SOFIA (Reuters) - Bulgaria said it could join ERM-2, the two-year “waiting room” for euro zone membership, within a year - a timeline that European Commission Vice President Valdis Dombrovskis said could be achieved.
Bulgaria is pushing ahead with its bid to join the euro zone while it holds the EU presidency and enjoys the support of the current European Commission and political backing from countries such as France and Germany.
As one of EU’s poorest and most corrupt member states, Bulgaria is concerned that missing the momentum for deeper integration would leave it on the periphery as EU countries discuss a multi-speed Europe.
The Balkan country has said it plans to apply for membership of the Exchange Rate Mechanism (ERM-2) by the end of June, when its six-month term as EU president expires, although Prime Minister Boyko Borissov declined to confirm that timeline on Thursday.
Borissov said Sofia wanted to join the EU’s banking union “one day after” it joins the ERM-2, rather than joining the banking union first as the EU and ECB would prefer.
“I am an optimist that within a year we can congratulate ourselves,” Borissov told an economic forum.
Dombrovkis, who is also in charge of financial services in the EU, said the timeline was “reasonable and certainly doable”, reiterating support in Brussels for Bulgaria’s joining ERM-2.
“It is realistic to start this process during the Bulgarian presidency,” Dombrovskis told a public debate on Bulgaria’s euro zone accession in Sofia. He added that Bulgaria needs to work to convince all member states and the ECB of its plan.
Bulgaria, which joined the EU in 2007, meets the formal criteria to adopt the single currency, before which it would need to spend at least two years in the ERM-2 “waiting room”.
Its lev currency has been pegged to the euro for two decades and Bulgaria produces fiscal surpluses, keeps inflation at bay and has one of the lowest public debt burden in the EU.
But critics say the EU’s poorest member state needs to better align its economy to richer Western peers and prove it can crack down on corruption before it can adopt the euro.
Bulgaria could be the first country to join the ERM-2 since the EU’s banking union was set up. Dombrovskis said it would be up to ECB to decide whether the country should join the union or the euro zone’s precursor first.
Following the biggest financial crisis in the country triggered by the collapse of its fourth largest lender in 2014, Bulgaria sought to join the banking union and put its banks under ECB scrutiny, but these plans have since stalled.
Borissov said Brussels will hand Bulgaria a detailed road map for euro entry with clear criteria and timelines.
“What we are working with the European Commission at the moment is to prepare the documents, to hand them in and to get a road map in a month,” he said.
Speaking at the same forum, Finance Minister Vladislav Goranov said he does not see a reason what would stop Bulgaria from entering the ERM-2, adding it would be “hypocritical” if Bulgaria was denied access.
Reporting by Tsvetelia Tsolova, editing by Larry King