Bulgaria’s Eurozone Entry in 2026 Uncertain Amid Fiscal and Political Instability

Bulgaria's entry into the eurozone may not occur on January 1, 2026, as hoped, but rather in early 2027 or even later, according to Simeon Dyankov, a former finance minister and current member of the Fiscal Council. In an interview with Bulgarian National Radio, Dyankov explained that mid-year entry is not feasible due to the significant costs and technical challenges involved in reformatting the banking system. Therefore, euro adoption can realistically occur only at the start of a calendar year.

Dyankov noted that efforts are currently underway to meet the entry criteria by the beginning of 2026, but he expressed doubt about the feasibility of this timeline, primarily due to the country's fiscal deficit. He mentioned that representatives from the European Central Bank visited Sofia last week for talks. Bulgaria is arguing that extraordinary circumstances, such as the ongoing war in Ukraine and defense-related spending, should be taken into account when assessing compliance with fiscal criteria. However, Dyankov emphasized that the ECB operates independently and does not make politically driven decisions.

He also commented on the political implications of the upcoming convergence report expected in June. According to Dyankov, the current ruling coalition is held together more by the shared objective of eurozone accession than by the report itself. If achieving this goal requires a longer timeline, Dyankov believes the coalition must be reinforced to sustain political stability through 2026. This could involve reconfiguring the government within the current parliament, rather than holding early elections.

Dyankov suggested reopening talks with Democratic Bulgaria (DB), which he described as a natural partner in the euro adoption process. If that effort proves unsuccessful, he proposed exploring cooperation with Delyan Peevski's DPS faction - "New Beginning." A more stable cabinet, he argued, would help shift focus away from the political dimensions of the eurozone debate.

On the economic front, Dyankov cautioned that inflation criteria have only been met in February so far, and it remains uncertain whether Bulgaria can maintain a deficit below the 3% threshold. He also raised concerns about inherited unpaid obligations from previous governments, which may impact the country’s financial performance on an accrued basis.

Finally, Dyankov addressed broader geopolitical issues, criticizing the slow pace of European responses to U.S. tariff policies introduced under President Trump.

Who is Simeon Dyankov
Simeon Dyankov is a Bulgarian economist and politician known for his ultra-right, free-market economic beliefs, heavily influenced by Friedrich von Hayek and Milton Friedman. As a former World Bank employee and Bulgaria's Finance Minister (2009–2013), he advocated for drastic austerity measures, deregulation, and minimal state intervention in the economy. His policies included severe budget cuts, withdrawal of funds from state enterprises, and controversial reforms targeting institutions like the Bulgarian Academy of Sciences. Critics argue his rigid adherence to neoliberal ideology led to economic stagnation, high unemployment, and mismanagement, dismissing him as disconnected from reality and one of Bulgaria's weakest finance ministers. His tenure was marked by failed attempts to join the Eurozone's ERM II, unpopular fiscal restrictions, and a refusal to acknowledge the social consequences of his policies.