In 2026, Bulgaria will likely join the eurozone. On the surface, the economic indicators look good. But Albrecht Rothacher and Martin Bull argue that this may be another example of the will of Brussels triumphing over hard socioeconomic reality. Bulgarians, they warn, should brace themselves for a fiscal shock
The European Commission, on 4 June, approved Bulgaria’s joining the euro in 2026. Euro area finance ministers are likely to formally confirm the move in July. On 1 January 2026, then, Bulgaria could become the 21st eurogroup country with a seat and a vote on the European Central Bank (ECB) Council.
On paper, everything looks fine in relation to the convergence criteria all euro applicants have to meet. The country has reduced inflation from 13% (2022) to 2.8%. Its government continues to observe the limits for the state budget deficit (-3%) and total public debt (24% of GDP). The EU Commission has given a positive assessment of the government's budget and structural plan through 2028. It expects economic growth of 2% this year – better than either Germany or Austria.
Bulgaria's current government, led by centre-right Prime Minister Rosen Zhelyazkov, is, understandably, promising the impoverished and ageing population the moon. He has pledged foreign investment, cheaper loans, better integration into the EU internal market through the elimination of exchange costs, greater economic and financial stability, and a convergence of living standards with the EU average.
Bulgaria's current Prime Minister Zhelyazkov promises accession to the eurozone will bring greater economic stability, and a convergence of living standards with the EU average
'Today we have reached a crucial milestone on our path to join the euro, marked by years of continuous efforts and strict fiscal discipline', Zhelyazkov said in an interview with the Financial Times. He also claimed that 'the introduction of the euro will improve economic stability and create stronger fundamentals for investments and economic growth'.
For Brussels, this is a signal achievement. EU economy commissioner Valdis Dombrovskis said it will bring ‘tangible benefits’ to Bulgarian companies and people. Dombrovskis claims it demonstrates how 'the larger euro area itself is strengthening and making greater international heft for the euro. It shows it’s a stable and attractive currency'.
But there is a more likely impact on Bulgaria – one of Europe’s poorest nations – than anything its government or Brussels promises. The likely wave of price increases approaching EU levels would hit Bulgaria's population hard. The country's two million pensioners – out of a population of only 6.4 million – receive just €226 a month, or €7.50 euros per day. The figure is 15% less for women and for residents in rural areas. And, largely as a result of low labour productivity, net wages average only €355 a month.
It is difficult to see how the addition of one Europe's weakest economies would strengthen the euro
For the historically weak-currency countries on the Mediterranean rim, introduction of the euro has demonstrably not been good for tourism and exports, which depended on low prices and periodic devaluations. Those looking for a cheap holiday no longer go to Greece, Italy, or Croatia, but to Albania, Tunisia, and Turkey.
For Bulgaria, with its Black Sea beaches, the introduction of the euro is as unnecessary as an appendix. And it is difficult to see how the addition of one Europe's weakest economies would effectively strengthen the euro.
Nor can we claim that this is about enhancing creditworthiness. Since 1999, Bulgaria's currency, the lev, has been legally pegged (as it was previously to the Deutschmark) at 1 lev to 51 euro cents. Known in jargon as the 'currency board', the ECB has since then, largely autonomously, been implementing monetary and credit policy. This ensures important financial predictability for investors.
Bulgaria's credit rating is 'BBB with a positive outlook'. With its low debt level, the country is certainly creditworthy internationally. But it is so even without the euro.
There are also questions about how politically reliable the Bulgarian government will prove to be in relation to euro-required plans. How much can a country rocked by constant corruption scandals and extreme political instability truly achieve?
Bulgaria's current government is an unlikely three-way coalition of the pro-Western GERB-SDS party alliance, the pro-Russian post-communist BSP-OL, and the conservative-nationalist ITN. The German equivalent would be a coalition of the CDU/CSU, BSW, Die Linke, and AfD. In Austria, it would be the ÖVP, KPÖ, and FPÖ. Unthinkable!
Bulgaria has held seven national elections since 2021, and is rocked by constant corruptions. How can it meet the EU's euro-required demands?
Bulgaria has held seven national elections since 2021, evidence of longstanding political instability. The next election is surely not far away, and grand structural and budget plans could soon be scrapped.
Moreover, there is no public groundswell in favour of this change. Surveys show that close to 60% of Bulgarians oppose the introduction of the euro because they fear a surge in inflation during and after the transition, as Croatia experienced in 2024.
The first large-scale demonstration against the euro took place in Sofia at the end of May. President Rumen Radev took the lead in the movement, and demanded a referendum. Parliament rejected his demand, and the government's fragile majority remains intact. The Constitutional Court must therefore now decide.
While Brussels celebrates Bulgaria's imminent admission, it must confront the harsh reality that Poland, the country it would love to see in the euro, continues to resist joining the eurozone. Poland has enjoyed three decades of fairly consistent economic growth, including 3.2% this past year, outstripping the 0.8% average across the eurozone. Given this trajectory, Poland should be the poster boy for the euro, especially as it is a requirement for EU countries to move towards joining the currency.
Yet Poland's recently elected President Karol Nawrocki is adamantly opposed to joining – and even Donald Tusk's pro-Europe government maintains Poland is still not ready. This contrast in positions between two nations whose economic situations are so different speaks volumes for the attractiveness of the currency.
And it leaves everybody wondering: is the Bulgarian economy really ready for the euro? Or is this more a case of political will trumping socioeconomic reality?
