Bulgaria has not yet approved its “ticket” to join the euro zone because inflation is still too high, according to two reports published jointly this Wednesday by the European Central Bank (ECB) and the European Commission.
The country, which has been an EU member since 2007, is touted as the next to adopt the single currency as it joined the eurozone banking regulatory system in 2020 and the European Exchange Rate Mechanism (ERM II), a fixed parity system. the system is considered the threshold of the euro.
But while Bulgaria now has legislation “considered compatible with the rules of the Economic and Monetary Union”, it meets “all but one criteria” to join the eurozone, the European chief executive wrote in a press release at the end of the two-year review. criteria for the convergence of several countries with the aim of joining a single currency.
In May, Bulgaria’s average inflation rate over the past 12 months was 5.1%, “well above the 3.3% benchmark for price stability,” the ECB said in a report.
It is true that inflation only reached 2.7% in May, but the ECB is “concerned” about the “sustainability of the convergence of inflation” in Bulgaria to the 2% target that prevails in the euro area, given the “sharp increase in unit inflation, labour costs and tight labour markets.”
The current political situation in Bulgaria, left aside in these reports, is likely to complicate matters further.
Following the latest legislative elections in early June, former Prime Minister Boyko Borissov, who was ousted from power in 2021 amid anti-corruption protests, has returned to power but will struggle to form a majority to govern the country.
The convergence report is prepared every two years, but Bulgaria has the option to request a specific report before the next edition, in 2026, in order to speed up its accession to the euro.
The “green light” ultimately depends on the European Council, based on recommendations from the Commission, which in turn relies on elements provided by the ECB.
Author: Lusa
Source: CM Jornal
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