Can Bulgaria Meet Eurozone Inflation Requirements?

The Bulgarian National Bank (BNB) has revised its economic forecast for Bulgaria, adjusting expectations for inflation. Economists Rumen Galabinov and Prof. Garabed Minasyan discussed on NOVA NEWS the implications for Bulgaria's potential entry into the Eurozone amid the country's ongoing political instability.

According to Minasyan, the BNB currently mandates a minimum reserve requirement of 12%. However, if Bulgaria joins the Eurozone, this requirement will drop to just 1%. He noted that the 12% reserves held by banks would be returned to them, which could lead to increased inflation.

Galabinov highlighted that the European Central Bank (ECB) has maintained high interest rates in the Eurozone for the past two years. He pointed out that the ECB has announced that the main interest rate will not decrease until annual inflation reaches 2%. This stance means that the BNB is continuing its local policies to support lower inflation in Bulgaria.

Minasyan added that as Bulgaria edges closer to Eurozone membership, there will be growing pressure for domestic wages to align with European standards. He noted the importance of monitoring how wage adjustments might impact the country’s economic processes.

Galabinov concluded that, aside from inflation concerns, Bulgaria's macroeconomic indicators are otherwise favorable for joining the Eurozone.