Bulgaria Set to Join the Euro Area on 1 January 2026

Strategic Insights -

Bulgaria is poised to become the 21st member of the euro area, with the European Parliament approving the Commission's proposal for a Council decision on the adoption of the euro on 1 January 2026. This decision marks a significant step towards Bulgaria's full economic integration with the European Union, reaffirming the euro's role as a global symbol of stability and unity. Bulgaria has achieved substantial progress towards full economic convergence, making it well-positioned to adopt the euro.

Key Takeaways:

  • Bulgaria has fulfilled all five convergence criteria under Article 140(1) of the Treaty on the Functioning of the European Union, demonstrating its readiness to adopt the euro.
  • The country's national legislation is fully aligned with EU requirements, guaranteeing the independence of the national central bank and ensuring compliance with the objectives of the European System of Central Banks (ESCB).
  • Bulgaria recorded an average inflation rate of 2.7% over the 12 months to April 2025, below the reference value of 2.8%.
  • The country's general government budget deficit stood at 3.0% of GDP in 2024, and its general government gross debt-to-GDP ratio stood at 24.1%, both below the reference values.
  • Bulgaria has participated in ERM II for the past two years, fulfilling all post-entry commitments and exhibiting no deviation from the central rate.
  • The country's average long-term interest rate was 3.9% in the 12 months ending April 2025, well below the reference value of 5.1%.
  • Bulgaria's external position has improved, with its combined current and capital account close to balance in 2024.
  • The country is well integrated with the euro area through trade and investment, benefiting from increased banking and financial integration and access to the broader euro area market.
  • Bulgaria continues to make progress on addressing the rule of law, anti-corruption efforts, and regulatory quality, but further actions are needed.
  • The Commission's 2025 Alert Mechanism Report found no need for an in-depth imbalance review but emphasized the importance of closely monitoring developments in competitiveness, the housing market, and credit growth.

Statistics:

  • Average inflation rate in Bulgaria: 2.7% (April 2025)
  • Reference value for inflation: 2.8%
  • General government budget deficit in Bulgaria: 3.0% of GDP (2024)
  • General government gross debt-to-GDP ratio in Bulgaria: 24.1% (2024)
  • Average long-term interest rate in Bulgaria: 3.9% (April 2025)
  • Reference value for long-term interest rate: 5.1%
  • Combined current and capital account in Bulgaria: close to balance (2024)
  • Number of years Bulgaria has participated in ERM II: 2
  • Average annual growth rate of Bulgaria's GDP: 3.5% (2021-2024)

Sources:

  • European Parliament Legislative Resolution on the proposal for a Council decision on the adoption by Bulgaria of the euro on 1 January 2026 (COM(2025)0304 -- C10Çæ0110/2025 -- 2025/0158(NLE)) (Consultation)
  • Commission Convergence Report 2025
  • European Central Bank Convergence Report of June 2025
  • Rule 108 of the European Parliament's Rules of Procedure
  • Report of the Committee on Economic and Monetary Affairs (A10-0113/2025)
  • Commission's 2025 Alert Mechanism Report
  • Bulgarian National Bank's Convergence Report
  • European Commission's grant agreement for Bulgaria's Recovery and Resilience Plan (RRP)
  • European Commission's grant agreement for Bulgaria's Cohesion Policy Funds (2021-2027)