Bulgaria will need to reduce inflation to meet European Central Bank (ECB) requirements for it to adopt the euro in January 2026, the country’s acting finance minister has said.
Ludmila Petkova’s statement came in response to the ECB rejecting Bulgaria’s bid, along with that of Romania, to join the European single currency next year. The rejections meant that Bulgaria fell at the final hurdle in its attempt to be admitted into the euro-zone.
The Frankfurt-based central bank sets several conditions that must be met by countries that want to throw off their national currencies and join the 19 European member states already using the single currency.
These include reducing inflation to the ECB’s 3.3% reference rate, which was a bridge too far for Bulgaria this year. Although the price index has come down drastically from over 13% in 2022 to 8% last year, prices were still rising at 5.1% at the end of May, compared to 12 months ago.
The ECB deemed this too steep for the Balkan country to join the common currency zone.
But Bulgaria is further along the road to joining the single currency than other potential members.
For years the local currency, the Bulgarian Lev, has been pegged to the euro, while its banks have adhered to strict ECB supervision. Sofia's budget deficit has been slashed after a spell on the Brussels watch list for countries that are spending beyond their means.
The ECB also requires candidates for euro membership to keep their budget deficit under control. That was the main bugbear of the regulators examining the prospects of Romania’s bid to join the euro, in addition to high inflation.
In 2023 the country ran a deficit of 6.6%, more than twice the European recommendations of 3%.
Meanwhile, annual inflation in Romania was 7.6% in May 2024, as measured by Eurostat, and that high readout was also one of the reasons for delaying their application.
On signing up for the European Union, all members had to agree to apply to join the euro, once they had fulfilled the economic requirements agreed in Maastricht.
Other conditions, as well as keeping deficits and inflation under control, include currency stability and low interest rates.
Currently, seven EU member states remain outside the eurozone: Bulgaria, the Czech Republic, Denmark, Hungary, Poland, Romania and Sweden.
