Bulgaria and the euro

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Bulgaria aims to join the euro zone in less than three years. The country has set itself a target date of 1 January 2015[1] or further depending on the Eurozone crisis developments. The euro coins have not been designed yet, but the motif for all coins has been chosen to be the Madara Rider.

Contents

Selecting the design [edit]

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,[2] the Rila Monastery[3] and the Tsarevets medieval fortress near Veliko Turnovo.[3]

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.[4][5]

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.[6][7][8][9]

Joining the eurozone [edit]

Bulgarian euro coins [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.[10] 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.[11][12]

Convergence criteria [edit]

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Bulgaria meets three and fails on two criteria to join the eurozone. It derogates on the price stability criterion, which envisages that its inflation does not exceed that of the three EU member states with the lowest inflation (Malta, the Netherlands and Denmark) by 1.5%. Bulgaria's inflation in the 12 months to March 2008 reached 9.4%, well above the reference value of 3.2%, the report said. Furthermore, Bulgaria has not yet joined ERM II but plans to formally apply for membership in November 2009. [1][2][3]

On the upside, Bulgaria fulfills 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 forecasts that it will 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. The expectation are to reach 11% of GDP in 2009.[13] 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.[14] Some members of Bulgarian government, notably economy minister Petar Dimitrov, have speculated recently about unilaterally introducing the euro, which was not well-met by the European Commission[15]

Joining ERM II [edit]

On 11 January 2010, the Bulgarian Prime-Minister Boyko Borisov said that Bulgaria will apply for ERM II membership in the end of the month,[16] however the application was delayed.[17]

Status [edit]

The Maastricht Treaty originally required that all members of the European Union join the euro once certain economic criteria are met. 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[18]
(12-months average
of annual rates)[nb 1]		 Budget deficit to GDP Debt-to-GDP ratio ERM II member[19] Long-term interest rate[20]
(12-months average
of 10yr bond yields)[nb 2]
2012 ECB Report Reference values[nb 3] max. 3.1%
(as of 31 Mar 2012)		 max. 3.0%
(Fiscal year 2011)[22]		 max. 60%, or declining
(Fiscal year 2011)[22]		 min. 2 years
(as of 31 Mar 2012)		 max. 5.80%
(as of 31 Mar 2012)
 Bulgaria 2.7% 2.1% 16.3% No 5.30%
April 2013 Reference values max. 2.5%[nb 4][nb 5]
(as of 31 Mar 2013)		 max. 3.0%
(Fiscal year 2012)[24]		 max. 60%, or declining
(Fiscal year 2012)[25]		 min. 2 years
(as of 31 Mar 2013)		 max. 4.81%[nb 4][nb 6]
(as of 31 Mar 2013)
 Bulgaria 2.4% 0.8% 18.5% No 3.89%


  Criterion fulfilled
  Criterion potentially fulfilled: If the budget deficit exceeds the 3% limit, but is "close" to this value (the European Commission has been deemed 3.5% to be close by in the past),[26] 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.[27][28] 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.[29]
  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. ^ Reference values from the ECB convergence report of May 2012.[21]
  4. ^ a b The reference values for HICP inflation and long-term interest rates are calculated based on the "calculation principle" outlined in the 2012 ECB Convergence Report,[23] with the input of forecasted data for the sliding assessment year 1 April 2012 - 31 March 2013.
  5. ^ The 3 best performing countries in regards to HICP inflation were Greece (0.614%), Sweden (0.843%) and Latvia (1.567%), with no outliers detected.
  6. ^ As Greece is still part of a bailout program, and suffered from elevated interest rates significantly above the eurozone average (being 15.40% above), this country was excluded from the calculation of the reference limit for "long term interest rates", leaving just Sweden (av. rate=1.61%) and Latvia (av. rate=4.00%) as benchmark countries for the calculation of the reference value limit.

Linguistic issues [edit]

5 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.

Bulgarian uses Cyrillic. The current design of euro banknotes has the word euro written in both the Latin and Greek alphabets. The same is true of euro coins, but if the Greek model is followed, the alternative spelling will go on the national (obverse) side. In popular Bulgarian usage the currency is referred to as евро [ˈɛvro] (from Bulgarian Европа [ɛvˈrɔpa], meaning Europe); the plural 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.

Initially, the European Central Bank and the European Commission insisted that Bulgaria change the name it uses for the currency from ЕВРО to ЕУРО, claiming the currency should have an official and standard spelling across the EU. Bulgaria on the other hand stated that it wants to take into account the different alphabet and the principle of phonetic orthography in the Bulgarian language.[30]

The issue was decisively resolved in favour of Bulgaria at the 2007 EU Summit in Lisbon, allowing Bulgaria to use the Cyrillic spelling евро on all official EU documents.[31][32]

As of 13 December 2007, all EU institutions – including the ECB – use ЕВРО as the official Bulgarian transliteration of the single European currency.

The new Euro banknotes issued in 2013 will have the word ЕВРО on it. It will be the first time when the Bulgarian Cyrillic alphabet is to feature on the banknotes as a result of Bulgaria joining the European Union in 2007. Therefore, the new series of Euro banknotes will include "EBPO", which is the Bulgarian spelling for EURO as well as the abbreviation "ЕЦБ" (short for Европейска централна банка in Bulgarian).[33]

References [edit]

  1. ^ http://bnr.bg/sites/en/Lifestyle/BGEU/Pages/2607BulgariaputsoffEurozonemembershipfor2015.aspx
  2. ^ "Most Probable Symbol of Bulgarian Coins". 
  3. ^ a b "The Sofia Echo – The symbolic meaning of Bulgaria's national symbols". Retrieved 2008-06-18. 
  4. ^ "Bulgaria Debates National Symbol for Euro Coin Design". Retrieved 2008-06-16. 
  5. ^ "Bulgaria singles out new national symbol by June 29". Retrieved 2008-06-18. 
  6. ^ "Bulgaria choses Madara horseman as its symbol". The Sofia Echo. Retrieved 2008-12-03. 
  7. ^ "Bulgaria selected the new euro design". Info Bulgaria. Archived from the original on 20 June 2008. Retrieved 2008-06-30. 
  8. ^ "Bulgaria Chooses Madara Horseman for National Symbol at Euro Coin Design". Sofia News Agency Novinite. Retrieved 2008-07-01. 
  9. ^ "Bulgaria chooses heritage site to adorn euro coins". EU Business. Retrieved 2008-07-01. [dead link]
  10. ^ "Prof. Dr. Ivan Angelov: Bulgaria needs a managed floating exchange rate". Retrieved 2009-01-12. 
  11. ^ Press release of the Bulgarian National Bank, April 21, 2005
  12. ^ Coin catalog : 1.95583 Leva (photos and details)
  13. ^ "First check against euro zone criteria". The Sofia Echo. Retrieved 2008-05-17. 
  14. ^ "Bulgaria's Eurozone accession drifts away". Retrieved 2008-11-25. 
  15. ^ http://evropa.dnevnik.bg/show/?storyid=595094
  16. ^ http://www.dnevnik.bg/bulgaria/2010/01/11/840831_borisov_v_kraia_na_ianuari_trugvame_kum_evrozonata/
  17. ^ http://www.iii.co.uk/news/?type=afxnews&articleid=7912576&subject=economic&action=article
  18. ^ "HICP (2005=100): Monthly data (12-month average rate of annual change)". Eurostat. 16 August 2012. Retrieved 6 September 2012. 
  19. ^ "What is ERM II?". European Commission. 31 July 2012. Retrieved 8 September 2012. 
  20. ^ "Long-term interest rate statistics for EU Member States (monthly data for the average of the past year)". Eurostat. Retrieved 18 December 2012. 
  21. ^ "Convergence Report May 2012". European Central Bank. May 2012. Retrieved 2013-01-20. 
  22. ^ a b "European economic forecast - spring 2012" (PDF). European Commission. 1 May 2012. Retrieved 1 September 2012. 
  23. ^ "Convergence report 2012". European Central Bank. May 2012. Retrieved 2013-01-15. 
  24. ^ "Government deficit/surplus data". Eurostat. 22 April 2013. Retrieved 22 April 2013. 
  25. ^ "Government debt data". Eurostat. 22 April 2013. Retrieved 22 April 2013. 
  26. ^ "Luxembourg Report prepared in accordance with Article 126(3) of the Treaty" (PDF). European Commission. 12 May 2010. Retrieved 18 November 2012. 
  27. ^ "EMI Annual Report 1994" (PDF). European Monetary Institute (EMI). April 1995. Retrieved 22 November 2012. 
  28. ^ "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. 
  29. ^ "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. 
  30. ^ "letter to the editor". The Sofia Echo. 13 November 2006. Retrieved 25 April 2011. 
  31. ^ "Bulgaria wins victory in "evro" battle". Reuters. 18 October 2007. 
  32. ^ byElena Koinova (19 October 2007). ""Evro" dispute over – Portuguese foreign minister". The Sofia Echo. Retrieved 25 April 2011. 
  33. ^ "Superimpose – ECB – Our Money". ECB. ECB. Retrieved 12 February 2013. 
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