site.btaLower Transaction Costs, Stronger Trade, Investment, and Price Transparency in Bulgaria Expected by ECB

Bulgaria is expected to benefit from lower transaction and borrowing costs for citizens and businesses after joining the eurozone, according to the European Central Bank's (ECB) latest monthly economic bulletin, published on Thursday on the bank's official website. Given its deep integration with the eurozone economy, adopting the euro could bring economic benefits such as increased foreign trade and investment, greater price transparency and comparability, and stronger investor confidence.

The ECB predicted that lower borrowing costs will benefit the Bulgarian economy thanks to stable inflation expectations and reduced regulatory costs for banks, such as lower reserve requirements. Furthermore, adopting the euro allows Bulgaria to participate in the euro area's monetary policy decision-making process and influence relevant economic policies, according to experts.

The ECB bulletin states that the costs and risks associated with adopting the euro in Bulgaria are expected to be minimal and mostly one-off: 

"When it comes to a country joining the euro area, the main sources of concern are the costs of the changeover and the potential for unjustified price increases when prices are converted to euro. To allay these concerns, the Bulgarian authorities have implemented several measures, including enhanced price monitoring and inspections to address abusive practices, as well as a long mandatory period for the dual display of prices, which began on August 8, 2025, and will end on August 8, 2026", according to the European Central Bank.

The ECB warned that inflation remains vulnerable to external price fluctuations due to the high energy intensity of the manufacturing sector and the large proportion of energy and food in the consumer basket of Bulgarian households. Although moderate, wage and credit dynamics create additional risks of price increases. In the long term, Bulgaria's relatively low income and price levels compared to other eurozone countries suggest that real and nominal convergence is likely to continue, the bulletin adds.

Spending on social protection, healthcare, and education in Bulgaria is also lower than in the eurozone. If pressure to increase these expenditures leads to an increase in overall expenditure, higher tax revenues will be needed to keep the debt ratio stable, according to the ECB bulletin.

The bulletin concludes by stating that the best approach to achieving sustainable long-term economic convergence and avoiding unjustified inflationary pressures and loss of competitiveness, which could hamper Bulgaria's long-term economic growth, would be to maintain stable and growth-friendly public finances in line with EU rules, together with ongoing structural reforms to boost productivity.