In a June 2024 convergence report assessing progress towards euro adoption in six countries – Bulgaria, the Czech Republic, Hungary, Poland, Romania and Sweden – the European Commission said the country met all other requirements for euro area membership, including those related to finances, long-term interest rates and exchange rates.
The European Commission said Bulgaria was the only country that met all but one of the criteria and whose domestic law was compatible with the Economic and Monetary Union rules.
The Commission's assessment was in line with a convergence report published by the European Central Bank (ECB) on Wednesday.
The ECB said Bulgaria's 12-month average of the Harmonized Index of Consumer Prices (HICP) inflation rate stood at 5.1% in May, well above its price stability benchmark of 3.3%, but it expects inflation to gradually ease in the coming months as pipeline pressures and supply constraints continue to ease.
Bulgaria joined the euro adoption training exercise Exchange Rate Mechanism (ERM II) and the EU banking union in 2020, but ERM II membership is conditional on the achievement of several policy commitments. Bulgaria is working towards these commitments, but the ECB has said it needs to accelerate efforts to implement elements of the action plan adopted by the FATF after Bulgaria was placed on the FATF's grey list of jurisdictions subject to increased monitoring in October last year.
“Given the limited monetary policy room, particularly for Bulgaria as a participant in ERM II, it is essential that other policy areas support the capacity of these economies to maintain price stability, deal with country-specific shocks and avoid the build-up of macroeconomic imbalances,” the ECB said.
“The Bulgarian authorities remain actively committed to improving the business environment and institutional framework in order to meet all the conditions for euro area membership and achieve sustainable integration with the euro area,” the National Bank of Bulgaria (BNB) and the finance ministry said in a joint statement on Wednesday.
The Bulgarian central bank and finance ministry expect to meet all accession criteria by the end of the year and the country will request a convergence report from the European Commission and the European Central Bank, based on which a date for Bulgaria to join the euro could be decided quickly, he added.
Convergence reports are issued every two years or upon specific request from an EU member state and assess its readiness to join the euro area. Based on these reports, the Council of the EU decides whether a country meets the conditions for adopting the euro.
