SOFIA, March 1 (Reuters) - Bulgarian Prime Minister Sergei Stanishev on Sunday pressed for a quick entry of the Balkan country in the pre-euro Exchange Rate Mechanism (ERM-2) as a step to cushion the impact of the global crisis.
Stanishev sought support for Bulgaria’s ERM-2 entry — a two-year currency stability test for euro hopefuls — saying such a move will send a positive signal to investors at a European Union summit in Brussels.
“Our participation in the ERM-2 will be a strong impulse for the reforms as well as a strong signal to investors and will confirm our financial and macroeconomic stability,” the government press office quoted Stanishev as saying.
German Chancellor Angela Merkel indicated on Sunday that the process to joining the ERM-2 could be accelerated. “There are requests to enter ERM 2 faster. We can have a look at that.”
The country is heavily dependent on foreign cash to finance its huge current account deficit and analysts say it may face a hard landing as investors flee the emerging economies and its key export market, the EU, has plunged into recession.
High inflation and bloated current account gap have frustrated Bulgaria’s efforts to join the two-year obligatory mechanism for euro zone entry since 2007 when it joined the bloc.
Diplomats in Sofia say the Socialist-led government’s failure to crack down on widespread corruption and stop fraud with EU funds put serious obstacles to its ERM-2 entry.
The latest Reuters poll [EMU/MEMS1] on the issue, in January, showed Bulgaria adopting the euro in 2015 from 2014 previously.
Bulgaria operates in a currency board regime and has pegged its lev currency to the euro since 1997.
The government has repeatedly said it plans to keep the current peg until it enters the euro zone, despite the turbulence caused by the global crisis.
Bulgaria’s reliance on foreign cash makes it vulnerable and analysts say it may be the next in line to seek International Monetary Fund support after Hungary, Iceland, Latvia, Serbia and Ukraine. (Reporting by Tsvetelia Ilieva, Editing by Maureen Bavdek)