Bulgaria likely to delay entry into euro zone 'waiting room'

First Investment Bank AD

20/02/2020 17:16

SOFIA, Feb 20 (Reuters) - Bulgaria is likely to delay plans
to join the precursor to euro zone membership, the ERM-2
exchange rate mechanism, until the summer, European Commission
Vice President Valdis Dombrovskis said on Thursday.
    Dombrovskis told national BNR radio he had been assured by
Finance Minister Vladislav Goranov that the Balkan country was
working towards the euro adoption. However, he said the country
was likely to postpone its target to join ERM-2 in April by a
few months.
    Earlier this week Prime Minister Boyko Borissov said his
government would "slow the tempo" of progression towards the
euro zone's "waiting room" amid fears that the preparatory steps
could endanger the lev's long-standing fixed exchange rate
against the euro.
    The government has pledged to keep the current peg to the
euro until it adopts the common currency. But many people are
concerned the value of their savings may be hit and Borissov
said he would need more time to convince everyone that euro
adoption would be beneficial to the country, an EU member since
2007.
    "I want a national consensus, I want all people to
understand that euro zone entry is for the good of the country,"
Borissov reiterated on Thursday in Brussels. 
    Borissov said adopting the euro would push borrowing costs
down, put Bulgaria at the heart of the European Union and
enhance the stability of the country's banking system.
    Bulgaria meets the nominal criteria to adopt the single
currency, with healthy public finances and low debt, but it is
also one of Europe's poorest and most corrupt countries.
    Sofia has made wide-ranging commitments to secure banking
union and ERM-2 membership, including strengthening its banking
sector and its anti-money laundering systems.
    A comprehensive assessment at six Bulgarian lenders by the
European Central Bank last year found capital shortfalls at two
locally owned banks, but both First Investment Bank  5F4.BB  and
Investbank have since announced plans to strengthen their
capital buffers.
    Kristalina Georgieva, the head of the International Monetary
Fund said last month Bulgaria's plans to adopt the euro currency
in 2023 were fully foreseeable.  

 (Reporting by Angel Krasimirov and Tsvetelia Tsolova; Editing
by Christina Fincher)
 ((angel.krasimirov@thomsonreuters.com; +359 888 695 510;))