Bulgaria's inflation data indicates a slight acceleration, with the Harmonized Index of Consumer Prices (HICP) rising 2.1% year-on-year in December from 2.0% in November. However, the more crucial takeaway is that Bulgaria is now on the verge of meeting the last remaining Maastricht criterion for euro adoption, thanks to a steady decline in inflation throughout the year. This progress brings the country within reach of formally applying for eurozone membership from the start of 2026.
Has Bulgaria reached the required inflation threshold?
Not entirely. The formal requirement under the price stability criterion is that Bulgaria's average inflation over one year must not exceed by more than 1.5 percentage points the inflation rate of the three best-performing EU member states. According to the methodology used by the European Commission (EC) and the European Central Bank (ECB), as of late 2024 these three low-inflation performers are Lithuania, Finland, and Italy. Based on available figures-some of which are preliminary and subject to revision-their average inflation over the past 12 months stands at 0.97%, setting the benchmark for Bulgaria at 2.47%.
Bulgaria's inflation rate, calculated under the same methodology, is slightly above 2.62%, just 0.15 percentage points above the target.
Technically, this means Bulgaria has not yet fully met the criterion unless certain outliers-countries with inflation rates significantly deviating from the EU average due to local factors-are excluded from the calculations. In the previous convergence report, the EC excluded the three countries with the lowest inflation rates (Denmark, Finland, and Belgium), while the ECB recognized only Finland as an exception. If two of the three countries with the lowest inflation rate were removed from the calculation, Bulgaria would meet the requirement. However, this decision rests with the institutions preparing the reports.
When will Bulgaria meet the inflation criterion?
As early as next month. Given the prevailing inflationary trends, it is almost guaranteed that Bulgaria will fall within the required range when the January data is published. Even if domestic inflation picks up, the so-called base effect plays in Bulgaria's favor-early 2024 saw inflation at around 4%, whereas the reference countries recorded figures close to or below 1%. This means the gap will continue to narrow unless Bulgaria suffers an unexpected inflationary shock. Once the criterion is formally met, Bulgaria can request an extraordinary convergence report. If all conditions are confirmed as met, the country could receive the green light to join the eurozone.
How long will Bulgaria remain in compliance?
It is difficult to predict. Inflation in Bulgaria is expected to rise slightly in the coming months, but similar trends are already observed in many eurozone countries. Therefore, Bulgaria is unlikely to have only a brief eligibility window lasting just a few months. Historically, the country has had extended periods of compliance with the inflation criterion, only deviating due to major economic shocks such as the global financial crisis, the COVID-19 pandemic, and the energy crisis.
However, Bulgaria may soon face challenges meeting other Maastricht criteria, particularly fiscal sustainability. While the country is not under an excessive deficit procedure, concerns about public finances-especially in the 2025 draft budget proposed by the caretaker cabinet that has already stepped down-increase the risk of future non-compliance. A government's reliance on one-off measures with uncertain effects to patch fiscal gaps could quickly undermine Bulgaria's standing.
When should the government request a convergence report?
As soon as possible. Parliament has mandated the government to submit the request no later than two weeks after Bulgaria meets the price stability criterion. However, there is no obstacle to submitting it earlier, as the EC and ECB typically work with the latest available data when preparing their reports, a process that takes several months. Consequently, their calculations would likely be based on January or later data, by which time Bulgaria should already comply.
Given that an elected government took office on January 16, submitting the request should be one of the top priorities for the new finance minister.
When could Bulgaria аdopt the еuro?
The original parliamentary resolution set a target date of July 1, 2025, provided Bulgaria met the criteria by the end of 2024. That deadline has now passed, and meeting the technical requirements within such a short timeframe appears highly challenging.
For instance, the Ministry of Finance has yet to release for public consultation the necessary amendments to the ordinance, which regulates cash register operations-a critical update for businesses to display prices in both levs and euro.
Moreover, European institutions are unlikely to make exceptions to established procedures. This makes January 1, 2026, the most realistic date for Bulgaria's eurozone entry.
Bulgaria's inflation data indicates a slight acceleration, with the Harmonized Index of Consumer Prices (HICP) rising 2.1% year-on-year in December from 2.0% in November. However, the more crucial takeaway is that Bulgaria is now on the verge of meeting the last remaining Maastricht criterion for euro adoption, thanks to a steady decline in inflation throughout the year. This progress brings the country within reach of formally applying for eurozone membership from the start of 2026.
