Bulgaria likely won’t join eurozone in January 2025 despite government goal

7 months ago 31

Bulgaria may join the eurozone at the end of 2025, Bulgarian National Bank Governor Dimitar Radev said on Thursday, missing the previous 1 January 2025 goal of the government and the main political parties in Sofia.

Radev is currently in Washington, where the spring meetings of the World Bank and the International Monetary Fund are held.

“Joining the eurozone later in 2025 is possible, and, at this stage, more probable scenario,” the Bulgarian central bank chief told state news agency BTA in an interview.

Radev also criticised the country’s state budget for the year, bemoaning its lack of measures to fight inflation, which remains the only formal obstacle to Bulgaria’s accession in the eurozone.

“The global and our own experience shows that (reducing inflation) can best be achieved through measures for effective management and control of spending,” the Bulgarian banker added.

Others have also recently questioned Bulgaria’s timely accession to the Eurozone.

In its annual forecast, released last week, UniCredit Bulgaria predicted that political instability would delay Bulgaria’s adoption of the euro until 2026.

Politically, things are indeed still up in the air for the EU’s poorest country, especially as it faces yet another snap parliamentary election and is currently governed by a caretaker cabinet. However, most analysts believe Bulgaria will get the green light in 2025, though no country has yet joined the economic group in the middle of the year.

Bulgaria is expected to meet the inflation criterion in December this year at the latest.

Bulgaria is currently one of the countries in the world cited as an example of the highly successful operation of a currency board. The Bulgarian currency (the lev) is pegged to the euro, with a fixed value of 1.95583 leva to €1, which has not changed in the last 22 years.

“In a currency board regime, the Bulgarian central bank has more limited options to control inflation due to the lack of some of the classical instruments to do so. Against this backdrop, the role of fiscal policy (the budget) in influencing prices is even greater,” said Radev as he criticised the Finance Ministry’s increased spending on social programmes.

“We are investing heavily in this process, and we are achieving concrete results in terms of institutional framework, capacity and logistics. Of course, there is more to be done,” Radev said about the process of preparing for euro adoption, for which his central bank and Bulgaria’s private banking sector are already at a very advanced stage.

(Krassen Nikolov | Euractiv.bg)