Tuesday

9th Aug 2022

Bulgaria shelves euro membership plans

  • Boiko: Bulgaria has shelved plans to join the euro. (Photo: Valentina Pop)

Bulgaria has halted plans to join the euro in the latest public setback for the beleaguered currency union.

Speaking in an interview with the Wall Street Journal on Monday (3 September) in Sofia, Prime Minister Boyko Borisov and Finance Minister Simeon Djankov said the decision was the result of the debt crisis and the double dip recession facing the eurozone, along with rising public opposition to joining the single currency.

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"Right now, I don't see any benefits of entering the euro zone, only costs," Djankov said, adding that disagreement between countries on how best to respond to the debt crisis made the prospect of euro membership "too risky for us and it's also not certain what the rules are and what are they likely to be in one year or two."

In January 2010 Borisov claimed that Bulgaria would take steps to join the eurozone with a target date of 2013.

Bulgaria already fulfills the economic criteria to join the euro, having reduced its budget deficit to 2.1 percent in 2011, comfortably below the 3 percent limit laid out in the Stability and Growth Pact.

The country, whose 17.5 percent debt burden is also one of the lowest in the EU, has pegged its Lev currency to a currency basket including the euro but is not in ERM II, a formal EU mechanism for limiting currency fluctuation. Countries must spend at least two years in ERM II before joining the euro.

However, the timetable for adoption has slipped as economic conditions in the eurozone deteriorated, with eurozone leaders divided on how best to respond to the debt crisis,

Referring to this, Borisov said: "I'm certain that we will definitely see a deepening divide in Europe now because many governments are not prepared to stomach the difficult decisions they have to take. It's like a spoilt child who doesn't want to go to the dentist to fix his bad teeth, even though the operation is needed."

Meanwhile, Radoslaw Sikorski, Poland's foreign minister, admitted to German newspaper Frankfurter Allgemeine Zeitung on Monday (3 September) that Poland is also shelving plans to join the currency bloc.

Calling on EU leaders to resolve the crisis, he insisted that "We are ready to join when you have resolved your problems and when we can say to our people 'We can now safely join'."

Poland is the third-fastest growing EU country, despite forecasts indicating that it will fall slightly short of the 2.9 percent growth figure predicted in the 2012 budget, one of the few EU countries to avoided recession since the global financial crisis broke in 2008.

Lithuania, too, which had its euro membership bid rejected in 2006, has also cooled on its own accession process.

Estonia was the 17th and last country to join the eurozone in 2011. All EU member states with the exception of Britain and Denmark are required to join the single currency under the terms of their EU membership.

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