Bulgaria is in talks with the European Commission and the European Central Bank (ECB) on the introduction of the euro as a parallel currency along with the Bulgarian lev, Finance Minister Assen Vassilev said on June 28.

The pro-Western government led by Prime Minister Nikolai Denkov has set among its top priorities Bulgaria’s accession to the eurozone and the Schengen border-free area as soon as possible. The current target is to enter the eurozone by January 1, 2025, but Sofia hopes to introduce the euro as a parallel currency a year earlier. 

Vassilev said, as quoted by Mediapool, that at the moment Bulgarian companies can sign deals in euro, while citizens cannot and that the introduction of the euro as a parallel currency seems achievable.

“We know that there are countries like Montenegro that allow these transactions to be carried out on a voluntary basis. That is, if two persons want and can carry put transactions in euros, they should be able to do so without the state restricting them,” Vassilev said as quoted by Mediapool.

According to Vassilev, Bulgarian companies lose BGN1.5bn annually in paying fees for transactions, which would be scrapped once the country is accepted in the eurozone.

Mediapool quoted its sources as saying that the government hopes to get a green light to introduce the euro as a parallel currency as of January 2024. If the European Commission and the ECB agree to that, prices in Bulgaria will be announced in euros and in Bulgarian levs, and individuals will be allowed to decide which currency to pick for transactions.

Meanwhile, Vassilev said that Bulgaria currently meets two out of three criteria for accession in the eurozone – those for a budget deficit of up to 3% of GDP and the debt level.

Vassilev added that the country is getting closer to achieving the third criterion, related to the inflation level, but whether it would be met depends on what approach the EC picks to determine it. Sofia hopes that Brussels will take into account the effect of the war in Ukraine and calculate what the inflation would be without the war.

Political instability within Bulgaria has delayed the euro adoption process, and earlier this year the former government under ex-prime minister Gulub Donev announced it had abandoned the target of entering the Eurozone by January 2024. 

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 by Donev’s caretaker government but adopted only in the first reading before the previous parliament was dismissed. 

Progress is expected now that Denkov’s government has been installed, Fitch Rating said earlier in June. However, the rating agency added that Bulgaria will have to deal with high inflation to meet the criteria for eurozone entry.

Euro adoption faces another obstacle as the far-right pro-Russian Vazrazhdane party collected enough signatures to force a referendum on delaying the country’s entry to the eurozone. According to a recent poll carried out by Alpha Research, nearly half of Bulgarians are against euro adoption.