Bulgaria may adopt the euro in the last year of the new government’s mandate which expires in 2013, Finance Minister Simeon Djankov said in an interview to 24 Chasa daily, published on Monday.
Djankov, who is also deputy prime minister in the new cabinet of the centre-right GERB, has said Bulgaria plans to apply for entry to ERM-2 — the two-year currency stability test for euro hopefuls — as early as November.
The emerging economy will meet all official criteria for euro zone entry by the end of the year, but the key effort for now was to avoid slipping into a budget deficit of over 3 percent of GDP, he said.
“We are currently at 2.2-2.5 percent (budget deficit) … If the deficit exceeds 3.0 percent, it will put off our euro zone entry by two more years,” he said.
“We have a chance in the last year of the mandate to introduce the euro,” Djankov said.
Double-digit inflation and a current account deficit of over 20 percent of GDP in the past several years, as well as the country’s image as the most corrupt EU state, have prevented Bulgaria’s efforts to join the ERM-2 mechanism so far.
The global economic downturn has hit domestic demand and imports as well as the external deficit and consumer price inflation have started to ease.
Djankov said inflation will drop to under 3.0 percent on an annual basis at the end of the year from 3.7 percent registered in June. Bulgaria’s current account gap is expected to shrink to about 12 percent this year, analysts say.
The Balkan country operates under a currency board regime that pegs the lev to the euro at 1.95583. Djankov has said that Bulgaria will keep its peg until it enters the euro zone.
The latest Reuters poll on the issue, taken in April, showed Bulgaria adopting the euro in 2015.