Bulgaria and the euro

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eurozone participation
  European Union member states (eurozone) – 18
  European Union member state in ERM II scheduled to join on 1 January 2015 – Lithuania
  European Union member states not in ERM II but obliged to join – 7
  European Union member state in ERM II with an opt-outDenmark
  European Union member state not in ERM II with an opt-out – United Kingdom
  non-European Union member states using the euro with a monetary agreement – 4
  non-European Union member states using the euro unilaterally – 2

Bulgaria committed to switching its currency, the lev, to the euro upon its joining the European Union in 2007, as stated in its EU accession treaty. The transition will occur once the country meets all the euro convergence criteria; it currently meets four of the five criteria, the exception being its membership for at least two years of the EU's official exchange rate mechanism (ERM II), which it has not yet joined despite the current Bulgarian lev having been pegged to the euro since its introduction in 1999. In 2011 Bulgaria's Minister of Finance Simeon Djankov stated that ERM II membership would be postponed until after the Eurozone crisis had stabilized.[1] Bulgarian euro coins have not yet been designed, but their motif has been chosen to be the Madara Rider.

Selecting the design[edit]

Bulgaria euro coins will replace the current national currency, the lev, once the convergence criteria are fulfilled. As the current lev was fixed to the Deutsche Mark at par, the lev's peg effectively switched to the euro, at the rate of 1.95583 leva = 1 euro, which is the Deutsche Mark's fixed exchange rate to euro.[2] On the occasion of the signing of the EU accession treaty on 25 April 2005, the Bulgarian National Bank issued a commemorative coin with a face value of 1.95583 leva, giving it a nominal value of exactly 1 euro.[3][4]

The Madara Rider was one of the favourites to become the symbol of Bulgaria to be used on the national side of the country's euro coins. Other eminent pretenders for the title ‘Symbol of Bulgaria' were the ancient tradition of the nestinars (Bulgarian fire-dancers), Cyrillic,[5] the Rila Monastery[6] and the Tsarevets medieval fortress near Veliko Turnovo.[6]

As of 17 June 2008, debates about the design of the future Bulgarian Euro coins were held all over the country. They continued until 29 June when a vote decided the symbol to be used on all coins. Bulgarians voted in post offices, gas stations and schools.[7][8]

Finally, on 29 June 2008 it was announced that 25.44% of the Bulgarian voters had chosen the Madara Horseman to be depicted on future euro coins.[9][10][11][12]

Public opinion[edit]

According to a eurobarometer poll in April 2014, 51 per cent of Bulgarians are in favor of introducing the euro while 45 per cent are opposed.[13]

Convergence criteria[edit]

The Maastricht Treaty originally required that all members of the European Union join the euro once certain economic criteria are met.

Bulgaria's inflation in the 12 months to March 2008 reached 9.4%, well above the reference value of 3.2%.[citation needed]

On the upside, Bulgaria fulfilled the state budget criterion, which foresees that the deficit does not exceed 3% of the country's gross domestic product (GDP).[citation needed] Over the past few years, the report said, the country has consistently improved its budget fundamentals and since 2003, a break-even point, the budget ran surpluses and in 2007 was at 3.4% of GDP.[citation needed] The EC forecast that it would remain at 3.2% of GDP in both 2008 and 2009.[citation needed]

In regard to public debt, Bulgaria has also been within the prescribed cap of 60% of GDP. Government debt has also been declining consistently, from 50% of GDP to 18% in 2007. They were expected to reach 11% of GDP in 2009.[14] Some recent analysis says that Bulgaria will not be able to join the Eurozone earlier than 2015, due to their inflation problems and the impact of the global financial crisis of 2008.[15]

Some members of Bulgarian government, notably economy minister Petar Dimitrov, have speculated about unilaterally introducing the euro, which was not well-met by the European Commission[16]

Joining ERM II[edit]

The ±15% floating band permitted within ERM II is less restrictive than Bulgaria's current strict peg of 1.95583 BGN to 1 EUR. This means that while Bulgaria has not formally joined the exchange rate mechanism, it more than complies with its requirements. Its non-membership of the mechanism is used as a de facto opt out of the euro membership, because Bulgaria has met the four other criteria for euro adoption since 2011.

Bulgaria had planned to apply formally for ERM II membership in November 2009. [1][2][3] The application was delayed, and on 11 January 2010, the Bulgarian Prime-Minister Boyko Borisov said that Bulgaria would apply for ERM II membership at the end of that month;[17] however, the application was further later delayed.[18]

In 2011, when Bulgaria complied with four of the five convergence criteria for euro adoption (the fifth being two years' ERM II membership), the Bulgarian Finance Minister Simeon Dyankov stated that ERM II membership would be delayed as long as the European sovereign-debt crisis was still ongoing and unresolved. At that time ERM II membership was being considered for 2013,[19] with Dyankov proposing euro adoption as early as 1 January 2015.[1] The government reiterated in September 2012 its intention to defer ERM II membership, and hence euro adoption, for as long as the eurozone debt crisis remained unresolved; it wanted a clear understanding of the consequences of adopting the euro before making a decision to do so.[20]

Status[edit]

Bulgaria met 4 out of the 5 criteria in the last convergence report published by the European Central Bank in May 2012.


Convergence criteria
Assessment month Country HICP inflation rate[21][nb 1] Excessive deficit procedure[22] Exchange rate Long-term interest rate[23][nb 2] Compatibility of legislation
Budget deficit to GDP[24] Debt-to-GDP ratio ERM II member[25] Change in rate[26][27][nb 3]
2012 ECB Report[nb 4] Reference values max. 3.1%[nb 5]
(as of 31 Mar 2012)
None open (as of 31 March 2012) min. 2 years
(as of 31 Mar 2012)
max. ±15%[nb 6]
(for 2011)
max. 5.80%[nb 7]
(as of 31 Mar 2012)
Yes[29]
(as of 31 Mar 2012)
max. 3.0%
(Fiscal year 2011)[30]
max. 60%
(Fiscal year 2011)[30]
 Bulgaria 2.7% Open (Closed in June 2012) No 0.0% 5.30% No
2.1% 16.3%
2013 ECB Report[nb 8] Reference values max. 2.7%[nb 9]
(as of 30 Apr 2013)
None open (as of 30 Apr 2013) min. 2 years
(as of 30 Apr 2013)
max. ±15%[nb 6]
(for 2012)
max. 5.5%[nb 9]
(as of 30 Apr 2013)
Yes[32]
(as of 30 Apr 2013)
max. 3.0%
(Fiscal year 2012)[33]
max. 60%
(Fiscal year 2012)[33]
 Bulgaria 2.4% None No 0.0% 3.89%  ?
0.8% 18.5%
2014 ECB Report[nb 10] Reference values max. 1.7%[nb 11]
(as of 30 Apr 2014)
None open (as of 30 Apr 2014) min. 2 years
(as of 30 Apr 2014)
max. ±15%[nb 6]
(for 2013)
max. 6.2%[nb 11]
(as of 30 Apr 2014)
Yes[35]
(as of 30 Apr 2014)
max. 3.0%
(Fiscal year 2013)[36]
max. 60%
(Fiscal year 2013)[36]
 Bulgaria -0.8% None No 0.0% 3.52% No
1.5% 18.9%


  Criterion fulfilled
  Criterion potentially fulfilled: If the budget deficit exceeds the 3% limit, but is "close" to this value (the European Commission has deemed 3.5% to be close by in the past),[37] then the criteria can still potentially be fulfilled if either the deficits in the previous two years are significantly declining towards the 3% limit, or if the excessive deficit is the result of exceptional circumstances which are temporary in nature (i.e. one-off expenditures triggered by a significant economic downturn, or by the implementation of economic reforms that are expected to deliver a significant positive impact on the government's future fiscal budgets). However, even if such "special circumstances" are found to exist, additional criteria must also be met to comply with the fiscal budget criterion.[38][39] Additionally, if the debt-to-GDP ratio exceeds 60% but is "sufficiently diminishing and approaching the reference value at a satisfactory pace" it can be deemed to be in compliance.[40]
  Criterion not fulfilled


Notes
  1. ^ The 12-months average for the annual HICP inflation rate must be no more than 1.5% larger than the unweighted arithmetic average of the similar HICP inflation rates in the 3 EU member states with the lowest HICP inflation. If any of these 3 states have a HICP rate significantly below the similarly averaged HICP rate for the eurozone (which according to ECB practice means more than 2% below), and if this low HICP rate has been primarily caused by exceptional circumstances (i.e. severe wage cuts or a strong recession), then such a state is not included in the calculation of the reference value and is replaced by the EU state with the fourth lowest HICP rate.
  2. ^ The annual average for the yield of 10-year government bonds must be no more than 2.0% larger than the unweighted arithmetic average of the bond yields in the 3 EU member states with the lowest HICP inflation. If any of these states have bond yields which are significantly larger than the similarly averaged yield for the eurozone (which according to previous ECB reports means more than 2% above) and at the same time does not have complete funding access to financial markets (which is the case for as long as a government receives bailout funds), then such a state is not be included in the calculation of the reference value.
  3. ^ The change in the annual average exchange rate against the euro.
  4. ^ Reference values from the ECB convergence report of May 2012.[28]
  5. ^ Sweden, Ireland and Slovenia were the reference states.[28]
  6. ^ a b c The maximum allowed change in rate is ± 2.25% for Denmark.
  7. ^ Sweden and Slovenia were the reference states, with Ireland excluded as an outlier.[28]
  8. ^ Reference values from the ECB convergence report of June 2013.[31]
  9. ^ a b Sweden, Latvia and Ireland were the reference states.[31]
  10. ^ Reference values from the ECB convergence report of June 2014.[34]
  11. ^ a b Latvia, Portugal and Ireland were the reference states.[34]

Linguistic issues[edit]

10 euro note from the new Europa series written in Latin (EURO) and Greek (EYPΩ) alphabets, but also in the Cyrillic (EBPO) alphabet, as a result of Bulgaria joining the European Union in 2007.

The Bulgarian language's use of a Cyrillic script and its not straightforward transliteration of the word euro have caused some issues regarding the official use of the language relating to the euro. The European Central Bank and the European Commission initially insisted that Bulgaria adopt the name ЕУРО (i.e., euro), rather than the original ЕВРО (i.e., evro) [ˈɛvro] (from Bulgarian Европа [ɛvˈrɔpa], meaning Europe), claiming the currency's name should be standardised across the EU as much as possible. Bulgaria maintained that its language's alphabet and phonetic orthography warranted the exception.[41] At the 2007 EU Summit in Lisbon the issue was decided in Bulgaria's favour, making евро the official Cyrillic spelling from 13 December 2007.[42][43]

This ruling has affected the design of euro banknotes. The second series of notes (beginning with the €5 note issued from 2013) includes the term "EBPO" and the abbreviation "ЕЦБ" (short for Европейска централна банка, the Bulgarian name of the European Central Bank).[44] The first series had only the standard Latin alphabet "EURO" and the Greek "EYPΩ".

The euro coins only have the Latin "EURO" on their common side. Greek coins include the alternative Greek spelling on the national (obverse) side. Bulgarian coins, therefore, may follow suit, having "EURO" on one side and "EBPO" on the other.

The plural of евро in Bulgarian varies in spoken language – евро, евра [ɛvˈra], еврота [ˈɛvrota] – but the most widespread form is евро – without inflection in plural. The word for euro, though, has a normal form with the postpositive definite article – еврото (the euro).

The word for eurocent is евроцент [ˈɛvrotsɛnt] and most probably that, or only цент [ˈtsɛnt], will be used in future when the European currency is accepted in Bulgaria. In contrast to euro, the word for "cent" has a full inflection both in the definite and the plural form: евроцент (basic form), евроцентът (full definite article – postpositive), евроцентове (plural), 2 евроцента (numerative form – after numerals). The word stotinki (стотинки), singular stotinka (стотинка), the name of the subunit of the current Bulgarian currency can be used in place of cent, as it has become a synonym of the word “coins” in colloquial Bulgarian; just like “cent” (from Latin centum), its etymology is from a word meaning hundred – "sto" (сто). Stotinki is used widely in the Bulgarian diaspora in Europe to refer to subunits of currencies other than the Bulgarian lev.

References[edit]

  1. ^ a b "Bulgaria puts off Eurozone membership for 2015". Radio Bulgaria. 26 July 2011. Retrieved 2 September 2012. 
  2. ^ "Prof. Dr. Ivan Angelov: Bulgaria needs a managed floating exchange rate". Retrieved 2009-01-12. 
  3. ^ Press release of the Bulgarian National Bank, April 21, 2005
  4. ^ Coin catalog : 1.95583 Leva (photos and details)
  5. ^ "Most Probable Symbol of Bulgarian Coins". 
  6. ^ a b "The Sofia Echo – The symbolic meaning of Bulgaria's national symbols". Retrieved 2008-06-18. 
  7. ^ "Bulgaria Debates National Symbol for Euro Coin Design". Retrieved 2008-06-16. 
  8. ^ "Bulgaria singles out new national symbol by June 29". Retrieved 2008-06-18. 
  9. ^ "Bulgaria choses Madara horseman as its symbol". The Sofia Echo. Retrieved 2008-12-03. 
  10. ^ "Bulgaria selected the new euro design". Info Bulgaria. Archived from the original on 20 June 2008. Retrieved 2008-06-30. 
  11. ^ "Bulgaria Chooses Madara Horseman for National Symbol at Euro Coin Design". Sofia News Agency Novinite. Retrieved 2008-07-01. 
  12. ^ "Bulgaria chooses heritage site to adorn euro coins". EU Business. Retrieved 2008-07-01. [dead link]
  13. ^ http://ec.europa.eu/public_opinion/flash/fl_400_en.pdf
  14. ^ "First check against euro zone criteria". The Sofia Echo. Retrieved 2008-05-17. 
  15. ^ "Bulgaria's Eurozone accession drifts away". Retrieved 2008-11-25. 
  16. ^ http://evropa.dnevnik.bg/show/?storyid=595094
  17. ^ http://www.dnevnik.bg/bulgaria/2010/01/11/840831_borisov_v_kraia_na_ianuari_trugvame_kum_evrozonata/
  18. ^ http://www.iii.co.uk/news/?type=afxnews&articleid=7912576&subject=economic&action=article
  19. ^ "Bulgaria: Frontier country report" (PDF). Deutche Bank Research. 23 May 2011. Retrieved 2 September 2012. 
  20. ^ "Bulgaria shelves euro membership plans". EUobserver.com. 4 September 2012. Retrieved 15 December 2012. 
  21. ^ "HICP (2005=100): Monthly data (12-month average rate of annual change)". Eurostat. 16 August 2012. Retrieved 6 September 2012. 
  22. ^ "The corrective arm". European Commission. Retrieved 2014-07-05. 
  23. ^ "Long-term interest rate statistics for EU Member States (monthly data for the average of the past year)". Eurostat. Retrieved 18 December 2012. 
  24. ^ "Government deficit/surplus data". Eurostat. 22 April 2013. Retrieved 22 April 2013. 
  25. ^ "What is ERM II?". European Commission. 31 July 2012. Retrieved 8 September 2012. 
  26. ^ "Euro/ECU exchange rates - annual data (average)". Eurostat. Retrieved 5 July 2014. 
  27. ^ "Former euro area national currencies vs. euro/ECU - annual data (average)". Eurostat. Retrieved 5 July 2014. 
  28. ^ a b c "Convergence Report May 2012". European Central Bank. May 2012. Retrieved 2013-01-20. 
  29. ^ "Convergence Report - 2012". European Commission. March 2012. Retrieved 2014-09-26. 
  30. ^ a b "European economic forecast - spring 2012" (PDF). European Commission. 1 May 2012. Retrieved 1 September 2012. 
  31. ^ a b "Convergence Report". European Central Bank. June 2013. Retrieved 2013-06-17. 
  32. ^ "Convergence Report - 2013". European Commission. March 2013. Retrieved 2014-09-26. 
  33. ^ a b "European economic forecast - spring 2013" (PDF). European Commission. February 2013. Retrieved 4 July 2014. 
  34. ^ a b "Convergence Report". European Central Bank. June 2014. Retrieved 2014-07-05. 
  35. ^ "Convergence Report - 2014". European Commission. April 2014. Retrieved 2014-09-26. 
  36. ^ a b "European economic forecast - spring 2014" (PDF). European Commission. March 2014. Retrieved 5 July 2014. 
  37. ^ "Luxembourg Report prepared in accordance with Article 126(3) of the Treaty" (PDF). European Commission. 12 May 2010. Retrieved 18 November 2012. 
  38. ^ "EMI Annual Report 1994" (PDF). European Monetary Institute (EMI). April 1995. Retrieved 22 November 2012. 
  39. ^ "Progress towards convergence - Nov. 1995 (report prepared in accordance with article 7 of the EMI statute)" (PDF). European Monetary Institute (EMI). November 1995. Retrieved 22 November 2012. 
  40. ^ "Progress towards convergence - November 1995 (report prepared in accordance with article 7 of the EMI statute)" (PDF). European Monetary Institute (EMI). November 1995. Retrieved 17 March 2013. 
  41. ^ "letter to the editor". The Sofia Echo. 13 November 2006. Retrieved 25 April 2011. 
  42. ^ "Bulgaria wins victory in "evro" battle". Reuters. 18 October 2007. 
  43. ^ byElena Koinova (19 October 2007). ""Evro" dispute over – Portuguese foreign minister". The Sofia Echo. Retrieved 25 April 2011. 
  44. ^ "Superimpose – ECB – Our Money". ECB. ECB. Retrieved 12 February 2013.