site.btaFinance Minister Petkova: Bulgaria to Request Eurozone Convergence Report Once Criteria Are Met

Bulgaria will submit a request for a convergence report for the eurozone as soon as it meets the necessary criteria, as failing to meet the criteria carries a high risk of rejection, Finance Minister Temenuzhka Petkova said during Question Time in the National Assembly on Friday, responding to a question from Continue the Change-Democratic Bulgaria (CC-DB) MP Martin Dimitrov.

Meeting the Eurozone Criteria

"We will request a convergence report as soon as possible, but we must first meet the relevant criteria. Before we address these criteria, there is a significant risk of receiving a negative response. Therefore, first we need clarity on the 2025 budget, followed by the approval of a fiscal-structural plan that ensures the stability we must demonstrate. Only then will we move forward. However, our European partners support Bulgaria and welcome the fact that we have a regular government. Expectations are high, and I hope we can handle this with joint efforts," Petkova said.

Dimitrov noted that it is important to consult the European Commission on whether the usual practice of excluding countries with a greater deviation from the average eurozone indicator will apply. This could lead to Lithuania's exclusion, allowing Bulgaria to meet the final criterion for eurozone membership. According to December’s inflation data, Bulgaria is 0.1 percentage points away from meeting the price stability criterion.

ECB’s Perspective on Bulgaria’s Progress

Dimitrov cited European Central Bank (ECB) President Christine Lagarde, who recently answered a question by BTA's Elena Savova at a press-conference that Bulgaria’s convergence process with the eurozone is well advanced and progressing.

"From what I have seen and the discussions that I have had with the Bulgarian authorities – I am confident that this process is going well," Lagarde said at a press conference following the ECB’s first monetary policy meeting of the year.

She added that if the Bulgarian authorities request an extraordinary convergence report, the process will continue so that the European Commission can review all the criteria for Bulgaria's entry into the eurozone, not just inflation, that Bulgaria has to satisfy.

Petkova recalled that last week she met in Brussels with Eurogroup President Paschal Donohoe, ECB President Christine Lagarde, and Commissioner for Economy and Productivity Valdis Dombrovskis. She said European institutions welcome Bulgaria’s progress toward eurozone membership, with a consensus that the country can request the preparation of a convergence report.

Inflation and Price Stability Criteria

“Data released by Eurostat on January 17, 2025, shows that the reference value for the price stability criterion in the European Union was calculated at 2.5% for December 2024. Inflation in Bulgaria for the same period stood at 2.6%, exceeding the reference value by 0.1 percentage points,” Petkova said in response to a parliamentary question.

“As you know, under the Treaty on the Functioning of the European Union, price stability is achieved when the average inflation rate over a one-year period does not exceed by more than 1.5 percentage points that of the three EU member states with the most stable prices. The reference value for the price stability criterion is determined using the 12-month average inflation rate, based on the harmonized index of consumer prices. This is calculated by taking the arithmetic mean of the inflation rates in the three countries with the lowest inflation and adding 1.5 percentage points,” Petkova explained.

“In calculating the reference value, price trends in countries identified as statistical outliers are also considered. The decision to classify a country as having statistically atypical inflation and exclude it from the price stability criterion is made by the European Commission and the European Central Bank in their convergence reports, based on an established methodology,” she said.

“For a country to be considered statistically atypical and excluded from the price stability calculation, two conditions must be met. First, its inflation rate must be significantly below the eurozone average, and second, this deviation must be due to extraordinary factors specific to that country, which are not representative of inflationary processes in the eurozone,” Petkova noted.

Bulgaria’s Preparations for Eurozone Membership

"The regular government, meanwhile, continues its efforts to prepare the country for eurozone membership, including meeting all necessary criteria. In this context, on January 20, I met with Eurogroup President Paschal Donohoe, ECB President Christine Lagarde, and European Commissioner for Economy and Productivity Valdis Dombrovskis," she said.

"European institutions welcome Bulgaria’s progress toward euro adoption, as well as the formation of a regular government. There is consensus that Bulgaria should request reports on the fulfilment of the eurozone membership criteria," Petkova added.

"Confirmation that Bulgaria meets all the technical criteria for eurozone membership will be a necessary prerequisite for formally requesting an extraordinary convergence report. It is important to note that in their assessment, the European Commission and ECB analyze the sustainability of compliance with all criteria, which is key to securing a positive evaluation," she said.

"The government is therefore working diligently and systematically on preparing the 2025 State budget to ensure it meets the required deficit criteria. An updated medium-term budget forecast for 2025-2028 is also being developed, alongside Bulgaria’s National Medium-Term Fiscal-Structural Plan, which will reaffirm our commitment to macroeconomic stability and fiscal discipline in the medium term. In other words, European institutions expect us to maintain sustainability in these indicators over the next three years," Petkova concluded.