What changed between the draft committee report and the plenary report

Bulgaria joining the euro area sends a strong political and economic signal of confidence in the enduring viability and appeal of the European Union’s single currency. More than two decades after the euro’s introduction, Bulgaria’s readiness to adopt the euro on 1 January 2026 reaffirms the Union’s cohesion and the euro’s role as a global symbol of stability and unity. Bulgaria has achieved substantial progress towards full economic convergence, making it well-positioned to become the twenty-first member of the euro area.

Bulgaria introduced its currency board framework on 1 July 1997, pegging the Bulgarian lev to the German mark and subsequently to the euro. Since its EU accession in 2007, Bulgaria has held the status of a “Member State with a derogation,” subject to regular convergence assessments by the European Commission and the European Central Bank.

At the European Parliament level, the Euro Accession Countries Working Group was established by a decision of the ECON Coordinators on 18 November 2019. It remained active throughout the entire 9th legislative term, scrutinising Bulgaria’s readiness to join the euro area and holding four dedicated sessions with experts, as well as Bulgarian Deputy Prime Ministers and Ministers of Finance.

On 25 February 2025, Bulgaria submitted a request for a convergence assessment. The ECB and Commission reports of 4 June 2025 include an examination of the compatibility between Bulgaria's national legislation, notably the statute of its national central bank, with Articles 130 and 131 of the Treaty and the Statute of the ESCB and of the ECB. The reports also examine whether a high degree of sustainable convergence has been achieved, by reference to the fulfilment of the convergence criteria, and take account of several other factors required under the final sub-paragraph of Article 140(1) of the Treaty.

Based on its own convergence report and that of the ECB, the Commission proposed that Bulgaria adopt the euro as of 1 January 2026. In accordance with Article 140(2) TFEU, the Council shall decide, by qualified majority and on a proposal from the Commission, which Member States with a derogation meet the necessary conditions for adopting the euro, as defined in Article 140(1) TFEU. This decision is to be made following consultation with the European Parliament and on the basis of the Commission and ECB reports. The Parliament is thus consulted on the legislative proposal for a Council decision to allow Bulgaria to adopt the euro on 1 January 2026.

On the Convergence Criteria under Article 140(1) of the TFEU, the Rapporteur observes:

1. Compatibility of National Legislation with Articles 130 and 131 TFEU and the Statutes of the ECB

Bulgaria’s national legislation, including the Law on the Bulgarian National Bank, is fully aligned with EU requirements. The law guarantees the independence of the national central bank and of the members of its decision-making bodies, the prohibition of monetary financing and privileged access, and ensures compliance with the objectives of the ESCB as formulated in Article 127 of the Treaty.

2. Achievement of a High Degree of Price Stability

Over the 12 months to April 2025, Bulgaria recorded an average inflation rate of 2.7%, below the reference value of 2.8%. An analysis of a broad set of indicators reveals no concerns regarding the sustainability of price stability. The reference value is calculated as the average inflation rate of the three best-performing EU Member States in terms of price stability, plus 1.5 percentage points. For the period from May 2024 to April 2025, the reference value of 2.8% is based on the inflation rates of Ireland (1.2%), Finland (1.3%), and Italy (1.4%). No Member States were considered statistical outliers in this calculation, as none showed inflation deviations significantly above the euro area average due to country-specific factors.

3. Sustainability of the Government Financial Position

Bulgaria is currently not subject to a Council Decision on the existence of an excessive deficit. Its general government budget deficit stood at 3.0% of GDP in 2024, i.e. at the level of the 3% reference value, and its general government gross debt-to-GDP ratio stood at 24.1%, i.e. well below the 60% reference value since 2007.

4. Compliance with the Normal Fluctuation Margins of the EMS’s Exchange Rate Mechanism (ERM II) for at least the past 2 years

The Bulgarian lev participated in ERM II in the two-year reference period from 20 May 2023 to 19 May 2025. Over the reference period, the lev did not exhibit any deviation from the central rate. Bulgaria has fulfilled nearly all of its post-entry commitments under ERM II. Further efforts are needed related to anti-money laundering and counter terrorist financing (AML/CFT) measures.

5. Durability of Convergence, as Reflected in Long-Term Interest Rate Levels

In the twelve months ending April 2025, Bulgaria’s average long-term interest rate was 3.9%, well below the reference value of 5.1%. The reference value for April 2025 is calculated as the simple average of the average long-term interest rates in Ireland (2.8%), Finland (2.9%) and Italy (3.7%) plus 2 percentage points, yielding a reference value of 5.1%.

6. Economic Integration and Convergence (Article 140(1), Second Subparagraph TFEU)

In accordance with Article 140 TFEU, the Commission’s assessment must also consider additional factors relevant to economic integration and convergence, as these provide insight into a Member State’s capacity to join the euro area without significant difficulties. These include developments in the balance of payments and product, labour, and financial market integration.

In this context, Bulgaria’s external position has improved, with its combined current and capital account close to balance in 2024. The country is well integrated with the euro area through trade and investment, benefiting from increased banking and financial integration and access to the broader euro area market. Bulgaria continues to make progress but further actions are needed to address the rule of law, anti-corruption efforts, and regulatory quality.

While the financial sector is small and bank-dominated, it is well embedded in the euro area, supported by Bulgaria’s participation in the banking union since 2020. Market-based financing remains underdeveloped, but potential financial stability risks are being mitigated by the Bulgarian National Bank’s conservative macroprudential policy and the robustness of the banking system. The Commission's 2025 Alert Mechanism Report found no need for an in-depth imbalance review, but emphasized the importance of closely monitoring developments in competitiveness, the housing market, and credit growth.

Bulgaria’s Recovery and Resilience Plan (RRP), supported by €5.7 billion in EU grants (2021–2026), targets structural reforms, competitiveness, and reducing regional disparities. A revised RRP was submitted in April 2025 to accelerate implementation, especially in decarbonisation, governance, and business environment. Cohesion policy funds (€10.7 billion for 2021–2027) further support competitiveness, the green transition, social inclusion, and education, with implementation progressing overall, despite some remaining challenges.

7. Note regarding Consultation of the European Parliament

In accordance with Rule 108 of the Rules of Procedure, when Parliament is consulted pursuant to Article 140(2) of the Treaty on the Functioning of the European Union, the committee responsible shall submit a report to Parliament advocating approval or rejection of the proposed act on the basis of which Parliament shall deliberate. Parliament shall take a single vote on the proposed act, to which no amendments may be tabled, which shall apply also to the vote in committee. On 19 March 2025, ECON Coordinators agreed the file to be treated swiftly with plenary vote in July and to allocate the rapporteurship on this file as soon as possible.

Based on the above, the Rapporteur recommends that the derogation be lifted and Bulgaria adopts the euro on 1 January 2026.