site.btaBanking, Industry, Tourism, Energy and Education among Biggest Winners of Eurozone Entry, Bulgarian Fiscal Council Finds

Joining the eurozone will accelerate the process of convergence of the Bulgarian economy with that of the eurozone and improve the welfare of Bulgarian citizens, the analysis of the Fiscal Council of Bulgaria published on Tuesday says. The Council names the sectors that will benefit the most from Bulgaria’s joining the eurozone: banking and finance, industry, tourism, energy, information technology and telecommunications, public administration, education, healthcare and social services.

The analysis notes that the banking and finance sector’s share in Bulgaria’s economy was 6.4%, and the number of people working in the sector was 55,315 in 2023. Among the benefits for the sector from Bulgaria’s joining the eurozone are the lower borrowing costs, both public and private lenders will see reduced interest rates, as loans denominated in euros will be close to the European Central Bank's interest rate levels. The currency environment will be more stable, because abandoning the fixed exchange rate of the lev in favour of the euro will eliminate the lev-euro exchange rate risk.

For industrial production, which had a share of 21.4% of the economy and employed 477,754 people in 2023, joining the eurozone will eliminate currency exchange costs for companies trading with eurozone members. This will benefit sectors such as machinery, automotive components, metals, chemicals, food and beverages. Key sectors such as mining, metallurgy, automotive components, machinery and energy will benefit from easier capital investment and the elimination of financing obstacles related to the foreign exchange market, the analysis adds.

For the tourism sector, which had a 6.5% share of the economy and employed 113,950 people in 2023, joining the eurozone gives increased attractiveness to travellers from the eurozone, who will appreciate easier transactions and the absence of exchange fees. This will give a boost to hotels, restaurants and tour operators, and allow better opportunities to promote holiday properties in Bulgaria, the Fiscal Council says.

For the energy sector, which had a 1.3% share of the economy and 28,940 people employed in the sector in 2023, the benefits of membership are cheaper project financing in euros, as well as government guarantees.

The benefits for the information technology and telecommunications sector, with an 8.2% share of the economy and 129,916 people employed in the sector in 2023, are that payment in euros corresponds to the currency of the clients, and that salary costs are more predictable.

For government, education, healthcare and social services, which had a 16.1% share in the economy and 448,475 people working in the sector in 2023, the benefits of joining the eurozone are that the increase in the sovereign credit rating leads to a decrease in interest costs for financing, and a decrease in the required fiscal reserve, the analysis notes.