Bulgaria is preparing to adopt the euro despite fears of increased inflation

Bulgaria will join the Eurozone next Thursday, becoming the 21st country to adopt the single European currency, in a merger that some fear will exacerbate inflation and political instability.

During the summer, a protest movement emerged demanding that the Bulgarian lev be kept as a national currency, led by far-right, pro-Russian parties, exploiting Bulgarians’ fears of rising prices.

But for successive governments that sought to adopt the euro, this transition to the single European currency would strengthen the economy of the poorest country in the European Union, strengthen its relations with Western Europe, and protect it from Russian influence.

Before Bulgaria, Croatia, in 2023, was the last country to adopt the single currency that was officially introduced, on January 1, 2002, in 12 European Union countries.

Bulgaria, a Balkan country with a population of 6.4 million people and a member of the European Union since 2007, faces serious challenges in the wake of anti-corruption protests that recently toppled the conservative coalition government that had been in power for less than a year, with the possibility of holding new parliamentary elections, which will be the eighth in five years.

In light of this unstable situation, Boriana Dimitrova, from the Alpha Polling Institute, which has been studying the position of Bulgarian public opinion on the euro for a year, believes that any problem related to the adoption of the euro constitutes material for exploitation by anti-European Union politicians.

According to the latest opinion poll conducted by the European Union’s Eurobarometer agency, 49% of Bulgarians oppose the adoption of a single currency.

This concern is particularly prominent in poor rural areas.

Bilyana Nikolova (53 years old), who runs a grocery store in the small village of Chopriny in northwestern Bulgaria, told Agence France-Presse: “Prices will rise, that’s what my friends residing in Western Europe told me.”

After hyperinflation in the 1990s following the fall of communism, Bulgaria linked its currency to the German mark, then to the euro, making it dependent on the monetary policy of the European Central Bank, without having any say in this matter.

Georgi Angelov, chief economist at the Open Society Institute in Sofia, explained to Agence France-Presse that “Bulgaria will finally be able to participate in decisions within the monetary union.”

The President of the European Central Bank, Christine Lagarde, confirmed that the gains from adopting the euro would be “significant” for Bulgaria, noting “facilitating trade, lower financing costs, and stable prices.”

Last month, in Sofia, Lagarde indicated that small and medium-sized companies could save the equivalent of about 500 million euros in foreign exchange fees.

Tourism is expected to benefit in particular from the euro in the country bordering the Black Sea, as the sector contributed about 8% of the gross domestic product this year.

Lagarde also downplayed concerns about price changes, considering that they would occur in a “slight and short-term” manner, and pointed out that their impact during previous euro adoption operations ranged between 0.2 and 0.4 percentage points.