Bulgaria sticks to plans to adopt the euro from Jan 1, 2024

SOFIA, June 30 (Reuters) - Bulgaria is sticking to its target to adopt the euro currency from January 1, 2024 and plans to start payments in euros without any transitional period once it joins the euro zone, government and central bank officials said on Wednesday.

Bulgaria, one of the European Union’s poorest member states, was admitted together with Croatia to the ERM-2 mechanism, a mandatory stage for joining the euro, last July.

According to a draft national plan for Bulgaria’s euro zone entry approved on Wednesday, Bulgarians will be able to pay also in the national lev currency a month after the adoption of the single currency.

One of the biggest problems countries face when joining the euro is that they can no longer use the exchange rate as a cushion from any economic shock, but Bulgaria already pegs its lev currency to the euro and plans to adopt the single currency at its current fixed rate.

“The introduction of the euro is planned without a transitional period, and the date of adoption of the euro will coincide with its introduction as an official unit of payment,” the central bank and the finance ministry said in a joint statement.

“The conversion will be done by applying the irrevocably the fixed exchange rate between the euro and the lev.”

The national plan draft is pending government approval after public discussions, the central bank and the finance ministry said in a joint statement.

Bulgaria meets the nominal criteria for joining the euro zone at present and expects to be compliant when the euro is adopted, despite eventual inflationary pressures as it converges with the richer euro zone economies.

Bulgaria is one of the least indebted EU states. Its fiscal deficit was only 3% of economic output last year, despite increased spending to reduce the impact of the coronavirus on jobs and businesses. (Reporting by Tsvetelia Tsolova, Editing by Nick Zieminski)