Bulgaria Should Negotiate Fairer Terms of Eurozone Accession - Analyst

Georgi Angelov, Senior Economist at the Open Society Institute, has cautioned of the excessive burden Bulgaria could face after its Eurozone accession. Photo by BGNES.

Georgi Angelov, senior economist at the Open Society Institute, warned of the risks accompanying Bulgaria's Eurozone accession during a discussion organized Monday by Bulgaria's Economic Policy Institute and the Friedrich Ebert Foundation.

"Bulgaria could benefit from joining the Eurozone on two conditions- if the Eurozone did not fall apart and if we did not have to pay an extraordionately high price in case countries like Italy or Spain went bankrupt.", Angelov stated.

The economist drew attention to the fact that an increasing number of Eurozone member states were calling for its expansion, while non-members were staring to reconsider their bids, seeking to avoid footing the bill for failed economies.

"Countries with small debt burdens would come in useful in this respect", Angelov pointed out.

He cautioned of a draft scheme under which bankrupt states would not have to pay, thereby significantly increasing the burden for countries with good economic parameters.

"In this case, it remains unclear whether we would benefit from joining the Eurozone", Angelov remarked.

The economist highlighted that Bulgaria should not be made to take the blame for the chaos in the Eurozone by paying on behalf of the defaulting member states. He urged Bulgaria to demand a fairer distribution of burdens before the proposed amendment was ratified into the Lisbon Treaty.

The economic expert also asserted that, while it was typical for the Eurozone countries to treat non-members like second class countries, it was plain to see that the countries outside the Eurozone were now performing better in terms of key economic indicators like state debt.

Nadya Yorgova from the Economic Policy Institute presented a report claiming that the benefits from Bulgaria's accession to the Eurozone outnumber the downsides.

In her opinion, the step would have a positive impact on the bank system, lowering risk and interest rates, and freeing up a portion of the country's currency reserves, boosting the currency board and easing the movement of goods, services and capital.

Among the downsides she listed the loss of competitive power and the rise in the inflation rate after the adoption of the Euro, which she termed be a one-off occurrence.

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