European Central Bank rules that Bulgaria can’t join the Eurozone yet 

Bulgaria’s bid to join the eurozone has been hindered by its high inflation rates, according to a European Central Bank (ECB) report. The country has been eager to become the 21st member of the EU’s currency union despite widespread fears that joining could further drive up prices. 

The ECB report found that Bulgaria’s inflation rate is currently at 5.1% annually, which is 1.8 percentage points above the threshold required for eurozone entry. However, the ECB noted that inflation is expected to “decrease gradually over the coming months” as supply chain issues are resolved.

During a press conference, Bulgarian Prime Minister Dimitar Glavchev acknowledged the report’s findings and said he plans to request another assessment from EU authorities once Bulgaria meets all the criteria for euro adoption.

Deputy Finance Minister Metodi Metodiev expressed optimism that Bulgaria could join the euro by mid-2025, contingent on improved economic conditions allowing for a new assessment from the EU. 

However, political turbulence soon followed national and European elections, with the far-right, pro-Russian Vazrazhdane party gaining about 14% of the vote and three of Bulgaria’s 17 MEPs, after campaigning against the euro.

The GERB party, led by former Prime Minister Boyko Borissov, now faces the challenge of forming a coalition government, with abandoning the lev being a contentious issue. According to a Eurobarometer survey, only 49% of Bulgarians support joining the euro, while 64% believe it would lead to further price increases.

Joining the euro is not automatic for EU member states; they must first align with legal and economic standards, including maintaining stable exchange rates and sound public finances. Sweden and Denmark are exceptions, having negotiated opt-outs that allow them to retain their national currencies.

Post-pandemic, inflation surged in several EU countries, reaching up to 17% due to the Ukraine war’s impact on energy and food prices. The ECB, which aims to keep inflation around 2%, evaluates euro candidates by comparing their inflation rates to those of the EU’s best-performing countries, such as Denmark, Belgium, and the Netherlands.

Other EU members like Czechia, Hungary, Poland, and Romania have yet to align their legislation with EU norms and join the exchange rate mechanism, which stabilises currency fluctuations with the euro. 

Earlier in June, Romania faced criticism from Brussels for its projected budget deficit of 7% in 2025, following years of admonitions to balance its finances and reform taxes and public sector wages.

Hungary, under the leadership of Viktor Orbán, has maintained a eurosceptic stance, while in Poland, the government remains wary of replacing the zloty with the euro, even as relations with Brussels improve under Prime Minister Donald Tusk.