Bulgaria is on Thursday to become the 21st country to adopt the euro, but some believe the move could bring higher prices and add to instability in the EU’s poorest country.
A protest campaign emerged this year to “keep the Bulgarian lev,” playing on public fears of price rises and a generally negative view of the euro among much of the population.
However, successive governments have pushed to join the eurozone and supporters insist it would boost the economy, reinforce ties to the West and protect against Russia’s influence.
Photo: Reuters
The single currency first rolled out in 12 countries on Jan. 1, 2002, and has since regularly extended its influence, with Croatia the last country to join in 2023.
However, Bulgaria faces unique challenges, including anti-corruption protests that earlier this month swept a conservative-led government from office, leaving the country on the verge of its eighth election in five years.
Boryana Dimitrova of the Alpha Research polling institute, which has tracked public opinion on the euro for a year, said that any problems with euro adoption would be seized on by anti-EU politicians.
Any issues would become “part of the political campaign, which creates a basis for rhetoric directed against the EU,” she said.
While far-right and pro-Russia parties have been behind several anti-euro protests, many people, especially in poor rural areas, worry about the new currency.
“Prices will go up. That’s what friends of mine who live in Western Europe told me,” said Bilyana Nikolova, 53, who runs a grocery store in the village of Chuprene in northwestern Bulgaria.
The latest survey by the EU’s polling agency Eurobarometer suggested 49 percent of Bulgarians were against the single currency.
After hyperinflation in the 1990s, Bulgaria pegged its currency to the German mark and then to the euro, making the country dependent on the European Central Bank (ECB).
“It will now finally be able to take part in decisionmaking within this monetary union,” said Georgi Angelov, senior economist at the Open Society Institute in Sofia.
An EU member since 2007, Bulgaria joined the so-called “waiting room” to the single currency in 2020, at the same time as Croatia.
The gains of joining the euro are “substantial,” ECB President Christine Lagarde said last month in Sofia, citing “smoother trade, lower financing costs and more stable prices.”
Small and medium-sized enterprises stand to save an equivalent of about 500 million euros (US$588.7 million) in exchange fees, she added.
One sector expected to benefit in the Black Sea nation is tourism, which this year generated about 8 percent of the country’s GDP.
Lagarde predicted the impact on consumer prices would be “modest and short-lived,” saying in earlier euro changeovers, the impact was between 0.2 and 0.4 percentage points.
However, consumers — already struggling with inflation — fear they would not be able to make ends meet, Dimitrova said.
Food prices last month were up 5 percent year-on-year, the Bulgarian National Statistical Institute said, more than double the eurozone average.
The Bulgarian parliament this year adopted empowered oversight bodies to investigate sharp price hikes and curb “unjustified” surges linked to the euro changeover.
However, analysts fear wider political uncertainty risks delaying much needed anti-corruption reforms, which could have a knock-on effect on the wider economy.
“The challenge will be to have a stable government for at least one to two years, so we can fully reap the benefits of joining the euro area,” Angelov said.
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