Bulgaria meets all the criteria, only the inflation rate remains for euro area membership according to the regular convergence reports for 2024 of the European Commission and the European Central Bank.
It is expected by the end of the year to be covered as a criterion and our country to request an extraordinary report. This was announced by the Bulgarian National Bank (BNB), BGNES reported.
Today, the European Commission (EC) and the European Central Bank (ECB) published the convergence reports for 2024, in which they present their assessment of the progress towards the euro area achieved by the six member states obliged to adopt the euro: Bulgaria, the Czech Republic, Hungary, Poland, Romania and Sweden. Convergence reports are published every two years or when there is a specific request from a member state to assess its readiness to join the euro area, as was the case for Latvia in 2013.
Bulgaria meets all the criteria, only the inflation rate for euro area membership remains, according to the regular convergence reports for 2024 of the European Commission and the European Central Bank. Our country fulfils three of the four numerical criteria for membership, namely: the one on the stability of public finances (budget balance and government debt), the exchange rate and the long-term interest rate. Bulgaria does not meet only the price stability criterion, as inflation is expected to fall in the coming months, which would allow Bulgaria to meet the last challenge to its euro area membership. This criterion is also expected to be met by the end of the year.
The budget balance in 2023 is negative at 1.9% of GDP, with a defined limit for the general government deficit of 3% of GDP, and the government gross debt-to-GDP ratio of 23.1% is well below the 60% benchmark, ranking us second among the EU countries with the lowest government indebtedness. Bulgaria's average long-term interest rate for the period March 2023-April 2024 is 4% and is also below the benchmark of 5.5%.
With regard to the exchange rate dynamics criterion, as of 10 July 2020 the Bulgarian lev participates in the exchange rate mechanism of the European Monetary System - Currency Mechanism II (CM II), which the country joined by maintaining the country's current currency board as a unilateral commitment with an official exchange rate of BGN 1.95583 per euro and has not shown any deviation within the reference period. Our country is the only one of the countries under consideration that fulfils this criterion.
The reports note that, of the six countries examined, only Bulgaria's legislation can be considered compatible with EU law, subject to the conditions and interpretations set out in the reports. In the context of our full membership of the euro area, Bulgaria should continue its steps towards ensuring a stable and predictable business environment and institutional framework to achieve sustainable convergence with the euro area countries.
From the EC and ECB reports it can be stated that Bulgaria is the most advanced of all six countries on its path to euro adoption and has made significant progress in meeting the convergence criteria.
The Bulgarian authorities will continue to work actively to meet all the criteria for euro area membership, as well as to improve the business environment and the institutional framework to achieve sustainable convergence with the euro area. Upon fulfilment of all membership criteria, which is expected to be achieved by the end of the year, our country will request the preparation of extraordinary convergence reports by the European Commission and the European Central Bank, on the basis of which a decision on Bulgaria's euro area membership date will be taken as soon as possible. I BGNES
