Bulgaria Central Bank Governor Slams Eurozone Double Standards

Iskrov said that Bulgaria and other new EU countries will find it very difficult to join the group of countries that already use the euro. Photo by BGNES

Bulgaria National Bank Governor, Ivan Iskrov, has stated that Bulgaria is very well prepared and generally meets the criteria for entry into the eurozone.

Iskrov said that the BNB will “fully support the government when it decides to send an application for admission into ERM 2.” He was explicit that membership in the eurozone is not a privilege but an obligation but refused to forecast when Bulgaria would be allowed to join the eurozone.

He added that Bulgaria and other new EU countries will find it very difficult to join the group of countries that already use the euro; “new EU countries are in the situation of shooting at a moving target with quail cartridges.”

Iskrov concluded that the ECB and older EU States have shown a fairly conservative policy on the adoption of new countries into the eurozone. He added that they have started to follow very strict implementation of the Maastricht criteria and noted that many older EU countries adopted the euro without complying with the same criteria.

Bulgaria planned to apply early next year to join the exchange-rate mechanism, the two-year currency stability test prior to euro adoption, and seek to switch to the common currency in 2013.

Initially the application was planned for November, but it was delayed till February at the earliest, after all member states submit their convergence programs, which contains the mid-term goals of the fiscal policy.

Joining the exchange-rate mechanism would bring Bulgaria closer to the umbrella of the euro region and the protection of the European Central Bank and is conditional on whether the new government will succeed to restore Brussels trust.

The lev is already linked to the euro in a currency board that keeps the Bulgarian currency at 1.9558 to the euro. Joining the exchange-rate mechanism may allow the lev to fluctuate by as much as 15 % around a central band, though the central bank has said it will leave the lev tightly pegged to the euro through the duration of the two years.

Bulgaria's entry in the eurozone, initially scheduled for 2010, has been set back as it is conditional on continued fiscal prudence and lower inflation.

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