German Edition: Bulgaria Raises Concerns for Euro Watchdogs in Frankfurt
Bulgaria and Croatia will be the next members of the Monetary Union. But this is not just about exchange rates, it is about much more important things, the subtitle of the specialized German magazine "Finanz und Wirtschaft", quoted by "Deutsche Welle" notes.
Since July, the Bulgarian lev and the Croatian kuna have been in the ERM II exchange rate mechanism. In the so-called euro zone waiting room, candidate countries are preparing for the adoption of the common European currency. This phase lasts for two years and if everything goes as it was planned, the euro will be able to be introduced in both countries from the beginning of 2023.
However, Bulgaria in particular raises concerns for the guardians of the euro in Frankfurt am Main, clarifies the publication and explains the reasons as follows: "In the spring, Prime Minister Boyko Borisov postponed the country's entry into the ERM II exchange rate mechanism after an up-to-date survey showed that only a fifth of the country's population supports the adoption of the euro. He then argued that a national consensus on the issue had to be reached first. When a few months later Borisov completely changed his mind, the Bulgarians were still too far from some unanimity on this issue."
The German magazine informs about the never-ending protests under the windows of the authorities in Sofia against corruption and for the resignations of the Prime Minister and the Prosecutor General.
"Borisov is trying to stay in power through changes to the constitution and the sudden surge for an entry into the exchange rate mechanism is due to the expected billions in grants to overcome the coronavirus crisis," the release reads. It also underlines the argument of Prime Minister Borisov who stated that only euro zone countries will receive funds, which is why Bulgarians had to enter it.
The publication explains Germany's passive position as follows: "Countries like Germany refrain from criticizing, they are ready to let Bulgaria into the euro area because it is a necessary ally in the refugee crisis - along the so-called Eastern Balkan refugee route. Borisov knows this well and tries to use this fact to his advantage."
The euro has, of course, a number of advantages. It is expected that it will give additional stability to the institutions, which in turn, will make both countries even more attractive to foreign investors. "But the new currency is not a sufficient guarantee if legal uncertainty and opacity persist in both countries. As for Bulgaria, it has a huge backlog in its economy", the German edition "Finance and Economics" commented.
Citi Bank's analysts for Eastern Europe have been quoted as doubting that Bulgaria is ready for the euro. No country that has adopted the common European currency has had such a low GDP per capita like Bulgaria, experts write and specify that they do not expect the Bulgarian lev to be replaced by the Euro in 2023.