Bulgaria is moving towards a new goal for the Eurozone, but it may be too optimistic

The Bulgarian Ministry of Finance expects the country to meet the criteria for entry into the Eurozone at the end of the year, which will postpone the change of the lev to the euro until the middle of 2025. Thus, although the government has not officially postponed the target date for entry into the currency union, which is still January 1, this now looks increasingly unlikely.

Major rating agencies, such as Fitch and S&P Global, have already signaled the postponement of the expansion of the Eurozone with Bulgaria. What’s more, there is no precedent of a member country joining the union on a date other than January 1.

We think we will meet the criteria at the end of the year, and I will request an extraordinary report that opens the possibility to entering the eurozone in mid-2025," said Deputy Finance Minister Metodi Metodiev during the "The Sound of Money" annual forum, which took place in Sofia on June 4.

Metaphorically speaking, according to him, Bulgaria is somewhere between the 80th and 90th km of the 100-kilometer route, which represents the road to the Eurozone.

However, economists and financiers are of the opinion that there is still a lot of work to be done before Bulgaria enters the elite monetary club. According to former Deputy Prime Minister Nikolay Vassilev, for example, there are four factors that slow Bulgaria down, and high inflation is only the last of these.

The main problem is political will. Now we are waiting to see a government that says: "I don't care about anything else, we have to enter the Eurozone". The kind of government that took us into the European Union," Vassilev pointed out.

According to him, Bulgaria's entry into the gray list of the global supervisory authority Financial Action Task Force (FATF) for money laundering is also a problem. The latter is not a criterion for the Eurozone; however, Vassilev is of the opinion that this brings serious reputational damage to Bulgaria. The country was put on the list in October last year on the grounds of very high levels of money laundering. For him, budget dissolution is also a problem – stemming from many consecutive years with budget deficits of around 3%.

The Maastricht criteria are a limit. The three percent deficit is the maximum limit. It's like the maximum alcohol limit allowed for driving. It doesn't say you have to drink up to this limit before driving. We fit within the 3% limit, but if we as a country want to enter the Eurozone, we should be more ambitious," Vassilev explained.

Economist Lachezar Bogdanov was adamant that if anyone is hoping for compromises and exceptions made on the part of the Eurozone authorities, they would be sorely disappointed.

There are rumors circulating that we could get in through the ‘back entrance’, but there’s no such thing, forget it. We must strive to enter according to the rules," said Bogdanov.

Postbank’s CEO, Asen Yagodin, said that the Deputy Finance Minister was too "optimistic" in his expectations for the middle of 2025. He reminded that the banks' expenses for the successful currency change process represent some 200-250 million euros,

so that Bulgarians can [one day] wake up with the euro as their currency".

The currency change process in the sector itself will take about 2 months, according to Ekaterina Panayotova, Deputy Director of Retail Banking at UniCredit Bulbank.

Banks are technically ready for the currency exchange, and ATMs will be prepared to dispense euros," she explained. The Chief Operations Officer of tbi bank Nikolay Spasov "does not expect any panic and lines to form up."

Translated by Tzvetozar Vincent Iolov