Bulgaria cleared for eurozone entry despite half the population opposing the move

Bulgaria is on course to become the 21st member of the eurozone after the European Commission and the European Central Bank gave their formal endorsement last week. The decision clears the final institutional hurdle for a country that has pegged its currency, the lev, to the euro since 1997 and has met the convergence criteria for several years. Yet the political atmosphere in Sofia is far from celebratory. A recent European Union survey found that half the population opposes the change, and nationalist parties have organised protests warning of higher prices and a surrender of monetary sovereignty.

A long road to the waiting room

Bulgaria joined the European Union in 2007 with a treaty obligation to adopt the euro once it satisfied the Maastricht criteria. The country entered the Exchange Rate Mechanism II (ERM II) in July 2020, fixing the lev at 1.95583 to the euro, a rate inherited from its previous currency board arrangement with the Deutsche Mark. Inflation, debt and deficit targets have been met for some time, but the process stalled over concerns about the rule of law, banking supervision and political instability. The Commission's convergence report published in June 2024 gave the green light, and the ECB's opinion followed shortly after. The Council of the EU is expected to formalise the decision in July, setting a likely entry date of 1 January 2026.

Prime minister makes it a personal mission

Rosen Zhelyazkov, who took office in March 2025 at the head of a GERB-led coalition, has placed euro adoption at the centre of his economic programme. He argues that membership will lock in macroeconomic stability, reduce borrowing costs and signal maturity to foreign investors. In a televised address after the Commission's verdict, he described the move as "a historic moment for Bulgaria's place in Europe". His government has launched an information campaign emphasising that the lev's fixed rate means most prices are already quoted in euro equivalents, and that the physical changeover will be managed over a dual-circulation period.

Public trust remains the missing ingredient

The government's confidence contrasts sharply with public sentiment. The Eurobarometer survey conducted in spring 2025 showed 50 percent of respondents opposed to adopting the euro, while only 38 percent were in favour. Opposition is strongest in rural areas and among older voters, who remember the hyperinflation of the 1990s and associate currency change with loss of purchasing power. Nationalist parties, notably Revival and the Bulgarian Socialist Party, have seized on the issue, organising demonstrations in Sofia and Plovdiv under slogans such as "Lev, our freedom". They argue that the euro will erase a symbol of national independence regained after communism.

"Its replacement with the euro may be perceived by parts of the population as a loss of national control," said Andrius Tursa, central and eastern Europe advisor at Teneo. He added that relinquishing control of monetary policy means the Bulgarian National Bank will no longer set interest rates based solely on domestic conditions, but will implement decisions taken in Frankfurt.

The inflation fear is real but likely overstated

The most immediate economic worry for ordinary Bulgarians is a spike in prices during the changeover, as businesses round up when converting lev prices to euros. Similar effects were observed in Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015), though they proved temporary. Valentin Tataru, an economist at ING who covers Bulgaria, acknowledges the concern but downplays the magnitude. "The most immediate concern is a spike in prices during the currency switch, as some businesses may round up prices. Many Bulgarians worry that eurozone membership could erode their purchasing power, especially in poorer rural areas," he said. "Nevertheless, he also noted Bulgaria's currency has long had a fixed exchange rate to the euro and therefore, the transitional inflation bump should be mild."

The Bulgarian National Bank has prepared a detailed changeover plan, including mandatory dual pricing for at least six months before and after the switch, price monitoring by the consumer protection authority, and a commitment from major retail chains to fair rounding practices. The experience of Croatia, which joined in 2023, suggests that rigorous enforcement can keep the one-off effect below 0.2 percentage points of annual inflation.

Trade and tourism stand to gain most

Bulgaria's economic structure makes it a textbook beneficiary of a single currency. In 2023, more than 65 percent of its goods exports went to EU member states, with machinery, transport equipment, manufactured goods and food products dominating the flows. The services side is even more euro-centric: tourism has become a major growth engine, with the country positioning itself as both a summer beach destination and a winter ski resort. Over 13 million foreigners visited Bulgaria in 2024, according to the National Statistical Institute, and the vast majority come from eurozone countries. Eliminating currency conversion costs and exchange-rate uncertainty for these visitors, as well as for the thousands of Bulgarian firms embedded in German, Italian and Austrian supply chains, is expected to provide a measurable boost.

"Bulgaria's accession to the eurozone would facilitate trade and tourism flows with other eurozone countries by eliminating the costs and burden associated with currency conversion," Tursa said, adding that this would be particularly important due to Bulgaria's strong integration into EU supply chains.

Lower borrowing costs, but stricter rules

The financial integration argument runs both ways. On the one hand, eurozone members benefit from the ECB's credibility, which translates into lower sovereign bond yields and cheaper credit for households and firms. Bulgarian government bonds already trade at a tight spread over German bunds, reflecting the market's anticipation of entry; formal membership could compress that spread further, reducing debt servicing costs for a country with a debt-to-GDP ratio around 24 percent, one of the lowest in the EU. On the other hand, Bulgaria will be subject to the Stability and Growth Pact's fiscal rules, the European Semester's surveillance, and the Banking Union's single supervisory mechanism. The Bulgarian National Bank will cede its role as lender of last resort to the ECB, a shift that matters less in normal times but could constrain emergency responses.

"Eurozone countries benefit from lower interest rates due to the credibility of the ECB and reduced currency risk," Tursa pointed out. "Lower interest rates typically benefit borrowers as loans and mortgages become more affordable." Jasmin Groeschl, senior economist for Europe at Allianz SE, went further: "Deeper financial integration would strengthen Bulgaria's financial system under the ECB's oversight, enhancing monetary stability. Adopting the euro would strengthen Bulgaria's ties with the EU, enhancing its influence and credibility."

The political risk nobody can model

Economists are broadly agreed that the long-term balance sheet favours entry. Tataru calls it "one of the most strategic steps Bulgaria can take to secure long-term prosperity and deeper European integration." Groeschl argues that "the trade-off involves losing some economic autonomy in exchange for deeper integration" and that "the advantages of greater economic stability, reduced transaction costs and stronger integration with the EU market would typically outweigh these disadvantages." But both acknowledge a variable that does not appear in macro models: politics. Public opposition has already triggered notable protests, and in the medium term, the issue could become a key driver of rising support for populist and Eurosceptic political movements, Tursa warned. Bulgaria's fragmented parliament, where no party holds a majority and coalitions are fragile, could see the euro issue destabilise the government before the changeover date.