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SOFIA, May 24 (Reuters) - Bulgaria needs to show its economy is more closely aligned to its wealthier EU peers before it considers joining the euro zone, the European Central Bank's chief economist Peter Praet said on Wednesday.
The Balkan country joined the European Union in 2007 and while it has relatively low inflation and stable public finances, its entry into the euro zone has been stymied by its failure to tackle high-level graft and low income levels.
"When you look at the formal, numerical convergence criteria, it looks quite good," Praet told a financial forum in Sofia.
"Of course the debate ... is always about what we call now sustained convergence, more structural. Because once you join the monetary union, it's irreversible. There is no exit," he said.
"It is a very important decision ... and we have been insisting very much about institutional capacity, institutional building," he said.
Bulgaria, which pegs its lev currency to the euro, does not have a target date to adopt the single currency. However, the new centre-right government of Prime Minister Boiko Borisov has put joining the Exchange Rate Mechanism (ERM-2), commonly known as the euro's "waiting room", high on its agenda.
He has pledged reforms including setting up a body to tackle graft although analysts are cautious on his reformist drive. Bulgaria ranks as EU's most corrupt country according to the index of Transparency International.
Finance Minister Vladislav Goranov, speaking at the same forum on Wednesday, said Sofia would use diplomacy to convince its EU partners it is ready to join.
"Our priority, of our government, is preparing the country to join the euro zone as well as preparation to participate in the banking union," Goranov said.
"Our efforts to integrate the country into European financial infrastructure will continue in the way we think is right - with diplomacy and convincing our partners that we are ready to become part of these structures," he said. (Reporting by Tsvetelia Tsolova; Editing by Susan Fenton)