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Bulgaria wants euro in 2012, but the deficit makes problems

This entry was posted on Wednesday, October 6th, 2010 at 10:48 and is filed under Currency, Finance, Investment, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Bulgaria intends to adopt the euro in 2012 or 2013, announced the Bulgarian finance minister Simeon Djankov, according to the international press.

“We have a chance in the final year of the mandate to introduce the euro,” said Djankov.

Bulgaria will meet all the criteria for the single currency before the end of the year, but if the budget deficit will exceed the 3% limit “entry in the euro area will be delayed by another two years, “said Djankov.

Djankov, who recently assumed the position of finance minister, said earlier that Bulgaria will apply in November for entry in the mechanism of the European exchange rates (ERM-2), the EU test of monetary stability on two years that the country must pass it before they give up their own currency and move to the euro.

The inflation and current account deficit of over 20% in recent years, and the country image of the most corrupt state in EU gave over the head Bulgaria’s efforts to enter ERM-2 mechanism before.

Djankov said that inflation will drop to below 3% at the end of this year, from 3.7% level recorded in June. Current account deficit is expected to decline to about 12% this year, analysts say.

Bulgaria previously intended to enter the euro zone in 2010, but failed to achieve targets related to the inflation rate and budget deficit. Lev is already tied to euro in a currency board that maintains the Bulgarian currency at 1.9558 against the euro unit. Entry into ERM could allow the Bulgarian to fluctuate up to 15% around a central strip.