Saturday

2nd Jul 2022

Bulgarian lev makes inroads in Greece

  • Thessaloniki restaurant: 'And the owner agreed' (Photo: 2 j 15)

Greeks used to see Bulgarians as their destitute northern neighbours. But now, with Greek banks closed and the state lurching toward a possible euro exit, hotels and restaurants in northern Greece are taking payments in Bulgarian levs.

“Automatic teller machines in Thessaloniki had run out of cash and nobody could withdraw even five euros”, Rumen Galabinov, a Bulgarian businessman told this website, referring to his recent visit to Greece’s second city.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

“After a lunch at a local restaurant, I joked, asking whether they would accept a payment in levs,” he said.

“And the owner agreed”.

Bulgaria’s lev (BGN) is pegged to the euro at a rate of BGN1.95 for €1 since mid-1997. At that time, the country was forced to introduce a currency board to deal with the aftermath of a financial crash and hyperinflation caused by government mismanagement.

Bulgaria has adhered to fiscal prudence and nurtured financial stability ever since. It has one of the lowest debt-to-GDP ratios in the EU – 27.6 percent in 2014.

The government of centre-right prime minister Boiko Borisov has appointed a working group to prepare for eurozone application. But Borisov has said his government isn’t in a hurry to file it until the single currency sorts out its problems.

“If we would join now, we’d be paying the bill for richer, but less disciplined countries like Greece”, he told reporters at last week’s EU summit.

Despite losing a quarter of their GDP in the past six years, Greeks are still three times richer than Bulgarians.

“The restaurant owner, who also had two hotels, said his Bulgarian guests would be welcome to pay in levs”, Galabinov, the Bulgarian businessman, added.

“Then, the owner would travel to Sandanski [in southern Bulgaria] and exchange the levs for euros to have cash for his daily supplies”.

As it is unclear when Greece’s capital controls will end, and since the European Central Bank has capped liquidity assistance, foreign tourists, paying in euros, dollars or Swiss francs, will be an increasingly important source of hard currency.

“Even in the most optimistic scenario after the Sunday referendum, Greece will need truck-loads of banknotes to restart its economy”, said Galabinov, who runs a financial consultancy and who used to sit on Bulgaria’s financial and insurance supervision panels back in 2003.

”Cash payments are dominant in the small tourist businesses, on which the Greek economy rests”, he noted.

He also predicted that Greek businesses and private depositors could start travelling to Bulgaria to withdraw money from Greek bank branches there.

These branches are companies established under Bulgarian law and they are not subject to the Greek capital controls. They are not allowed to transfer money to their mother companies in Greece without permission from the Bulgarian National Bank.

The Greek bank holiday could stall business in key Greek-owned industries in Bulgaria, such as steel, copper, and cement mills, Galabinov warned.

He said it could also hurt key Bulgarian exports to Greece, such as cereals.

Greece’s share in Bulgaria’s exports has slipped to 6 percent from 16-18 percent before 2009, he said.

The crisis is also threatening some 10,000 small Greek businesses which migrated to Bulgaria and which are creating thousands of jobs, he added.

Bulgaria eyes Greek crisis warily

Bulgaria is watching the crisis in neighbouring Greece through wary eyes, with its PM noting that Sofia is in "no rush" to join the euro.

'It's Greeks against Greeks'

It was a tale of two Greeces on Friday night, as tens of thousands took to the streets of Athens for the last evening of campaigning.

MEPs boycott awards over controversial sponsorship

Two MEPs have withdrawn their nominations from the MEPs Awards over the Swiss pharmaceutical company Novartis's participation as a sponsor — currently involved in an alleged bribery scandal in Greece.

EU Parliament interpreters stage strike

Interpreters at the European Parliament are fed up with remote interpretation, citing auditory health issues given the poor quality of the online sessions.

Opinion

The euro — who's next?

Bulgaria's target date for joining the eurozone, 1 January 2024, seems elusive. The collapse of Kiril Petkov's government, likely fresh elections, with populists trying to score cheap points against the 'diktat of the eurocrats', might well delay accession.

News in Brief

  1. EU Parliament 'photographs protesting interpreters'
  2. Poland still failing to meet EU judicial criteria
  3. Report: Polish president fishing for UN job
  4. Auditors raise alarm on EU Commission use of consultants
  5. Kaliningrad talks needed with Russia, says Polish PM
  6. Report: EU to curb state-backed foreign takeovers
  7. EU announces trade deal with New Zealand
  8. Russia threatens Norway over goods transit

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  2. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  3. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  4. Council of the EUEU: new rules on corporate sustainability reporting
  5. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  6. Reuters InstituteDigital News Report 2022

Latest News

  1. Nato's Madrid summit — key takeaways
  2. Czech presidency to fortify EU embrace of Ukraine
  3. Covid-profiting super rich should fight hunger, says UN food chief
  4. EU pollution and cancer — it doesn't have to be this way
  5. Israel smeared Palestinian activists, EU admits
  6. MEPs boycott awards over controversial sponsorship
  7. If Russia collapses — which states will break away?
  8. EU Parliament interpreters stage strike

Join EUobserver

Support quality EU news

Join us