PRESS RELEASE
26 June 2024
Bulgaria meets all the criteria, only inflation is yet to be complied
with for euro area membership according to the regular convergence reports
for 2024 by the European Commission and the European Central Bank.
It is expected that by the end of the year this criterion will be fulfilled
too and Bulgaria will request an ad hoc report
Today, the European Commission (EC) and the European Central Bank (ECB) have published the 2024 Convergence Reports in which they assess the progress made on the path to the euro area by the six Member States committed to adopt the euro: Bulgaria, Czechia, Hungary, Poland, Romania and Sweden. Convergence reports are published at least once every two years or when specifically requested by a Member State to have its readiness to join the euro area assessed, as Latvia did in 2013.
Bulgaria meets all the criteria, only inflation is yet to be complied with for euro area membership according to the regular convergence reports for 2024 by the European Commission and the European Central Bank. Bulgaria fulfils three of the four numerical criteria for membership, namely: the stability of public finances (budget balance and government debt), the exchange rate, and the long-term interest rate. Bulgaria fails to fulfil only the criterion on price stability, and inflation is expected to fall in the coming months which would enable Bulgaria to successfully meet the last challenge towards its euro area membership. It is expected that by the end of the year this criterion will be fulfilled too.
The budget balance in 2023 was negative at 1.9% of GDP, with a defined limit for the general government deficit of 3% of GDP. The general government gross debt-to-GDP ratio of 23.1% was well below the 60% reference value, and Bulgaria ranks second among the EU countries with the lowest government debt. Bulgaria’s average long-term interest rate was 4% in the period March 2023 – April 2024 and is also below the reference value of 5.5%.
As regards the exchange rate developments criterion, since 10 July 2020 the Bulgarian lev has participated in the exchange rate mechanism of the European Monetary System – Exchange Rate Mechanism II (ERM II). Bulgaria entered the Exchange Rate Mechanism, keeping the existing currency board in place as a unilateral commitment, at an official exchange rate of BGN 1.95583 per euro, and did not exhibit any deviation over the reference period. Bulgaria is the only one of the countries under review that meets this criterion.
The reports point out that out of the six countries under review, only Bulgaria’s legislation can be considered compatible with EU law, subject to the conditions and interpretations set out in the reports. In the context of its full membership in the euro area, Bulgaria should continue its steps towards ensuring a stable and predictable business and institutional environment that is conducive to sustainable convergence with the euro area countries.
From what is written in the reports by the EC and the ECB, it can be concluded that Bulgaria is the most advanced of all six countries, which intend to introduce the euro, and it has made a significant progress in meeting the convergence criteria.
The Bulgarian authorities will continue to actively work to fulfil all criteria for euro area membership and to improve the business environment and the institutional framework for achieving sustainable convergence with the euro area. When all the criteria for membership are met, which is expected to happen at the end of the year, Bulgaria will request ad hoc convergence reports by the European Commission and the European Central Bank, on the basis of which a decision on the date of Bulgaria’s euro area membership can be made as soon as possible.
