Three of the five convergence criteria required for the adoption of the European currency fulfills Bulgaria, as evidenced by the Convergence Report 2014, published by the European Commission. In particular, Bulgaria fulfills the criterion on price developments. Over the reference period of the report from May 2013 to April 2014, the country recorded an average rate of HICP inflation of 0.8%, ie well below the reference value of 1.7%, as defined in the stability criterion price. According to the latest available forecasts from major international institutions, inflation is expected to gradually increase from 2014-15 from the very negative at present levels and range between -0.8% and 0.9% in 2014 and between 0.9% and 2.3% in 2015.
Bulgaria is also the criterion of fiscal aggregates. Currently the country is not a subject of decision by the EU Council on the existence of an excessive deficit. In 2013 recorded a general government deficit equal to 1.5% of GDP, well below the 3% reference value. The ratio of gross government debt to GDP was 18.9%, well below the 60% reference value. For 2014, the European Commission predicts an increase in the deficit ratio to 1.9% and the ratio of public debt to 23.1%. The report notes that Bulgaria still suffers from macroeconomic imbalances, which require monitoring and political activity and state that for the reason that the country will continue to be subject to the preventive arm of macroeconomic imbalances procedure, taking specific recommendations for their correction.
About the stability of the exchange rate, it is noted that Bulgaria does not meet the criterion and the Bulgarian lev currency is not participating in ERM II. The exchange rate of the two year reference was irrevocably fixed at 1.95583 levs per euro under a currency board arrangement implemented by the country. Bulgaria fulfills the criterion on the evolution of long term interest rates. During the reporting period from May 2013 to April 2014 term interest rates averaged 3.5%, well below the reference value of 6.2% for the criterion of convergence.
Finally, based on the criterion of legal convergence in the report that the Bulgarian legislation does not comply with all the requirements regarding the independence of the central bank, the monetary financing prohibition and legal integration into the Eurosystem.
By Nicole P.