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From January 1, 2026, Bulgaria will replace the lev with the euro as its national currency.
The Balkan country of 6.5 million people joined the EU in 2007 and officially began the process of joining the eurozone in 2018.
Brussels and Sofia hope joining the eurozone will boost the country’s economy and strengthen its integration into the European Union.
“The bigger effect is the long-term effect, which basically increases confidence in the currency, the purchasing power of the currency, foreign investors, people buying Bulgarian bonds, but also the various sectors that invest in the country,” Petar Ganev, a senior researcher at the Institute for Market Economics, told Euronews.
The introduction of the euro may also affect Bulgaria’s credit rating.
“Because of the Monetary Board, credit agencies are deducting it from our credit ratings,” Ganev explained.
“They say our debt is denominated in a foreign currency, that is, the euro (…) They say that if you have foreign debt in another currency that is not yours, we will deduct it from your credit rating. So we have been deducting it from your credit rating for 28 years, and now it will go away.”
Furthermore, he believes that joining the eurozone would only lead to a slight increase in inflation.
“That’s not the main driver. The main driver is consumption, supported by an inflationary budget and record levels of credit, especially for new homes,” he said.
political turmoil
However, political instability may have a negative impact on the Bulgarian economy. The government resigned in mid-December after weeks of anti-corruption protests.
In Bulgaria, “there have been seven elections in three years, and now the government has resigned again, so long-term political stability and the formation of a government are not possible,” Ganev explained.
“This leads to budget problems because we are not able to vote on a budget on time. Four out of the last five years have started without a budget,” he added.
The exchange rate is fixed at Lev 1.95 per euro.
From August, prices will be displayed in both levs and euros to help consumers and businesses adjust. Additionally, cash payments in both currencies will be accepted in January to smooth the transition.
Sofia meets the four criteria for Maastricht to join the monetary area: price stability (inflation rate of 2.7% in 2024), sound finances (public debt and deficit of 24% and 3% of GDP in 2024), exchange rate stability, and long-term interest rate stability.
In 2024, Bulgaria will be the poorest EU country in terms of GDP per capita.
It is also the country most affected by poverty among the EU countries, with over 21% of the population living below the poverty line.
