We are working towards an entry date for the euro as soon as possible

Mr. Metodiev, when do you expect the so-called Euro Law to be adopted and enter into force?

The Bulgarian government is working intensively on all workstreams to ensure that legislative and non-legislative commitments are fulfilled on time. We believe that one of the first commitments of the newly constituted National Assembly will be the adoption of the Law on the introduction of the euro in the Republic of Bulgaria (Euro Law).

What is the realistic date for the adoption of the single currency in Bulgaria and when will it be officially announced?

Bulgaria is in the last phase of the process of full integration into the Economic and Monetary Union. The only Maastricht criterion that Bulgaria does not fulfill is that of price stability. According to the preliminary estimates of the Ministry of Finance, there is a possibility that our country will meet it by the end of 2024. When this becomes a fact, the Bulgarian authorities intend to request extraordinary Convergence Reports from the EC and the ECB. The government is working towards the date for the introduction of the euro being set as soon as possible, which must ultimately be decided by the Council of the EU.

What are the main challenges that our country must respond to in order to adopt the euro more quickly? What steps are being taken to address them?

The main challenge is the fulfillment of the price stability criterion. It was influenced by factors that were external to our country caused by COVID-19, the war in Ukraine, disrupted supply chains, the high energy intensity of the Bulgarian economy, as well as the ongoing process of real convergence and the relatively low level of prices in the country compared to the average for EU. It is important to specify that the Maastricht criterion for price stability is calculated on the basis of the 12-month moving average of the inflation rate, which is different from the annual rate of inflation. The adjustment reflecting the reduction does not come about so quickly, since the method of calculation implies greater momentum in the indicator. The reference value also depends on the dynamics of inflationary processes in other EU countries.

An important aspect is also the combat misinformation in connection with the introduction of the euro. We envisage the implementation of a comprehensive communication campaign, divided into three main phases, in line with the date set for the introduction of the single currency.

In the event of accession in the middle of the year, what are the foreseeable challenges for businesses which will have to report in two currencies and what measures does the state envisage to ease the companies in that eventuality?

The draft law stipulates that the balances on accounts in leva will be recalculated into euro, in accordance with the rules defined therein, on the date of the introduction of the single currency. From this date on, accounting documentation and reporting will be carried out in euro, and the data for the previous accounting period will be recalculated in thousands of euro. The annual financial statements and tax returns for an expired tax period will be stated in the currency that is the official monetary unit of Bulgaria at the end of the reporting/tax period. This means that in case of an introduction of the euro in mid-2025, the documents drawn up at the end of that year should be in euro. The working groups assisting the Coordination Council for the Adoption of the Euro are in operational contact with representatives of both business and social organizations, which is the institutional mechanism for coordination and a prerequisite for a smooth transition to the euro.