Credit FAQ: Bulgaria Reaffirms Eurozone Commitment With Parallel Currency Discussion

This report does not constitute a rating action. Bulgaria's long road to euro ascension continues. Last week, Finance Minister Asen Vasilev confirmed that the country had begun negotiations with the European Commission on introducing the euro as parallel legal tender for transactions in the country from Jan. 1, 2024, in addition to the lev. Bulgaria has operated a currency board with the euro since 1997. When Bulgaria joined the EU in 2007, the accession treaty included a requirement for the country to eventually join the eurozone if it meets the "convergence criteria". In 2020, Bulgaria acceded to the Exchange Rate Mechanism (ERM II)--the waiting room for eurozone accession. However, elevated post-COVID-19 inflationary stress and a prolonged period of reform inertia

...July 6, 2023 This report does not constitute a rating action. Bulgaria's long road to euro ascension continues. Last week, Finance Minister Asen Vasilev confirmed that the country had begun negotiations with the European Commission on introducing the euro as parallel legal tender for transactions in the country from Jan. 1, 2024, in addition to the lev. Bulgaria has operated a currency board with the euro since 1997. When Bulgaria joined the EU in 2007, the accession treaty included a requirement for the country to eventually join the eurozone if it meets the "convergence criteria". In 2020, Bulgaria acceded to the Exchange Rate Mechanism (ERM II)--the waiting room for eurozone accession. However, elevated post-COVID-19 inflationary stress and a prolonged period of reform inertia has stalled progress. In this report, S&P Global Ratings answers frequently asked questions on the status and ratings impact of both the parallel currency introduction and ultimate eurozone ascension....

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