SOFIA (Reuters) - Bulgaria will be next to adopt the euro, but should not rush the process, European Commissioner for Economic Affairs Pierre Moscovici said on Friday, as Sofia said it would make a key step to join the single currency by the end of June.
Arriving for an informal meeting of EU finance ministers in Sofia, Moscovici said Bulgaria should stay “cold-blooded” and work on meeting the accession criteria.
“Bulgaria will be the next member of the euro zone, no doubt about that,” he told reporters. “But we need to prepare that with method and care and we do not need to rush, because if we rush we create accession to the euro that is not perfect.”
Bulgarian Prime Minister Boyko Borissov said on Thursday he expected the country to join the Exchange Rate Mechanism II - an obligatory two-year stability test for the currency before adopting the euro - within a year.
Finance Minister Vladislav Goranov said Bulgaria would apply for the ERM-2 in the first half of the year.
The ERM-2 is likely to be a formality, because Bulgaria has had a currency board for more than 20 years, pegging its lev first to the Deutschemark and then to the euro.
Moscovici said that Bulgaria, the EU’s poorest member, should work to make it economy more like those of the richer Western countries, stressing that joining the euro should be “an asset and not a shock”.
Bulgaria meets the formal criteria for euro adoption — it has a budget surplus, very low debt and long-term interest rates and moderate inflation.
But its gross domestic product per capita, calculated as power purchasing parity, is 49 percent of the EU average, well below euro zone member states. Many blame that on corruption that scares away investors.
Moscovici said that joining the EU’s banking union, which will put Bulgaria’s top banks under the scrutiny of the European Central Bank, was part of the process.
Borissov said the European Central Bank wanted Bulgaria to join the banking union before adopting the euro, but Goranov made clear on Friday there was no obligation to do so under EU rules.
“The understanding of the Bulgarian government and the central bank is that these are two parallel processes and the one cannot be a precondition for the other,” he said.
In a publication for a financial conference in Sofia, the deputy governor of Bulgaria’s central bank, Kalin Hristov, argued that joining the banking union before adopting the euro was not a reasonable option.
Hristov pointed out that non-euro zone members that joined the banking union would not be part of the decision making until they become euro members. Nor would they have access to ECB liquidity assistance or the European Stability Mechanism to recapitalize banks.
Reporting by Tsvetelia Tsolova, editing by Larry King