The Euro Area Has A New Member: Bulgaria

Following the Council Decision on 8 July 2025, Bulgaria will become the 21st member of the euro area as of 1 January 2026. The Council’s Decision was based on the findings of the 2025 Convergence Reports of the Commission and the European Central Bank (ECB). The assessment was based on the four nominal economic convergence criteria provided for in the Treaty on the Functioning of the European Unions (TFEU), namely on price stability, sound public finances, exchange rate stability and convergence in long-term interest rates, complemented with the assessment that Bulgaria’s national legislation in the monetary field is in line with the Treaty. This chapter presents the key economic considerations underpinning this positive convergence assessment, emphasising the sustainability of convergence. Bulgaria’s economic cycle and inflation developments have been largely aligned with those of the euro area, which indicates that the common monetary policy should serve the Bulgarian economy well when addressing symmetric shocks. The economy’s vulnerability to asymmetric shocks appears contained and it has the capacity to absorb and recover from shocks, including as a result of the solid external position, low government debt, relatively flexible labour market, and the stable financial system. The analysis suggests that sufficiently robust conditions are in place for Bulgaria to be able to maintain a sustainable convergence path in the medium term. However, significant economic challenges remain, and policy discipline, including prudent fiscal policies, and further structural reforms will be key for the country to fully reap the benefits from euro area membership.