Bulgaria Set to Join the Euro on Jan. 1 as Political Turmoil Intensifies

Overview

• The currency changeover at midnight will make Bulgaria the 21st member of the euro area, a move endorsed by the European Commission and euro-area finance ministers and publicly backed by the ECB.
• Prime Minister Rosen Zhelyazkov’s government resigned on December 11 after mass anti-corruption protests, with party leaders signaling snap elections are likely and no updated budget in place.
• Authorities announced on December 29 penalties for retailers that impose unjustified price increases, as dual pricing rolls out and many citizens worry about inflation during the changeover.
• Macro indicators cited for entry include inflation near 2.8%, a deficit around 3% of GDP and public debt near 24–30%, with the lev long pegged to the euro and in ERM since 2020.
• The EU has delayed part of recovery funds over unmet rule-of-law reforms, public opinion is split with many preferring to keep the lev, and the ECB plans to light its Frankfurt headquarters to mark the accession.