November 11 (SeeNews) - Bulgaria will apply early next year to join the Exchange Rate Mechanism II (ERM II), the two-year pre-euro waiting room, and adopt the common currency in 2013, Finance Minister Simeon Dyankov told Bloobmerg.
“We are going to apply to the ERM-2 as soon as possible, within a few months,” Dyankov told Bloomberg in an interview on Tuesday.
“It will be sometime early next year,” Dyankov said. “And the process typically takes a year. From the start of the ERM-II process, “we’re giving ourselves about four years. By the end of our mandate we should be able to be in the euro zone or close to it. So it will be 2013.”
Since July 1997 Bulgaria has been operating an IMF-prescribed currency board system, a tight monetary arrangement that ties the level of cash in circulation to the amount of central bank foreign exchange reserves. The fixed exchange rate of the Bulgarian lev under the system is 1.95583 per euro.
Joining the exchange-rate mechanism may allow the lev to fluctuate by as much as 15% around a central band, though the central bank has said it will leave the lev tightly pegged to the euro through the duration of the two years, Bloomberg reported.
To adopt the euro, candidates need to keep their budget deficits to within 3.0% of gross domestic product, debt to 60% of GDP and their 12-month average inflation rates to within 1.5 percentage points of the average inflation rate of the three EU nations with the slowest consumer-price growth.
Bulgaria ran a budget deficit in the last five months after eight years of surpluses as the previous government raised spending before the July 5 elections and the recession eroded revenue, Bloomberg reported.
“For 2009 it’s quite difficult to get to a balanced budget but we are working at it every day,” Bloomberg quoted Dyankov as saying.
“The government has to create a surplus to counterbalance that significant deficit. October was the first month that we balanced the budget. And in November and December our forecast is to run surpluses. I’m fairly confident that we’ll come very close to a balanced budget for this year.”