Eurozone Ineligibility The European Central Bank (ECB) has dealt a blow to Bulgaria’s hopes of joining the eurozone, citing high inflation rates as the main obstacle. The country’s inflation rate is currently 5.1%, significantly higher than the 3.3% target required for membership.
Disappointment in Sofia The news is likely to disappoint Bulgarian officials, who had hoped to join the eurozone by mid-2025. The country’s Prime Minister, Dimitar Glavchev, has promised to request a further assessment from EU authorities once all euro criteria are met.
Economic Convergence According to the ECB, Bulgaria has made limited progress in converging its economy with the eurozone since 2022. The country needs to demonstrate stable exchange rates, sound public finances, and economic stability before being considered for membership. This requires Bulgaria to address its high inflation rates and ensure price stability.
Political Turmoil The announcement comes as Bulgaria is experiencing political turmoil following recent national and European elections. The far-right Vazrazhdane party has gained significant support, and there are concerns that abandoning the lev may not be a popular move among voters. A Eurobarometer survey shows that only 49% of Bulgarians favor joining the eurozone, with 64% believing it will lead to higher prices.
Eurozone Membership Criteria To join the eurozone, countries must meet strict criteria, including low inflation rates, stable exchange rates, and sound public finances. The ECB monitors inflation rates in potential member states, comparing them to the EU’s best performers. The ECB has warned that remaining EU members such as Czechia, Hungary, Poland, and Romania must also align their legislation with EU norms and join the exchange rate mechanism to avoid wild currency fluctuations.
SOURCE: Ref Image from Investment Executive
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