Bulgaria adopts euro amid fears of rising prices

This year, a protest campaign to “keep the Bulgarian lev” has gained momentum, exploiting popular fears of rising living costs and largely negative views of the single European currency. Yet successive governments have pushed for eurozone membership, while supporters of the move say it will strengthen the economy, strengthen ties with the West and offer greater protection against Russian influence.

• Learn more: K-pop, K-beauty, K-drama: the fever for Korean products goes beyond the screen and stage and reaches the retail sector

The euro was introduced in 12 countries on January 1, 2002 and has since expanded its circulation area. Croatia was the last country to join the eurozone, in 2023. Bulgaria will be next, facing specific challenges.

The country is preparing for its eighth election in just five years, after a series of anti-corruption protests recently toppled a conservative government. According to Boryana Dimitrova of the Alpha Research institute, the difficulties linked to the adoption of the euro tend to be politically exploited by forces opposed to the European Union.

“Any issue will become part of the political campaign, creating the basis for a discourse directed against the EU,” Dimitrova told AFP.

Although far-right parties and pro-Russian groups are behind several anti-euro protests, concern extends beyond this political spectrum. Especially in poorer rural areas, many fear the impact of the new currency on their pockets.

— Prices will increase. This is what my friends who live in Western Europe tell me,” Bilyana Nikolova, 53, owner of a grocery store in the village of Chuprene, in northwest Bulgaria, told AFP.

“Substantial” advantages

According to the latest Eurobarometer survey, 49% of Bulgarians are opposed to the adoption of the euro. After the hyperinflation of the 1990s, Bulgaria pegged its currency first to the German mark and then to the euro, which already made it heavily dependent on the European Central Bank (ECB).

“We will now be able to participate in decisions within this monetary union,” economist Georgi Anguelov of the Open Society Institute in Sofia told AFP.

• To understand: Americans are trying to file for bankruptcy to escape their student debts

A member of the EU since 2007, Bulgaria only joined the “watch mechanism” for the adoption of the euro in 2020, at the same time as Croatia.

ECB President Christine Lagarde said in Sofia last month that the benefits of membership were “substantial”, citing “more fluid trade, lower financing costs and more stable prices”. According to her, small and medium-sized businesses could save around 500 million euros (around $580 million) per year in exchange rates.

The tourism sector, which accounts for around 8% of the country’s gross domestic product (GDP), also hopes to benefit from the change.

Lagarde estimated that the impact of the adoption of the euro on consumer prices should be “modest and temporary”, recalling that, during previous transitions, the increase varied between 0.2 and 0.4 percentage points.

However, consumers who already have difficulty paying their monthly bills remain concerned, according to Dimitrova. In November, food prices rose 5% year-on-year, according to the National Institute of Statistics, more than double the euro zone average.

• Learn more: ‘What we do goes beyond astronomy,’ says Brazilian scientist who helps map southern hemisphere skies

Faced with this scenario, Parliament approved this year the creation of control bodies with the power to investigate significant price increases and prevent adjustments deemed “unjustified” linked to the transition to the euro.

Analysts warn, however, that prolonged political instability could delay needed anti-corruption reforms, with negative effects on the wider economy.