Bulgaria, which will adopt the euro on 1 January (see EUROPE 13653/1), hosted a launch conference on Tuesday 4 November attended by representatives of the European Central Bank (ECB), the Bulgarian National Bank, the Eurogroup, the International Monetary Fund (IMF), the European Stability Mechanism (ESM) and the European Commission. The Commission outlined the expected benefits of accession, both for Bulgaria and for the international influence of the single currency, while a significant proportion of the Bulgarian population remains attached to the lev, the national currency, and is expressing its concerns about this change.
The Bulgarian Prime Minister, Rossen Jeliazkov, has promised that his country is “ready at every level”, from the legislative framework and logistics to the adaptation of IT and payment systems and consumer protection and information systems.
“I am convinced that the Bulgarians’ reticence about the euro will very soon dissipate”, declared Mr Jeliazkov, denouncing the propagation of speculative claims based on fear by certain political players hostile to European integration.
With annual inflation recorded at 3.9% in Bulgaria at the start of the autumn, the prospect of a further rise in prices following the change of currency is causing concern, and is also fuelling a feeling of loss of sovereignty.
“In earlier euro changeovers, the [inflationary - Editor’s note] impact was between 0.2 and 0.4 percentage points. Even in Croatia – which joined the euro area at a time when inflation was already high – the changeover effect was about 0.4 percentage points, and it quickly faded”, noted ECB President Christine Lagarde, referring to “natural uncertainty” in public opinion.
Consolidation of reforms. On the basis of past experience, Ms Lagarde felt that the real risk for countries joining the euro area was not a loss of sovereignty or rising prices, but rather that reforms would run out of steam once monetary integration was complete, which, in her view, would prevent them from reaping the full benefits of the single currency.
Praising the work done to join the euro (see EUROPE 13653/1), the European Commissioner for Economy, Valdis Dombrovskis, the Managing Director of the IMF, Bulgaria’s Kristalina Georgieva, and Ms Lagarde recommended that Bulgaria continue to align its institutions, particularly in terms of governance (see EUROPE 13689/20), with the standards of the European Union, which it joined in 2007.
Ms Georgieva recommended that Bulgaria implement responsible economic policies by strengthening budgetary discipline, in particular through prudent management of public spending and more efficient investment, and by closely monitoring the financial risks associated with the overheating of the economy and the property market.
“Use your voice - in the EU and now in the euro area. If you want more efficient banking and financial intermediation and better opportunities for startups, innovation, and growth - please - push for the completion of the EU single market and the single European financial system”, she argued. (Original version in French by Bernard Denuit)