The country fulfils all other requirements for joining the eurozone, including those related to public finances, long-term interest rates and exchange rates, the Commission said in its June 2024 convergence report assessing six member states' progress towards adopting the euro - Bulgaria, Czech Republic, Hungary, Poland, Romania and Sweden.
Bulgaria is the only country that meets all but one criterion and whose national legislation is compatible with Economic and Monetary Union rules, the Commission said.
The Commission's assessment was mirrored by the European Central Bank's (ECB) own convergence report issued on Wednesday.
The ECB found that in May, the 12-month average rate of harmonised index of consumer prices (HICP) inflation in Bulgaria was 5.1%, significantly above the 3.3% reference value for the price stability criterion. Inflation, however, is projected to gradually decrease over the next months as pipeline pressures and supply constraints continue to ease.
Bulgaria joined the exchange rate mechanism (ERM II), the training ground for euro adoption, and the EU's banking union in 2020, with its ERM II participation contingent on completing several policy commitments. The country is working towards these commitments but needs to speed up efforts to fulfil the action plan elements adopted by the Financial Action Task Force (FATF) after Bulgaria was placed on the FATF’s grey list of jurisdictions under increased monitoring last October, according to the ECB.
"Given the limited room for manoeuvre in monetary policy, especially for Bulgaria, which participates in ERM II, it is imperative that other policy areas support the capacity of these economies to maintain price stability, cope with country-specific shocks and avoid the build-up of macroeconomic imbalances," the ECB said.
"Bulgarian authorities will continue to actively work for the fulfilment of all the criteria for eurozone membership, as well as to improve the business environment and the institutional framework to achieve sustainable convergence with the eurozone," the Bulgarian National Bank (BNB) and the finance ministry said in a joint statement on Wednesday.
Upon meeting all membership criteria, which is expected by the end of the year, the country will request convergence reports from the Commision and ECB, based on which a prompt decision on Bulgaria's eurozone accession date can be made, the BNB and the finance ministry added.
Convergence reports are issued every two years or upon an EU member state's specific request to assess its readiness to join the euro area. Based on these reports, the Council of the EU decides whether a country meets the conditions to adopt the euro.
Jun 28, 2024
