The EU and ECB give Bulgaria a “good-to-go” for EMU
Both the EC and the ECB published their ad hoc Convergence Reports on 4 June. These reports will be supplied to the Council for a formal deliberation on Bulgaria’s euro adoption. While formally still to be observed, the actual decision seems to be taken. Bulgaria will cross the Rubicon, by entering into the eurozone, on 1 January 2026. This brings an end to a long and contested quest to join the euro area and it is expected to strengthen institutions and economic fundamentals, by supporting economic growth and convergence.
Bulgaria (together with Romania) belongs to the last group of former socialist countries that joined the EU in 2007. Followed, in 2013, by Croatia.
Meeting the entry conditions for EU membership required massive efforts from all Bulgarian institutions, but also led to important and tangible positive effects on the country’s institutions and growth performance. However, obtaining EU-membership comes with the obligation of eventual euro adoption. According to the Accession Treaty to the EU, member states commit to adopting the euro once the entry criteria are met.
Notwithstanding the initial enthusiasm surrounding Bulgaria’s entry to the EU, political priorities and sensitivities shifted and turned inward. The deeper EU integration was consequently postponed. In practice, the country was often close to meeting the Maastricht criteria for euro area membership, but no institutional actions were taken in that direction. In 2018, the political will for applying for euro area membership (alongside Croatia) gained support and momentum.
At this point, the rules for joining the euro area had already become more stringent. A pre-condition for admission to the exchange rate mechanism (ERM II), the so-called 'waiting room' for the euro area, was prior admission to the EU Banking Union. The two countries made significant efforts in close cooperation with the ECB and ultimately in July 2020, the EC decided to admit them into ERM II. Croatia spent two years in the currency exchange mechanism and, amidst the pandemic, stepped up efforts to meet the euro-accession criteria. These efforts and reforms opened the way for joining the euro area on 1 January 2023.
Bulgaria, in contrast, found itself in a protracted political crisis in 2021: over the next 4 years, 7 parliamentary elections were held, and the country was governed by 6 caretaker and 3 regular governments. Against this turbulent backdrop, the commitment to join the euro area diminished. The regular (2-yearly) Convergence Reports from the EC and ECB in June 2024 stated that Bulgaria met all accession criteria except for the price stability criterion. Therefore, it could not be accepted as a member on 1 January 2025.
As new figures suggested that Bulgaria could meet the price stability criterion, the new Bulgarian government submitted a request in February 2025 for the preparation of extraordinary ad hoc Convergence Reports by the EC and the ECB. These reports were published on 4 June 2025 (see also the ECB overview table from the report below) and led to the following final conclusion by the EC: “In the light of its assessment on legal compatibility and on the fulfilment of the convergence criteria, and taking into account the additional relevant factors, the Commission considers that Bulgaria fulfils the conditions for adopting the euro.” “This positive assessment of convergence paves the way for Bulgaria to introduce the euro as of 1 January 2026 and become the 21st EU Member State to join the euro area,” said Philip R. Lane, Member of the ECB Executive Board. “I wish to congratulate Bulgaria on its tremendous dedication to making the adjustments needed.”
Before the implementation of the euro, however, several formal steps still have to be taken. There is, however, little doubt that these steps could pose major obstacles on Bulgaria’s route to the euro:
- 19 June: meeting of Eurogroup countries in Luxembourg. Following the discussion of the reports, a draft recommendation to the EU Council regarding Bulgaria's accession will be adopted.
- 20 June: meeting in Luxembourg of the representatives of the 27 on economic and financial matters (ECOFIN) – the recommendation made the previous day will be adopted.
- 26 June: Leaders' meeting in Brussels – discussion of the reports and the proposal from the European Commission for acceptance on 1 January 2026.
- 8 July: Final approval from the representatives of the 27 during a meeting on financial matters (ECOFIN). On the same day, a resolution will also be voted on in the plenary chamber of the European Parliament. An ordinary majority is required.
Euro adoption is an economic landmark for most countries and it is likely also to be the case for Bulgaria. A direct benefit for businesses from joining the euro area is the saving of significant transaction costs, which include currency exchange costs, costs due to the need to have bank accounts in different currencies, administrative expenses, and so on. The same applies to citizens traveling in the EA and foreigners visiting Bulgaria. Other important effects include the elimination of country risk and the expected increase in the country's credit and investment rating. This will allow the state and businesses to finance themselves at a lower cost and will further attract direct foreign investments in the economy: more jobs, rising incomes, and accelerated economic growth. A similar development was experienced by Croatia, which was the fastest-growing economy in the EU after Malta in the last two years. An improvement in fiscal discipline in the country is expected, greater resilience to economic crises, and a stabilisation of inflation through a closer connection with the economic cycle of the EU.
Importantly, membership in the EMU brings significant additional benefits in political, institutional and reputational terms. Bulgaria will participate more fully in making strategic decisions in the EU. Faster institutional convergence and improved quality of institutions in the country can also be a positive consequence of EA membership.
ECB overview table of economic indicators of convergence
| Price stability | Government budgetary developments and projections | Exchange rate | |||||
|---|---|---|---|---|---|---|---|
| HICP inflation1 | Country in excessive deficit2,3 | General government surplus (+)/ deficit (-)4 | General government debt4 | Currency participating in ERM II3 | Exchange rate vis-à-vis the euro5 | Long-term interest rate6 | |
| 2023 | 8.6 | No | -2 | 22.9 | Yes | 0 | 3.8 |
| 2024 | 2.6 | No | -3 | 24.1 | Yes | 0 | 3.9 |
| 2025 | 2.7 | No | -2.8 | 25.1 | Yes | 0 | 3.9 |
| Reference value7 | 2.8 | -3 | 60 | 5.1 | |||
Sources: European Commission (Eurostat, Directorate-General for Economic and Financial Affairs) and European System of Central Banks.
1) Average annual percentage change. Data for 2025 refer to the period from May 2024 to April 2025. 2) Refers to whether a country was subject to an EU Council decision on the existence of an excessive deficit for at least part of the year. 3) The information for 2025 refers to the period up to the cut-off date for statistics (19 May 2025). 4) As a percentage of GDP. Data for 2025 are taken from the European Commission’s Spring 2025 Economic Forecast. 5) Annual percentage change. A positive (negative) number denotes appreciation (depreciation) vis-à-vis the euro. Data for 2025 refer to the period from 1 January 2025 to 19 May 2025. 6) Average annual interest rate. Data for 2025 refer to the period from May 2024 to April 2025. 7) The reference values for HICP inflation and long-term interest rates refer to the period from May 2024 to April 2025; for the general government balance and debt, the reference values are defined in Article 126(2) of the Treaty on the Functioning of the European Union and the related Protocol (No 12) on the excessive deficit procedure.