ECB President Christine Lagarde promises prosperity, but Bulgaria’s adoption of the euro on January 1st is far from making its 6.4 million inhabitants pop champagne.
In theory, joining one of the EU’s poorest countries in the eurozone brings economic benefits. But almost half of Bulgarians fear further price increases amid a persistent cost-of-living crisis.
“Currency conversions can lead to a temporary increase in measured inflation, often if companies round their prices during the transition,” Lagarde admitted in a speech in Sofia in early November.
But with proper oversight by the authorities, she added, the impact on consumer prices can be avoided.
There are, however, some serious obstacles to this. About three weeks before the national currency, the lev, was to be relegated to historical oblivion, the pro-Western coalition government in Sofia resigned after days of massive protests against its budget plans and under the weight of corruption allegations.
Although the original 2026 budget plan was withdrawn (it had called for tax and social security contributions to be raised to finance state spending), social discontent remains.
For now, the expanded 2025 budget is set to be implemented, as the country looks set to head to another election, its eighth in five years.
When is crucial. If they are caught in the middle of the euro transition, the far-right parties could emerge as winners – though probably not winners. And the pro-Russian nationalist “Renaissance” in particular, the most extremist of all.
It belongs to the same Eurogroup as the “Alternative for Germany” (AfD) and, among other things, is strongly opposed to the euro.
Half-hearted
“With the introduction of the euro, Bulgaria is now taking the final step towards the European Monetary Union and taking its rightful place at the heart of Europe,” Lagarde insists. Indeed, the Balkan country has long been part of European monetary history.
Although it has been a member of the EU since 2007, the lev has been linked to the euro since 1999 and, before that, to the Deutsche Mark.
Bulgaria is now considered to meet the criteria for joining the eurozone this year in terms of inflation, budget deficit, long-term borrowing costs and exchange rate stability.
It becomes the 21st country to join, following Croatia’s accession in January 2023, bringing the number of Europeans using the single currency to over 350 million.
The outgoing government has been touting the benefits until the very end. Almost half (45%) of Bulgaria’s exports are already in the eurozone.
According to the European Central Bank (ECB), small and medium-sized businesses will save around one billion leva a year just from eliminating the burden of transaction costs with conversion costs. In a small economy like Bulgaria, meanwhile, almost one in two jobs depends on foreign demand.
The euro is expected to help tourism and make it easier for Bulgarian manufacturers to trade with Europe and the world.
“Joining the eurozone is a way to make Bulgaria richer,” has long been the motto of the Central Bank and the Finance Ministry. But not all of the country’s residents share the same optimism.
Changing the currency is not enough
Bulgaria has the highest percentage of people in the EU at risk of social exclusion (30.3%). In areas near the borders with Serbia and Romania, GDP per capita is the lowest in the entire European bloc.
Of the 16.3 billion euros Brussels has so far allocated to the country, the main beneficiary is the capital Sofia, in contrast to small municipalities and rural communities.
The same is expected to happen with joining the euro. But Europe seems distant to many Bulgarians for many other reasons.
The billboards on the streets, showing the euro-lev exchange rate accompanied by the message “Common past. Common future. Common currency”, are a bad joke for a large part of the population.
The latest wave of popular protests, which has not yet subsided, has revealed a growing sense of discontent, especially among the young.
There is widespread disappointment that, 18 years after Bulgaria joined the EU, its politicians and Brussels have not kept their promise to improve the rule of law.
Analysts are sounding the alarm that this parameter could become a weapon in the “quiver” of the opponents of enlargement, in view of the planned accession of Ukraine to the EU.
It is considered by many to be fundamental for restoring stability on its eastern borders. Back in the present day, meanwhile, euro-bound Bulgaria is sinking into political and social instability.
As the protests continue, they are yet another chapter in a long-running dispute over who controls the state.
For the protesters, especially the young, the answer is simple. They are calling for judicial reform, a change in the electoral system, and new leaders.
