Bulgarian exports are expected to grow by 5.8% annually after the country joins the eurozone, according to an analysis released on Wednesday by trade credit insurer Allianz Trade.
According to the analysis cited by 3E News, trade in goods could grow by 3.3%, while growth in services could reach 8.4% annually.
Experts also point to the missed opportunities resulting from the delay in joining the eurozone.
Their calculations show that, based on 2023 export data, this represents a missed potential increase in volume of $2.6 billion. Another consequence of the delay is that Bulgarian business continues to suffer from transaction costs, which will drop following the change in currency.
Bulgaria’s accession to the eurozone has never seemed so close. Bulgaria currently has a historically low unemployment rate of around 4%. The country’s debt-to-GDP ratio is almost twice as low as the required criterion of 60%.
The Commission’s economic forecasts for this year and the next are also positive for Bulgaria.
The Commission expects Bulgarian inflation to fall to 2.3% in 2025 and 2.8% in 2026, the budget deficit to reach 2.8% in 2025 and 2026, and public debt to reach 24.5% of GDP in 2026.
On Wednesday, caretaker Prime Minister Dimitar Glavchev said he believed that Brussels would announce within a few days that Bulgaria met all the conditions for adopting the euro.
Bulgaria has failed to meet the inflation criteria for years, and its accession to the eurozone has been postponed several times.
“The eurozone is on our doorstep. We are literally days away from fulfilling the fourth criterion for price stability,” Glavchev announced before a cabinet meeting.
Earlier on Saturday, Bulgarian National Bank (BNB) governor Dimitar Radev told national broadcaster BNT that the country would meet the inflation criterion for joining the eurozone by January at the latest.
Radev called on politicians who want the country to adopt the euro to set a goal for the country to receive such support from the EU Council in 2025.
Within two weeks of meeting the low-inflation criterion, the country must submit a request for extraordinary convergence reports from the European Commission and the European Central Bank to assess its readiness to adopt the euro.
While Bulgaria has managed to bring inflation under control, the main challenge now appears to be the budget deficit. Since August, the Finance Ministry has been warning of an €18 billion (€9 billion leva) hole in the budget, which amounts to a budget deficit of around 8%, a Euractiv Bulgaria tally has shown.
To join the eurozone, the budget deficit must also be within the 3% limit.
This gap is the result of increased spending on pensions, higher salaries in the army and the Interior Ministry, and other budget expenditures. The caretaker government has promised to introduce a balanced budget with a deficit of 3%, which means an increase in budget revenues.
As a result, the government has announced plans for a new one-off tax on excess bank profits, an increase in excise duties on cigarettes and alcohol, a broad tax amnesty and more.
The lack of a clear political majority in parliament could prevent the adoption of measures to increase budget revenues and reduce the deficit.
Pro-European politicians in Bulgaria perceive accession to the Eurozone as a geopolitical anchor that will keep the country, where pro-Russian sentiments are widespread, in the Western sphere of influence.
Many economists believe that politicians have no reason to deviate from the goal of Bulgaria joining the eurozone as soon as possible in 2025.
However, recent opinion polls show that citizens are evenly divided on the adoption of the euro. The pro-Russian radical party Vazrazhdane is waging a fierce campaign against Sofia’s plans to join the eurozone.
The EPP-affiliated GERB party is in talks to form a government with the Bulgarian Socialist Party (BSP) and showman Slavi Trifonov’s There Is Such a People (ITN) party. However, both the BSP and ITN have expressed scepticism about rapid eurozone entry.
(Georgi Gotev | Euractiv.com)
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Publish date : 2025-01-09 22:25:00
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The post Economic forecasts optimistic as Bulgaria moves closer to joining eurozone first appeared on Love Europe.
Author : love-europe
Publish date : 2025-01-10 13:31:14
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