By the end of February Bulgaria will formally request the preparation of extraordinary convergence reports by the European Commission (EC) and the European Central Bank (ECB). This was announced by the Finance Ministry on Monday after Minister Temenuzhka Petkova presented to the Eurogroup the country's progress on its path towards euro adoption.
According to Capital Weekly, the move has been agreed with EU partners, so unless there is a serious surprise, Bulgaria should receive positive evaluations from Frankfurt and Brussels by mid-2025. However, they will probably wait for the EU inflation data for January, which Eurostat is due to publish on 24 February, according to the institution's calendar. "The Bulgarian finance minister stressed that the preliminary estimates give us confidence that we will meet all the nominal convergence criteria," the official statement said.
Covering the requirements
The request for the decisive step towards the euro is a clear sign that Petkova's hearing went smoothly and the budget plans she presented were well received. The issue became pivotal after the draft budget presented by the caretaker Glavchev cabinet at the end of 2024 outlined serious fiscal problems facing the country, which were to be solved with dubious one-off measures and an increase in social security contributions from 2026.
The regular cabinet of Rosen Zhelyazkov, formed a month ago, withdrew this draft budget and called for a new one. This has not yet been officially presented, with the government only giving itself a one-week reprieve from the originally announced February 14 deadline. However, reportedly, the figures are ready and they were convincing enough for eurozone finance ministers. They are expected to be presented to the public within the nest few days. It will be interesting how the complex task has been solved, both to shrink the deficit to 3% of GDP while not cutting spending and/or already enacted wage and pension increases, and not to raise taxes.
Formally, the requirement for fiscal sustainability is that the country is not in an excessive deficit procedure by the EC, but the reports often also focus on the expected development of the country. That is why Bulgaria was also expected to present its medium-term fiscal program at the Eurogroup.
As for the other requirement - inflation, which until recently was considered to be the only obstacle, the data published at the end of last week by the National Statistics Institute (NSI) showed a level on the verge of meeting the Maastricht criterion, based on flash estimates for the euro area countries. Rounding to the first decimal place, it can even be assumed that the criterion has already been met, and this will be even more pronounced with data from the current month. At the Eurogroup meeting, Commissioner Valdis Dombrovskis also pointed out that things in terms of inflation "are moving in that direction, but it is relatively close to the reference value."
What's next?
After Bulgaria requests extraordinary convergence reports, the Commission and the ECB have to decide whether the country meets all the criteria for the euro. Last year, in their regular assessments, the two institutions practically ticked all the boxes except inflation, so there are unlikely to be any obstructions. Traditionally, the final step towards the euro is preceded by a probing that there will be a positive response.
Thus, probably at the end of May, or the beginning of June at the latest, Bulgaria will get the green light to join the euro area. Formally, the decision takes a little more time because, based on the report's conclusions, the Commission makes a proposal to the EU Council, and it decides whether a country can introduce the single European currency.
Bulgaria's target date for changing the lev to the euro is January 1, 2026, and given the several postponements, the financial system is now largely ready. However, there are still uncertainties (including regulatory ones) and businesses will have a lot of work to do. Moreover, some of the changes start long before 2026, such as dual pricing.
By the end of February Bulgaria will formally request the preparation of extraordinary convergence reports by the European Commission (EC) and the European Central Bank (ECB). This was announced by the Finance Ministry on Monday after Minister Temenuzhka Petkova presented to the Eurogroup the country's progress on its path towards euro adoption.
According to Capital Weekly, the move has been agreed with EU partners, so unless there is a serious surprise, Bulgaria should receive positive evaluations from Frankfurt and Brussels by mid-2025. However, they will probably wait for the EU inflation data for January, which Eurostat is due to publish on 24 February, according to the institution's calendar. "The Bulgarian finance minister stressed that the preliminary estimates give us confidence that we will meet all the nominal convergence criteria," the official statement said.
