Archive for February 16, 2010


European Union political leaders have sent a discouraging message regarding Bulgaria’s ambition to adopt the single currency in the next two to three years.
This has been reported by foreign media in the wake of Bulgaria’s Prime Minister Boyko Borisov meetings in Brussels with European Central Bank president Jean-Claude Trichet, Germany ‘s Chancellor Angela Merkel and France ‘s President Nicolas Sarkozy.
The message confirms fears that political support for admitting a new euro area member in the face of a struggling government in neighbouring Greece to regain control over its finances will be insufficient for a successful Bulgarian application.
Boyko Borisov, who has drawn international accolades for cutting spending while maintaining high levels of public support, said after his return he fears Bulgaria’s fiscal performance won’t guarantee entry to the 16-nation euro zone.
Greece’s woes may end up foiling Bulgaria’s aspirations to join the euro in three years, despite the country’s budgetary rigor, the prime minister announced.
After months of speculation over when the former communist state would formally apply to the bloc’s exchange-rate mechanism, the so-called Eurozone waiting room, the prime minister refused to cite a concrete date.
Bulgaria initially planned to apply to join the exchange-rate mechanism in November, but delayed it for the beginning of 2010 after all member states submit their convergence programs, which contains the mid-term goals of the fiscal policy.
Borisov reiterated the assurances of Finance Minister Simeon Djankov that the country can significantly contribute to the stability of the single currency as it boasts the best fiscal policy parameters across the European Union.
Officials from the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) will arrive in Bulgaria February 18 to examine the country’s readiness to join ERM II.
The experts will visit Sofia at the invitation of Bulgaria’s Minister of Finance Simeon Djankov who has discussed the issue during his formal trip to Germany and Luxembourg last week.
Countries must be members of ERM II for two years before they can formally join the eurozone. Bulgaria believes that it could be ready for euro entry by 2013.
Bulgaria, which joined the EU in 2007, posted the smallest budget deficit among the 27 member states last year, according to the finance ministry. It is expected to be the only EU nation to balance its budget in 2010.
Minister Djankov, a World Bank economist, hopes to offset a possible reluctance to admit Bulgaria into the ERM, stemming from the global crisis, by garnishing the application with a targeted balanced 2010 budget, the smallest 2009 deficit in the EU and laws overhauling the inefficient health-care and social-security systems.
Joining the exchange-rate mechanism would bring Bulgaria closer to the umbrella of the euro region and the protection of the European Central Bank and is conditional on whether the new government will succeed to restore Brussels trust.
The lev is already linked to the euro in a currency board that keeps the Bulgarian currency at 1.9558 to the euro. Joining the exchange-rate mechanism may allow the lev to fluctuate by as much as 15 % around a central band, though the central bank has said it will leave the lev tightly pegged to the euro through the duration of the two years. “Novinite”