ECB: Bulgaria Does Not Fully Comply with Euro Convergence Criteria

In its latest Convergence Report released on Tuesday, the European Central Bank (ECB) concluded that Bulgaria does not fully comply with the euro convergence criteria.

Apart from Bulgaria, the report examine the six other member states which do not participate in the exchange rate mechanism (ERM II), namely the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden.

According to the report, the seven countries comply with most of the quantitative economic criteria, but none fulfills all the obligations featured in the Treaty, including the legal convergence criteria.

The report, which examines both economic and legal convergence, states that in none of the seven member states the legal framework is fully compatible with all the requirements for the adoption of the euro.

As regards, Bulgaria the country fulfills three out of the five criteria necessary for adoption of the euro, namely price stability, public finances and long-term interest rates.

Legislation in Bulgaria is not fully compatible with the Treaty and the country does not fulfill the exchange rate criterion.

In April 2016, Bulgaria registered twelve-month average deflation of 1 %, which was well below the reference value of 0.7 % for the criterion on price stability.

Over the past decade, Bulgaria's inflation rate has fluctuated, ranging from deflation of 1.7 % to inflation of 12.6 %, with the average inflation for the period standing at 3.6 %.

The ECB expresses concerns about the sustainability of Bulgaria's inflation convergence in the longer term.

The report notes that the country's general government deficit and debt complied with the Maastricht criteria in 2015.

ECB reminds that Bulgaria has been subject to the preventive arm of the...