An individual beats a drum with the euro brand crossed out in crimson on the drumhead throughout an illustration towards Bulgaria coming into the Eurozone in Sofia on Might 31, 2025.
Nikolay Doychinov | Afp | Getty Photos
Bulgaria is ready to turn into the twenty first member of the euro zone after receiving log out from the European Fee and European Central Financial institution final week — however not everyone seems to be satisfied the transfer is a good suggestion.
Bulgaria’s Prime Minister Rosen Zhelyazkov, member of the center-right GERB occasion, has made becoming a member of the euro zone a precedence, arguing that it could enhance financial stability and development.
Nonetheless, fears of upper costs and a lack of independence have stoked nationalist-party fueled protests towards the nation’s euro ascension. A current European Union survey confirmed that half of Bulgaria’s inhabitants is towards adopting the euro.
Economists and specialists weighed in on the potential dangers to Bulgaria becoming a member of the euro, outlining what the japanese European nation might lose and acquire from the transfer.
Inflation and rates of interest
“Probably the most quick concern is a spike in costs in the course of the forex swap, as some companies could spherical up costs. Many Bulgarians fear that eurozone membership might erode their buying energy, particularly in poorer rural areas,” Valentin Tataru, an economist at ING who covers Bulgaria, advised CNBC.
Nonetheless, he additionally famous Bulgaria’s forex has lengthy had a hard and fast alternate charge to the euro and subsequently, “the transitional inflation bump needs to be gentle.”
The second key concern is what giving up Bulgaria’s forex, the lev, will imply for the nation’s independence and sovereignty — beliefs for which it has turn into symbolic in accordance with Andrius Tursa, central and japanese Europe advisor at Teneo.
“Its alternative with the euro could also be perceived by components of the inhabitants as a lack of nationwide management,” he advised CNBC. As well as there are issues about relinquishing management of financial coverage as international locations within the euro zone are topic to choices by the ECB, Tursa added.
The Bulgarian Nationwide Financial institution (BNB) would for instance now not solely be accountable for setting the nation’s rates of interest based mostly solely on how its particular person financial system is growing.
Nonetheless, “eurozone international locations profit from decrease rates of interest because of the credibility of the ECB and decreased forex danger,” Tursa identified. Decrease rates of interest sometimes profit debtors as loans and mortgages turn into extra inexpensive.
Financial stability and energy
Becoming a member of the euro zone and securing oversight from the ECB might enhance financial stability and development prospects for Bulgaria, Jasmin Groeschl, senior economist for Europe at Allianz SE, advised CNBC.
Overseas funding might for instance improve, she advised, and the nation’s gross home product could be anticipated to be boosted by euro zone membership.
“Deeper monetary integration would strengthen Bulgaria’s monetary system underneath the ECB’s oversight, enhancing financial stability,” Groeschl defined. “Adopting the euro would strengthen Bulgaria’s ties with the EU, enhancing its affect and credibility,” she added.
Key areas that underpin the financial system like commerce and tourism may be supported, Teneo’s Tursa stated.
A lot of Bulgaria’s key buying and selling companions are within the EU, with most of its exports going to members of the 27-state bloc in 2023 in accordance with knowledge from the nation’s statistics workplace. Key sectors embody equipment and transport gear, manufactured items and meals.
Tourism has in the meantime turn into a serious contributor to the financial system as Bulgaria positions itself as each a summer season and winter vacation spot. Over 13 million foreigners visited the nation in 2024, official statistics confirmed.
“Bulgaria’s accession to the eurozone would facilitate commerce and tourism flows with different eurozone international locations by eliminating the prices and burden related to forex conversion,” Tursa stated, including that this might be notably vital as a result of Bulgaria’s robust integration into EU provide chains.
Political tensions
One danger flagged by the economists and analysts are the political tensions surrounding Bulgaria’s euro adoption.
“Public opposition to euro adoption has already triggered notable protests, and within the medium time period, the problem might turn into a key driver of rising help for populist and Euroskeptic political actions,” Teneo’s Tursa defined.
However regardless of native protests and issues about euro zone ascension, at the very least in the long run the advantages for the nation outweigh any negatives, Allianz SE’s Groeschl argued.
“The trade-off includes shedding some financial autonomy in alternate for deeper integration,” she stated. “Though Bulgaria would lose some financial coverage management and be topic to strict fiscal guidelines, the benefits of better financial stability, decreased transaction prices and stronger integration with the EU market would sometimes outweigh these disadvantages.”
ING’s Tataru struck an identical tone, saying that as a result of the lev is already tied to the euro, there shouldn’t be a serious shock.
“Becoming a member of the euro is among the most strategic steps Bulgaria can take to safe long-term prosperity and deeper European integration,” he stated.
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