2026 At the Earliest: Political Instability Pushes Back Bulgaria’s Eurozone and Schengen Goals

The "Economist Intelligence Unit" has pushed back Bulgaria's anticipated entry into the Eurozone and full Schengen membership to 2026, citing ongoing political instability as a major factor. According to their August forecast, while adopting the euro could be technically feasible by 2025 if price stability and a stable government are achieved, the prevailing conditions suggest a delay. Persistent political instability and inflation levels exceeding those of the European Central Bank benchmark are expected to hinder this timeline.

The forecast highlights that Bulgaria's capital expenditure program will remain heavily reliant on European Union funding, particularly from the Recovery and Resilience Plan. Despite the potential for increased investment, which is currently below that of comparable regional economies, the country's substantial coal sector and the need for social protection programs for miners may impede progress toward a green transition. This transition is crucial for accessing funds from the Recovery Plan.

The business climate in Bulgaria is anticipated to gradually improve, though the country will likely remain less attractive compared to other Eastern European nations due to political instability and underdeveloped infrastructure. The report notes that Bulgaria has struggled with government instability since 2021, and the fragmented parliament continues to obstruct key policy implementation. Polls from July indicate a significant risk that the political instability will persist into the next year.

Regarding inflation, the forecast suggests a significant reduction from 9.5% in 2023 to 2.7% by the end of this year, approaching the Eurozone's 2.5%. This decrease is attributed to slower increases in energy and food prices, which make...