Bulgaria Joins Madrid Ecofin with Euro Hopes

Finance | April 16, 2010, Friday // 08:03|  views

Bulgaria's center-right government has blamed their Socialist predecessors for the dashed hopes for entry into ERM II in 2010. Photo by BGNES

Bulgaria's finance minister has not given up hope for pushing ahead with his euro plans, it emerged in Madrid where his colleagues from the other EU member states will consider and assess the country's convergence program.

“What I hope to hear is the word “adequate”. If we hear that our convergence program is “adequate”, we will be able to plan ahead Bulgaria's application for ERM II,” Minister Simeon Djankov told journalists in Madrid, the venue of the European Union finance ministers summit.

The Bulgarian center-right government submitted to the European Commission at the end of January its convergence program until 2012, which outlines the preparations for joining the ERM II mechanism and the adoption of the euro.

“Provided that we receive a positive evaluation of the program, we will immediately begin to consider what is the best time for ERM II application,” Minister Djankov added, referring to the the pre-euro ERM II waiting room.

The comment comes shortly after Bulgaria's center-right government announced it has abandoned plans to apply to join the bloc's exchange-rate mechanism over a larger than expected 2009 deficit caused by unaccounted procurement deals, signed by the previous Socialist-led cabinet.

The financially unaccounted procurement deals has increased the 2009 gap to 3.7% of gross domestic product (GDP) from an initial 1.9% under the EU rules.

“We were expected to be a fiscal model for the other European countries together with Estonia, now I will feel only shame in Madrid ( at the meeting of the EU finance ministers) when I tell my colleagues what has happened,” Djankov fumed last week.

“Europe does not make a distinction between current and former governments. I represent Bulgaria and now it is a shame,” he added.

Joining the exchange-rate mechanism was assigned top priority for this year by the new Bulgarian center-right government, which was the reason why it stuck to tight financial policy at the end of 2009 and delayed payments to businesses in a bid to keep low the budget deficit.

Minister Djankov, a World Bank economist, hoped to offset a possible reluctance to admit Bulgaria into the ERM, stemming from the global crisis, by garnishing the application with a targeted balanced 2010 budget, small 2009 deficit and laws overhauling the inefficient health-care and social-security systems.

Entry into the so-called Eurozone waiting room would have brought Bulgaria closer to the umbrella of the euro region and the protection of the European Central Bank and was conditional on whether the new government would succeed to restore Brussels trust and the budget deficit that the country has posted.

Countries must be members of ERM II for two years before they can formally join the eurozone. Bulgaria so far believed that it could be ready for euro entry by 2013.

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Tags: greece, Eurozone, EC President, EC, Jose Manuel Barroso, Georgi Parvanov, Bulgaria President, natural gas, gas transit, Buzek, euro, ERM II, ERM 2


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