Bulgaria becoming a member of eurozone is massive deal – DW – 12/29/2025 | EUROtoday

Bulgaria is ready to undertake the euro on January 1, 2026, making it the twenty first member state of the eurozone.

Joining the foreign money membership marks a serious milestone for the Eastern European nation, which entered the European Union in 2007.

Bulgaria’s accession leaves solely six of the 27 EU nations exterior the foreign money union: Sweden, Poland, the Czech Republic, Hungary, Romania and Denmark.

The euro is “not just a currency but a strategic choice” that strengthens Bulgaria’s place in Europe, Bulgarian Prime Minister Rosen Zhelyazkov mentioned at a high-level convention within the Bulgarian capital, Sofia, in November.

At the identical occasion, Christine Lagarde, president of the European Central Bankmentioned the euro adoption “bolsters Bulgaria’s economic foundations, builds its resilience against global shocks and amplifies its voice in euro area decision-making.”

But not everyone seems to be optimistic concerning the Balkan nation’s entry into the eurozone.

“Supporters of Bulgaria’s entry into the eurozone point out the fact that by joining the ‘club of the rich,’ the country will benefit and will achieve significant progress,” Rossitsa Rangelova, professor on the Bulgarian Academy of Sciences’ Economic Research Institute, instructed DW.

“Things are presented as if Bulgaria will automatically increase its standard of living and prosperity, but it is not justified how this will happen given the need for mandatory and postponed reforms, without which our country would not be an equal participant,” she added.

How is Bulgaria’s economic system performing?

Bulgaria’s nationwide foreign money, the lev, has been pegged to the euro because the latter’s introduction in 1999.

Sofia formally started the method of becoming a member of the foreign money bloc in 2018, and the lev was then included within the European Exchange Rate Mechanism in July 2020.

The European Commission and euro space finance ministers earlier this yr greenlighted the nation’s eurozone membership bid.

Becoming a euro space member demonstrates how the Bulgarian economic system has improved over the previous decade. Macroeconomic indicators stay steady, with inflation now hovering at round 2.8%, down from round 13% in 2022.

The funds deficit and debt ranges are low — at about 3% and 24%, respectively — complying with EU guidelines that mandate member states to maintain their deficits inside 3% of financial output, and their complete fiscal debt inside 60% of GDP.

Growth prospects additionally look constructive. The EU estimates the nation’s actual GDP to develop round 3% this yr, by 2.7% in 2026 and a couple of.1% in 2027.

Bulgaria nonetheless has a ‘lot of catching as much as do’

“Bulgaria’s macroeconomic performance has been stable in the last decades, even though its economic growth and catch-up has been suboptimal,” Guntram Wolff, an knowledgeable on euro-area fiscal coverage on the European financial suppose tank Bruegel, instructed DW.

Norbert Beckmann, head of the Konrad Adenauer Foundation workplace in Bulgaria, shared the same view.

Bulgaria meets all of the convergence standards for becoming a member of the eurozone, he mentioned, pointing particularly to the nation having one of many lowest debt ratios in Europe.

“However, the Bulgarian economy still has a lot of catching up to do in terms of structure and performance. The income level in Bulgaria is also only 59% of the EU average.”

But the consultants warning in opposition to the Bulgarian authorities loosening the purse strings and overspending after the euro adoption.

“The main risk is that after the accession to the euro, the budget constraint might be seen as less binding by the political system and deficits could grow,” mentioned Wolff. “But given low debt levels, I don’t think this risk is significant.”

Beckmann additionally underscored the necessity to keep away from market distortions.

“It is important that incomes always reflect the economy’s capacity and that people do not live beyond their means. If incomes become decoupled and are artificially inflated by borrowing, this can lead to distortions, as we have seen in Greece,” he instructed DW.

Political turmoil poses dangers

At the identical time, political instability presents a grave problem. Public anger and frustration have run excessive in latest months as a result of financial mismanagement and rampant corruption.

Bulgaria — one of many poorest within the EU — ranks among the many bloc’s most corrupt nations, in accordance with Transparency International’s Corruption Perceptions Index.

The Balkan nation of 6.4 million folks has already held seven parliamentary elections since 2021 — and it may face extra elections within the coming months.

Prime Minister Zhelyazkov’s authorities resigned on December 11 amid mass protests over graft and the administration’s funds plans, together with increased taxes and elevated social safety contributions.

Although the funds was withdrawn, widespread anger has continued.

If efforts to arrange a brand new authorities fail, the president will appoint an interim administration and name a snap election, which might be the eighth in 4 years.

And ought to the vote fail to provide a functioning coalition, it may lengthen the political turmoil and erode investor confidence.

Public break up on euro adoption

Bulgarians are additionally break up on euro adoption, surveys present. Supporters of the frequent foreign money say it should increase overseas funding flows into the nation, remove overseas alternate prices and result in larger integration into the EU single market, amongst different issues.

Skeptics, nevertheless, worry a spike in inflation as costs of products and providers are transformed from the nationwide foreign money, the lev, to the euro following the foreign money change. Some additionally fear about shedding management over financial coverage to the European Central Bank in Frankfurt.

“The eurozone accession process will not benefit the economy of Bulgaria. It would become a periphery for the eurozone, less flexible and unable to reduce or eliminate its shocks on its own,” mentioned Rangelova.

She additionally criticized Bulgarian authorities for not holding a referendum on the euro accession. “For such fundamental projects, the government of any democratic country takes into account the opinion of the public,” she mentioned, noting that “the Bulgarian authorities have categorically rejected referendums as a form of public opinion over the years and still find ways to ignore them.”

While there are real considerations, Wolff mentioned,  disinformation campaigns and conspiracy theories have exacerbated the anti-euro sentiment.

“Bulgaria is regularly attacked by Russian disinformation campaigns and Russia certainly tries to convince the country to rejoin its sphere of influence,” he famous.

“By joining the euro, Bulgaria is more deeply anchored in Western Europe — which strengthens the European Union. It will be imperative to step up efforts to counter Russian hybrid warfare as well as step up the fight against corruption.”

Despite the incessantly altering governments lately, Beckmann mentioned, “the parties and politicians in Bulgaria who want to introduce the euro and promote the country’s integration with the West have always had a majority in parliament.”

He careworn that euroskeptic positions “have always been a minority in Bulgaria.”

“I don’t think that will change in the future,” Beckmann added. “Therefore, there is no reason to assume that Bulgaria’s accession to the eurozone could somehow weaken the euro.”

But Rangelova mentioned becoming a member of the eurozone at any value just isn’t a path to prosperity. “Instead of joining the eurozone now and immediately, Bulgaria’s efforts should focus on stabilizing the political situation, a sensible macroeconomic policy, supported by strong domestic institutions and good governance.”

Edited by: Rob Mudge