Bulgaria’s Euro Dilemma in the Shadow of Croatia and Greece

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Introduction

Bulgaria’s path toward euro adoption has slowed, with 2026 now the earliest realistic entry date. Although the country formally entered ERM II in July 2020, it missed the 2024 target and failed to meet inflation benchmarks in 2023. While the Bulgarian government remains committed to joining the eurozone, public opposition has surged, and political resistance is growing.

Notably, President Rumen Radev has called for a national referendum, reflecting widespread skepticism. This article analyzes the economic pros and cons, using comparative data from Croatia, Greece, and other countries that transitioned to the euro.

Bulgaria in 2024: Status Update

Despite technical readiness in areas like fiscal balance and exchange rate stability, inflation volatility and public sentiment are the biggest hurdles.

Public Sentiment: Why Many Bulgarians Oppose the Euro

Recent polls show a majority of Bulgarians are against euro adoption:

• Gallup International Balkan (2023): 58% opposed, 30% in favor

• Trend Research (2023): 60–65% against the euro in most age groups

• Main concerns: Inflation, loss of sovereignty, lack of trust in EU institutions

President Rumen Radev, reflecting this sentiment, called for a referendum in 2025. Though no referendum has been held, the idea underscores the political friction surrounding the issue.

Case Study 1: Croatia (Joined Eurozone in 2023)

Context:

• Pegged kuna to the euro since 1994

• GDP per capita (PPP): €27,200

• Inflation (2022): 10.7%

• Public debt: 70.6% of GDP

What Happened Post-Euro:

Gains:

• Lower interest rates

• Boost in tourism revenue (+15% in early 2023)

• Improved credit ratings

• Full access to ECB liquidity and financial safety nets

Problems:

• Inflation spike: Prices rose 12.7% YoY in early 2023

• Dual pricing confusion: Difficult for elderly and rural populations

• Retail backlash: Accusations of price manipulation

• Public mistrust: Most Croats opposed euro adoption at the time

Lesson for Bulgaria: Transparent communication and strong consumer protections are essential. Croatia showed that even a “technically smooth” adoption can create public backlash without careful inflation controls.

Case Study 2: Greece (Joined in 2001)

Context at Entry:

• GDP growth: 4.5%

• Debt: 103% of GDP (understated)

• Unemployment: 10–11%

• Inflation: ~3.2%

The Crisis Decade:

Failures:

• Underreported deficits and debt

• Borrowed heavily due to cheap credit

• No control over monetary policy when crisis hit

• Deep recession, 27% peak unemployment in 2013

• Loss of sovereignty under IMF/EU bailouts

Initial Gains:

• Interest rate convergence

• Short-term FDI boost

• EU structural funds inflows

Lesson for Bulgaria: Sound fiscal governance must be preserved. Unlike Greece, Bulgaria maintains low debt and a conservative budget—but slippage could be catastrophic under euro constraints.

Case Study 3: Other Euro Adopters

These countries demonstrate that successful euro transitions are possible, but only with public trust, price controls, and resilient institutions.

Pros of Euro Adoption for Bulgaria

Economic Advantages:

1. No conversion costs for business or tourism

2. Lower transaction risk with EU trade partners (~56% of exports to eurozone)

3. Improved investor confidence (especially in banking and real estate)

4. Access to ECB’s liquidity and safety mechanisms

5. Enhanced financial credibility

6. Tighter EU integration, opening door to more cohesion funds and strategic influence

Cons and Risks

Economic and Political Risks:

1. Loss of monetary tools (no devaluation or independent rate setting)

2. Perceived inflation due to rounding-up or pricing abuse

3. Public resistance may lead to political instability or delayed adoption

4. Limited ECB fit—monetary policy might not match Bulgaria’s economy

5. Risk to low-income groups—fixed income households could face real losses

6. Political tension—referendum calls could polarize society

Conclusion: Is Bulgaria Ready?

Technically: Yes—Bulgaria meets most Maastricht criteria, especially fiscal and exchange rate stability.

Politically: Not yet—public trust is lacking, and euro enthusiasm is far from unanimous.

Economically: Conditional—benefits will materialize only with strong regulatory frameworks and inflation controls.

Final Thought

Euro adoption could anchor Bulgaria more firmly in the EU core, but timing and trust matter just as much as technical readiness. Learning from Croatia’s growing pains and Greece’s deeper crisis, Bulgaria must approach 2026 not just as a date—but as a target for readiness, transparency, and public dialogue.