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An individual beats a drum with the euro brand crossed out in pink at the drumhead all the way through an indication towards Bulgaria coming into the Eurozone in Sofia on May 31, 2025.
Nikolay Doychinov | Afp | Getty Images
Bulgaria is ready to develop into the 21st member of the euro zone after receiving log out from the European Commission and European Central Bank ultimate week — however now not everyone seems to be satisfied the transfer is a good suggestion.
Bulgaria’s Prime Minister Rosen Zhelyazkov, member of the center-right GERB occasion, has made becoming a member of the euro zone a concern, arguing that it could spice up financial steadiness and expansion.
However, fears of upper costs and a lack of independence have stoked nationalist-party fueled protests towards the rustic’s euro ascension. A contemporary European Union survey confirmed that part of Bulgaria’s inhabitants is towards adopting the euro.
Economists and mavens weighed in at the doable dangers to Bulgaria becoming a member of the euro, outlining what the jap European nation may lose and achieve from the transfer.
Inflation and rates of interest
“The most immediate concern is a spike in prices during the currency switch, as some businesses may round up prices. Many Bulgarians worry that eurozone membership could erode their purchasing power, especially in poorer rural areas,” Valentin Tataru, an economist at ING who covers Bulgaria, advised CNBC.
Nevertheless, he additionally famous Bulgaria’s forex has lengthy had a hard and fast trade charge to the euro and subsequently, “the transitional inflation bump should be mild.”
The 2d key worry is what giving up Bulgaria’s forex, the lev, will imply for the rustic’s independence and sovereignty — beliefs for which it has develop into symbolic consistent with Andrius Tursa, central and jap Europe guide at Teneo.
“Its replacement with the euro may be perceived by parts of the population as a loss of national control,” he advised CNBC. In addition there are issues about relinquishing regulate of financial coverage as nations within the euro zone are matter to selections through the ECB, Tursa added.
The Bulgarian National Bank (BNB) would for instance now not only be answerable for surroundings the rustic’s rates of interest based totally simplest on how its person economic system is creating.
However, “eurozone countries benefit from lower interest rates due to the credibility of the ECB and reduced currency risk,” Tursa identified. Lower rates of interest normally get advantages debtors as loans and mortgages develop into extra reasonably priced.
Economic steadiness and gear
Joining the euro zone and securing oversight from the ECB may spice up financial steadiness and expansion possibilities for Bulgaria, Jasmin Groeschl, senior economist for Europe at Allianz SE, advised CNBC.
Foreign funding may for instance building up, she steered, and the rustic’s gross home product could be anticipated to be boosted through euro zone club.
“Deeper financial integration would strengthen Bulgaria’s financial system under the ECB’s oversight, enhancing monetary stability,” Groeschl defined. “Adopting the euro would strengthen Bulgaria’s ties with the EU, enhancing its influence and credibility,” she added.
Key spaces that underpin the economic system like business and tourism may be supported, Teneo’s Tursa mentioned.
Many of Bulgaria’s key buying and selling companions are within the EU, with maximum of its exports going to participants of the 27-state bloc in 2023 consistent with knowledge from the rustic’s statistics workplace. Key sectors come with equipment and delivery apparatus, manufactured items and meals.
Tourism has in the meantime develop into a significant contributor to the economic system as Bulgaria positions itself as each a summer season and iciness vacation spot. Over 13 million foreigners visited the rustic in 2024, authentic statistics confirmed.
“Bulgaria’s accession to the eurozone would facilitate trade and tourism flows with other eurozone countries by eliminating the costs and burden associated with currency conversion,” Tursa mentioned, including that this could be in particular necessary because of Bulgaria’s robust integration into EU provide chains.
Political tensions
One possibility flagged through the economists and analysts are the political tensions surrounding Bulgaria’s euro adoption.
“Public opposition to euro adoption has already triggered notable protests, and in the medium term, the issue could become a key driver of rising support for populist and Euroskeptic political movements,” Teneo’s Tursa defined.
But regardless of native protests and issues about euro zone ascension, a minimum of in the longer term the advantages for the rustic outweigh any negatives, Allianz SE’s Groeschl argued.
“The trade-off involves losing some economic autonomy in exchange for deeper integration,” she mentioned. “Although Bulgaria would lose some monetary policy control and be subject to strict fiscal rules, the advantages of greater economic stability, reduced transaction costs and stronger integration with the EU market would typically outweigh these disadvantages.”
ING’s Tataru struck a identical tone, announcing that since the lev is already tied to the euro, there must now not be a significant surprise.
“Joining the euro is one of the most strategic steps Bulgaria can take to secure long-term prosperity and deeper European integration,” he mentioned.
