Speaking to Brussels-based reporters as EU commissioners visited Sofia at the start of Bulgaria’s six-month presidency of EU ministerial councils, the finance minister said he was ready to apply to join the ERM-2 exchange rate mechanism this year even if he had no assurance that the request would be accepted.
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“We have done our homework for the euro zone,” Borissov said, noting the lev’s 20-year-old fixed rate against the euro, a non-existent budget deficit and one of the lowest public debt levels in the EU. “Any moment they invite us, we can enter it.”
Bulgaria has been reluctant to repeat the experience of flat rejection of its request to join the Schengen passport-free area and has been in discussions on joining the ERM-2 with the European Commission and the European Central Bank, hoping for an informal green light before lodging its formal application.
However, Goranov said, patience was wearing thin with a lack of clarity from states on why they object. Euro zone officials say that lead economy Germany sees the gulf between Bulgarian incomes with the EU average and concerns over graft and organised crime as reasons to keep it at arm’s length.
Goranov said he now expected to lodge an application by the middle of this year after a biennial EU report on performance on economic convergence, which the EU executive said it plans to publish in May.
“We are ready to file a formal application even if we are not convinced that the reply will be ‘yes’,” Goranov said.
“This is not a threat,” he said, noting pressure on the government from Bulgarian businesses to join.
“A ‘no’ will also show us what to do in order to get there.”
As an example, he cited the fact that Bulgaria’s GDP per capita is about half that of the EU average and said that if euro zone states wanted to set it a target of 70 percent of the average he could accept that.
There is no such formal criterion at the moment and some euro zone countries are below that level.
Goranov stressed that Bulgaria would be in no rush to move from the ERM-2, in which it participates as an observer in some euro zone institutions, to full membership of the currency area.
The rules stipulate two years in the ERM-2 before adopting the euro, but Goranov said: “We are prepared to wait there until we are fully ready to go on … As many years as we need.”
ERM-2 membership would bolster investor confidence and help the central bank manage its reserves, he said. Ratings agencies have already cited ERM-2 as grounds for a possible upgrade.
European Commission President Jean-Claude Juncker, who was leading his EU executive’s visit to Sofia, supports Bulgaria’s case for moving toward euro membership as part of a broader strategy to bolster confidence in the project following the sovereign debt crises of the past decade. It could also ease divisions between the rich west and ex-communist east of the bloc in the wake of Britain’s decision to quit the EU next year.
A Commission spokesman noted that euro membership was an obligation in the long run for most EU states, saying: “Member states that want to join the euro must be able to do so.
Goranov acknowledged reservations at the ECB and among richer euro zone states but added: “I don’t think that things are so bad that we need to be treated as second class.
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