozone in 2035.
According to Valentin Lazea, chief Economist of the National Bank of Romania, “it’s not the time to discuss the Euro, because by 2027 we will not reach the 3% of GDP budget deficit criterion”.
In the beginning of the 2010s, argues Lazea, the country had the potential to join the Euro, which soon vanished due to the increase in public spending in the following years, combined with a lack of political will from the Romanian ruling class.
Despite the formal commitment to adopt the single currency, other Central European countries are also hesitating: in the Czech Republic, the government, opposition and public opinion are now aligned against joining the Eurozone.
Polls in Hungary, on the other hand, show a very positive attitude towards the Euro, but the lack of government decisiveness and poor economic performance keeps the country from making the single currency a viable perspective.
Supporters of rapid entry of Bulgaria into the Eurozone argue that, since the lev is already pegged to the Euro (after having been pegged to the German mark), the formal adoption of the single currency would represent a step without any particular shocks, especially in terms of inflation.
The advantages they expect are many: less risks for investments, fewer expenses related to exchange rates, more ease of doing business with economic partners in the Eurozone.
“With the Bulgarian currency pegged to the Euro, the country already follows the policies of the Eurozone”, maintains Smilov. “With the adoption of the single currency, the only significant difference will be to also be able to participate in the decision-making process”.
Critical voices instead argue that the adoption of the Euro entails a risk of substantial inflation and further imbalance between social classes, which in Bulgaria is already among the deepest in the European Union.
The adoption of the Euro is not only an economic issue, but also, of course, a political one. In an increasingly volatile international context, and with the war in Ukraine on the opposite side of the Black Sea, deeper integration into the core of the European Union is seen by many as the best strategy in terms of security, both economic and geopolitical.
The idea is to strengthen the country's fragile stability thanks to entry into the Eurozone, the last European "exclusive club" from which Bulgaria currently remains excluded.
However, not all political forces share this objective: the pro-Russian "Renaissance" nationalists have made the defence of the lev a heated political battle.
In the spring of 2023, the party collected 590,000 signatures (out of the 400,000 requested) to launch a referendum to postpone joining the Eurozone until at least 2034.
The referendum proposal was, however, later quashed by the Sofia parliament as unconstitutional, because a referendum may not be held on renouncing an international treaty to which Bulgaria is a party.
"Renaissance", today the third party in Bulgaria, has announced protests if the process of joining the Euro goes ahead.
In the meantime, Bulgarian society, according to the various surveys, remains split in half.
For Manisian, the divide emerges from divergent economic expectations in different sectors of Bulgarian society. “A large part of the local population fears that the country's hasty inclusion in the Eurozone will lead to accelerated price convergence and overall impoverishment”, argues Minasian. “Another part of the population believes that inclusion in the Eurozone will stabilise their wealth. This is where the division in question mainly comes from”.
For Smilov, however, the divisions are fuelled above all by political forces which, like "Renaissance", have everything to gain from fear-mongering.
Despite temporary jolts, Smilov argues, "I believe that adopting the single currency is the best of the strategies currently available to us".
Contributors to this article include Sebastian Pricop (HotNews, Romania), Petr Jedlička (Denik Referendum, Czech Republic), György Folk (HVG, Hungary).
This article was produced as part of PULSE, a European initiative coordinated by OBCT that supports transnational journalistic collaborations.
