An individual beats a drum with the euro emblem crossed out in purple on the drumhead throughout an indication towards Bulgaria getting into the Eurozone in Sofia on Could 31, 2025.
Nikolay Doychinov | Afp | Getty Photographs
Bulgaria is ready to turn into the twenty first member of the euro zone after receiving log off from the European Fee and European Central Financial institution final week — however not everyone seems to be satisfied the transfer is a good suggestion.
Bulgaria’s Prime Minister Rosen Zhelyazkov, member of the center-right GERB get together, has made becoming a member of the euro zone a precedence, arguing that it might enhance financial stability and development.
Nonetheless, fears of upper costs and a lack of independence have stoked nationalist-party fueled protests towards the nation’s euro ascension. A latest European Union survey confirmed that half of Bulgaria’s inhabitants is towards adopting the euro.
Economists and specialists weighed in on the potential dangers to Bulgaria joining the euro, outlining what the jap European nation may lose and acquire from the transfer.
Inflation and rates of interest
“Essentially the most speedy concern is a spike in costs in the course of the forex swap, as some companies might spherical up costs. Many Bulgarians fear that eurozone membership may erode their buying energy, particularly in poorer rural areas,” Valentin Tataru, an economist at ING who covers Bulgaria, advised CNBC.
However, he additionally famous Bulgaria’s forex has lengthy had a set change charge to the euro and due to this fact, “the transitional inflation bump ought to be delicate.”
The second key concern is what giving up Bulgaria’s forex, the lev, will imply for the nation’s independence and sovereignty — beliefs for which it has turn into symbolic in accordance with Andrius Tursa, central and jap Europe advisor at Teneo.
“Its alternative with the euro could also be perceived by elements of the inhabitants as a lack of nationwide management,” he advised CNBC. As well as there are considerations about relinquishing management of financial coverage as nations within the euro zone are topic to choices by the ECB, Tursa added.
The Bulgarian Nationwide Financial institution (BNB) would for instance not solely be chargeable for setting the nation’s rates of interest primarily based solely on how its particular person financial system is creating.
Nonetheless, “eurozone nations profit from decrease rates of interest as a result of credibility of the ECB and diminished forex danger,” Tursa identified. Decrease rates of interest usually profit debtors as loans and mortgages turn into extra reasonably priced.
Financial stability and energy
Becoming a member of the euro zone and securing oversight from the ECB may enhance financial stability and development prospects for Bulgaria, Jasmin Groeschl, senior economist for Europe at Allianz SE, advised CNBC.
Overseas funding may for instance improve, she prompt, and the nation’s gross home product could be anticipated to be boosted by euro zone membership.
“Deeper monetary integration would strengthen Bulgaria’s monetary system below the ECB’s oversight, enhancing financial stability,” Groeschl defined. “Adopting the euro would strengthen Bulgaria’s ties with the EU, enhancing its affect and credibility,” she added.
Key areas that underpin the financial system like commerce and tourism may be supported, Teneo’s Tursa stated.
A lot of Bulgaria’s key buying and selling companions are within the EU, with most of its exports going to members of the 27-state bloc in 2023 in accordance with data from the nation’s statistics workplace. Key sectors embody equipment and transport gear, manufactured items and meals.
Tourism has in the meantime turn into a significant contributor to the financial system as Bulgaria positions itself as each a summer time and winter vacation spot. Over 13 million foreigners visited the nation in 2024, official statistics confirmed.
“Bulgaria’s accession to the eurozone would facilitate commerce and tourism flows with different eurozone nations by eliminating the prices and burden related to forex conversion,” Tursa stated, including that this could be notably vital on account of Bulgaria’s sturdy integration into EU provide chains.
Political tensions
One danger flagged by the economists and analysts are the political tensions surrounding Bulgaria’s euro adoption.
“Public opposition to euro adoption has already triggered notable protests, and within the medium time period, the difficulty may turn into a key driver of rising assist for populist and Euroskeptic political actions,” Teneo’s Tursa defined.
However regardless of native protests and considerations about euro zone ascension, a minimum of in the long run the advantages for the nation outweigh any negatives, Allianz SE’s Groeschl argued.
“The trade-off entails shedding some financial autonomy in change for deeper integration,” she stated. “Though Bulgaria would lose some financial coverage management and be topic to strict fiscal guidelines, the benefits of better financial stability, diminished transaction prices and stronger integration with the EU market would usually outweigh these disadvantages.”
ING’s Tataru struck an analogous tone, saying that as a result of the lev is already tied to the euro, there shouldn’t be a significant shock.
“Becoming a member of the euro is without doubt one of the most strategic steps Bulgaria can take to safe long-term prosperity and deeper European integration,” he stated.
