Bulgaria has abandoned its target of embracing the euro in January 2024 as it failed to fulfil certain requirements, Finance Minister Rossitsa Velkova announced on February 17. However, Velkova said the country still aims to become a part of the single currency by 2025, or potentially earlier. 

Adoption of the euro is expected to enhance investment in Bulgaria, the poorest member of the European Union. However, efforts to meet the criteria to join the European single currency have been impeded by the prolonged political crisis. Bulgaria is due to hold its fifth general election in two years this April. 

Velkova told journalists that Bulgaria has failed to meet the entry requirements on inflation and has yet to make some essential legal amendments, a finance ministry statement said. 

Speaking to journalists in Sofia, she talked of a “serious backlog” in the legislative part of the criteria for euro adoption. 

Several laws — namely those concerning changes to the Insurance Code, the Law on Measures against Money Laundering and the Commercial Law in the field of bankruptcy — were submitted to the parliament but adopted only in the first reading before the parliament was dismissed. 

"The other criterion that we do not meet is inflation, which is due to both external and internal factors and requires a certain time to reach its target values," Velkova added.

Bulgaria’s annual inflation rate slowed slightly in January, but remained high at 16.4%, according to the latest data from the statistics office. The rate grew for 19 consecutive months before starting to slow in October 2022. 

She added that the country’s interim government, led by Prime Minister Golob Donev, is prepared to resubmit the legislation once a new parliament is established after the April 2 general election. 

The last election, in October 2022, again resulted in a highly fragmented parliament, where parties were unable to form a ruling majority. 

"Bulgaria will not submit a request for Convergence Reports to the [European Commission] EC and the [European Central Bank] ECB at the end of February, as we have not fulfilled the commitments undertaken upon our entry into the Monetary Mechanism 2 [ERM2] and we do not meet the inflation criterion,” Velkova told journalists. 

"Bulgaria has agreed to submit a request for a Convergence Report when it fulfils its commitments and the necessary laws are adopted, which the caretaker government will introduce in the new National Assembly, including the changes in the Law on the [Bulgarian National Bank] BNB, when it achieves the fulfilment of the inflation criterion and when a stable fiscal outlook for the period 2023-2026 has been achieved," the minister said. 

She added that the caretaker government is making efforts to control inflationary pressure and expressed expectations that the parliament will vote on the key legal changes as a priority.

"If we meet the criteria at the end of June or July, we could immediately submit a request for a report, and not wait for the regular one," said Velkova. 

She also noted concerns on the part of Bulgaria’s EU partners on the country’s failure so far to meet its commitments. 

Bulgaria is also one of the most corrupt countries in the EU, though Hungary performed worse on this year’s Corruption Perceptions Index from Transparency International. Several high profile Bulgarian politicians and businessmen were sanctioned by the US and the UK for corruption earlier this month. 

Bulgaria’s former government led by Kiril Petkov of the reformist Change Continues adopted a plan for introduction of the euro on January 1, 2024, back in May 2022, despite some disagreements within the ruling coalition. Shortly afterwards, Petkov’s government collapsed and Bulgaria. 

The country was accepted in the eurozone’s, waiting room, the ERM II mechanism, in July 2020 along with Croatia. However, as political instability in Bulgaria stymied reform progress, Croatia drew ahead and became the latest country to enter the eurozone in January 2023. 

While most mainstream political parties want Bulgaria to become more deeply integrated within the EU, a June 2022 poll carried out by Eurobarometer showed that Bulgarians are the most sceptical among all the EU member states that have not yet introduced the euro. 

That poll showed 54% of Bulgarians were against the introduction of the EU currency, while there was at least a slim majority in favour in all of the other countries — Bulgaria, Czechia, Hungary, Poland, Romania, Sweden and (at that time) Croatia. Around 60% of Bulgarians said they expected negative consequences.