On a sunny morning in Sofia in early June 2025, excitement spread quickly within the National Bank of Bulgaria. The long-awaited convergence report, requested from the European Commission and the European Central Bank in February, had finally arrived. It assessed the degree of economic and legal readiness of Bulgaria for joining the euro zone. Contrary to previous reports, this time Bulgaria met all the criteria and the country was preparing to take the final step towards adopting the euro, write two members of IMF in the Bulgarian news agency Novinite. Bulgaria's path to the euro began a long time ago. The country entered the European Union in 2007 and aspired to join the Eurozone shortly after. Eighteen years later, on 1 January 2026, Bulgaria became the 21st member of the single currency, marking the culmination of decades of economic and political transformation. To understand this success, you have to look back to the 90s. After the fall of communism, Bulgaria's transition to a market economy was marked by major difficulties. State-owned enterprises dominated the economy, accumulating debt that banks continued to finance, while the central bank and government often stepped in to cover losses. By 1996, over 60% of loans were non-performing, and bank closures eroded public confidence. Inflation exploded, the economy contracted, and public debt reached unsustainable levels, exceeding 120% of GDP. In March 1997, annual inflation exceeded 2,000%. The population's savings disappeared, pensions lost their value, and ordinary citizens struggled to cover their basic needs. A change of government brought Prime Minister Ivan Kostov to power, along with the International Monetary Fund, to stabilize the economy. Weak banks were closed and the government implemented a currency board, pegging the levy to the German mark and later the euro. The monetary council allowed the issuance of lei only in exchange for currency and gold reserves, with strict transparency and parliamentary supervision, contributing to the restoration of public confidence. The results were immediate. Inflation fell to 22% in 1998, interest rates fell, and GDP grew by 3.5% after severe contractions in previous years. The public debt was almost halved. Over the next decade, despite political turmoil—including 18 successive governments and the emigration of nearly a million people—the currency board remained popular for maintaining fiscal discipline and low inflation. By 2007, Bulgaria had joined the EU with 75% of the economy privatized, including the entire banking sector, and achieved the status of an upper-middle-income economy. Accession to the EU brought new challenges. Policymakers aimed for a quick entry into the Exchange Rate Mechanism (ERM II), but global financial shocks and domestic economic imbalances delayed the process. The 2014 banking crisis exposed persistent governance problems, but reforms implemented during the second government of Prime Minister Boiko Borissov prepared Bulgaria for entry into ERM II, which took place in 2020, simultaneously with the accession to the European Banking Union. Continued fiscal discipline, legal reforms and anti-corruption measures laid the foundations for the adoption of the euro currency. By 2024, Bulgaria's economic position has strengthened even more. The World Bank classified the country as a high-income economy, and the accession to the Schengen area strengthened confidence in Brussels. Inflation has fallen, the economic impact of the pandemic has faded, and energy shocks have been mitigated. In February 2025, Bulgaria requested a special convergence assessment, thus entering the final stage of adopting the euro. The June 2025 report confirmed Bulgaria's readiness. On January 1, 2026, the euro replaced the leva, ending nearly three decades of currency board. The transition was accompanied by mixed feelings: citizens appreciated the stability offered by the leva, but also recognized the benefits of full integration into the euro zone. Adopting the euro brings several advantages. Travel in Europe will no longer require currency exchange, financial stability is strengthened through the ECB and the Single Supervisory Mechanism, and Bulgaria gains a say in the monetary policy of the euro zone. Investor confidence increases with the disappearance of currency risk, and access to the capital markets of the euro zone can reduce borrowing costs and sovereign risk premiums. Bulgaria's experience with the currency board also positions it as an example for other countries in terms of monetary stabilization and fiscal discipline. Despite persistent challenges, including demographic decline and corruption, Bulgaria's transformation—from hyperinflation and economic chaos to eurozone membership—is a testament to long-term reforms and perseverance. As one young Bulgarian reflected: «Euros in my pocket finally make me a full member of the club.»Bulgaria switched to the euro: are hopes rising, but so are prices? The changeover to the euro has triggered a real wave of alerts from consumers regarding alleged price manipulation, with warnings that some traders are taking advantage of the confusion in the first days of the transition On January 1, Bulgaria officially became a member of the eurozone, making the switch from the leva to the single European currency. The authorities in Brussels and Sofia hope that this transition will give a boost to the country's economy and strengthen its integration into the EU, notes Euronews. «The stronger effect is the long-term one, practically increasing the confidence when it comes to the currency, the purchasing power of the currency, the confidence of foreign investors, of those who buy Bulgarian debt securities, but also of those who invest locally, in different sectors», says Petar Ganev, from the Institute for Market Economics, an independent economic think tank. The adoption of the euro could also have a positive impact on the country's credit rating. Bulgaria has the potential to be a place of opportunity, personal development, innovation and achievement. To realize this potential, the country needs a productive, modern economy based on entrepreneurship, innovation and the ability to successfully compete with goods and services on global markets, according to a study by the institute, cited by Novinite. Petar Ganev believes that joining the euro zone will increase inflation only marginally. And yet, concerns about rising prices and the loss of a national symbol, the leva, are growing following the country's switch to the euro, according to rfi.fr. On the streets of the capital Sofia, optimism is mixed with concern. While some Bulgarians see the euro as a logical step in the country's European integration, others fear its impact on everyday life. Gheorghi, a 47-year-old entrepreneur, regrets giving up leverage. Like many Bulgarians, he fears that the arrival of the euro will lead to price increases. Economists note that food prices had already risen by 5% in annual terms in November, even before the transition to the single European currency. In Zhenski Pazar, the oldest market in the Bulgarian capital, a vegetable trader says that people have not got used to it yet, they are confused. According to him, prices are increasing, especially in supermarkets, and the change to the euro has only increased the pressure.The switch to the euro triggered a real wave of alerts from consumers regarding alleged price manipulations, with warnings that some traders are taking advantage of the confusion in the first days of the transition, Novinite writes. Bogomil Nikolov, from the «Active Consumers» association, shows that his organization received a series of complaints from citizens, indicating speculative behavior shortly after January 1. Online retailers also attract criticism, targeting dramatic and apparently unjustified price increases for household appliances. Nikolov reminded traders that unjustified price increases can lead to serious penalties, with fines rising up to 50,000 euros. Beyond speculation, there are clear data regarding the evolution of some prices after the switch to the euro. From January 1, public transport prices are set in euros, and currency conversion is rounded off in favor of travelers, according to the Center for Urban Mobility in Sofia, reports dariknews.bg. Instead, the prices of taxi services in the Bulgarian capital have increased, according to fakti.bg. In the first days of the year, Bulgaria's retail sector switched to accepting payments in euros without major problems, with customers adapting well to the new system, notes Novinite. However, there are a number of problems related to the transition. Small retailers are struggling to cope with the practical realities of the switch from the leva to the euro. The local press draws attention to a lack of enough euro coins and banknotes in small shops. Also, quite a large number of elderly people do not understand the most important thing: what is the leva/euro exchange rate. Another problem is that customers turn shops into currency exchange agencies, according to pbnovini.com.
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