Bulgaria adopts the Euro

Translated by Mariateresa Tauro

Turmoil in Sofia: joining the Eurozone amid political instability and economic austerity

Bulgaria’s political and social scenario is currently marked by deep concerns and marked instability. The government, led by the prime minister Rosen Zhelyazkov, has been forced to resign, overwhelmed by a wave of popular discontent that manifested itself through frequent and intense street protests. The core of the dissent lies in the firm opposition of a section of the population to the adoption of the single European currency, the euro, which is viewed with suspicion at this delicate moment in history.

The dawn of a new monetary era

Despite the internal tensions, the 1st January is intended to be a fundamental watershed: it will mark the end of a transition that has lasted for years and, at the same time, the beginning of a new financial era for the nation. On that day, Bulgaria will officially join the Eurozone, becoming the 21st member state to adopt the official common currency.

As is well known, the journey leading to this milestone received its official endorsement in the summer of 2025. In particular, on the 4th June, the highest EU institutions — the European Commission and the European Central Bank (ECB) — gave their seal of approval, certifying that Sofia fully complies with all the strict convergence criteria required. The analysis confirmed a solid economic framework: inflation is under control, public finances are in good health, interest rates are in line with the required standards, and the exchange rate has demonstrated the necessary stability.

A few weeks later, on the 8th July, the Ecofin Council ratified the final acts to definitively seal the process, irrevocably setting the conversion rate. The exchange rate was fixed at 1 euro to 1.95583 lev, confirming the same parity that has effectively linked the Bulgarian national currency to the single currency for many years now.

Substantial continuity

Analysing the situation from a purely European perspective, Bulgaria's entry does not represent a leap into the unknown or the entry into a completely new system. Quite the opposite, the country already lives de facto within this financial ecosystem. Suffice it to know that since 1997, the lev has been anchored first to the German mark and then to the euro. Furthermore, since 2020, Sofia has been an integral part of ERM II, the European mechanism designed to test the resilience and stability of exchange rates.  In other words, the euro has been a ‘silent’ but dominant presence in the Bulgarian economy for decades. From 2026 onwards, this relationship will simply become explicit and official.

Convergence figures and ECB warnings

The assessment expressed in the Convergence Report drawn up by the ECB does not allow for interpretation doubts: in April 2025, the average inflation rate in Bulgaria stood at 2.7%, virtuously positioning itself just below the 2.8% threshold imposed by the European Union to enter the euro club. The data on public finances are also encouraging: public debt remains at around 24% of GDP, a figure that places Bulgaria among the most virtuous countries in the Union. As proof of this fiscal discipline, it should be noted that Sofia has not been subject to excessive deficit procedures since 2012.

In Brussels' eyes, this is a ‘textbook case’. However, Frankfurt has chosen to adopt a policy of transparency, avoiding minimising what is perhaps the most sensitive issue for public opinion: the perception of rising living costs. The President of the ECB, Christine Lagarde, issued a clear warning, emphasising that in the months immediately following the physical introduction of the new currency, there could be a slight, albeit temporary, rise in prices.

This phenomenon, technically linked to price list rounding, has been defined by experts as ‘modest and temporary’ from a strictly macroeconomic point of view. Nevertheless, it cannot be ignored that this effect could have a significant psychological impact, risking further erosion of consumer confidence in an already fragile social context.

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