By Jan Strupczewski
BRUSSELS (Reuters) -The European Commission and the European Central Bank gave Bulgaria the go-ahead on Wednesday to adopt the euro currency from the start of 2026, making Bulgaria the 21st country to join the single currency area.
In a “convergence report” describing how Bulgaria’s economy dovetails with the rest of the euro zone, the Commission said Bulgaria met the formal criteria needed to adopt the currency now used by 347 million Europeans in 20 countries.
“Today, the European Commission concluded that Bulgaria is ready to adopt the euro as of 1 January 2026 – a key milestone that would make it the twenty-first Member State to join the euro area,” the Commission said in a statement.
The Commission also looked at whether Bulgaria’s economy and markets are integrated with the rest of the EU, as well as the trends in the country’s balance of payments.
In a separate report, the ECB also said Bulgaria was ready.
“I wish to congratulate Bulgaria on its tremendous dedication to making the adjustments needed,” ECB Executive Board Member Philip Lane said in a statement.
Bulgaria has been striving to switch its lev currency to the euro ever since it joined the European Union in 2007. But after such a long wait, many Bulgarians have lost the initial enthusiasm with 50% now sceptical towards the euro, according to a Eurobarometer poll in May.
Becoming a member of the euro zone, apart from using euro notes and coins, also means a seat at the European Central Bank’s rate-setting Governing Council.
The ECB will issue its own assessment later on Wednesday whether it thinks the country is ready, and if its central bank is independent. But the Commission’s view is decisive.
The positive recommendation from the EU executive arm means that EU leaders will have to endorse it later in June. EU finance ministers will then fix the conversion exchange rate for the Bulgarian lev into the euro in July, leaving the rest of the year for the country to technically prepare for the transition.
MEETING THE CRITERIA
To get the positive recommendation, Bulgaria had to meet the inflation criterion, which says that the euro-candidate cannot have consumer inflation higher than 1.5 percentage points above the three best EU performers.
In April, the best performers were France with 0.9%, Cyprus with 1.4% and Denmark with 1.5%, which put Bulgaria with its 2.8% just within the limit.
The euro candidate country also cannot be under the EU’s disciplinary budget procedure for running a deficit in excess of 3% of GDP. Bulgaria meets this criterion with a budget deficit of 3.0% in 2024 and 2.8% expected in 2025.
The country’s public debt of 24.1% of GDP in 2024 and 25.1% expected in 2025 is well below the maximum level of 60%, and its long-term interest rate on bonds is well within the 2 percentage point margin above the rate at which the three best inflation performers borrow.
Finally, Bulgaria had to prove it had a stable exchange rate by staying within a 15% margin on either side of a central parity rate in the Exchange Rate Mechanism II.
This was easily done because Bulgaria has been running a currency board that fixed the lev to the euro at 1.95583 since the start of the euro currency in 1999.
Bulgaria’s euro adoption will come three years after the last euro zone expansion, when Croatia joined the single currency grouping at the start of 2023.
The accession of Bulgaria into the euro zone will leave only six of the 27 EU countries outside the single currency area: Sweden, Poland, Czech Republic, Hungary, Romania and Denmark.
None of them have any immediate plans to adopt the euro either for political or because they do not meet the required economic criteria.
(Additional reporting by Balazs Koranyi in Frankfurt, Reporting by Jan Strupczewski)
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