Bulgaria seeks political backing to switch to euro

Bloomberg

A decade after joining the European Union, Bulgaria is stepping up its lobbying efforts to switch to the euro, part of an expansion by the bloc that could help stabilize the volatile Balkan region.
The former communist country will ask euro-area politicians to back its bid to join the ERM-2 exchange-rate mechanism, the precursor to adopting the common currency, Finance Minister Vladislav Goranov said in an interview. EU enlargement into the western Balkans would benefit everyone by calming ethnic tensions and stemming westward migration, he said Monday.
“I trust euro-area expansion is also a political process,” Goranov, 40, said in his office in Sofia, the capital. “Europe must be bigger and more united to stay competitive, to overcome global challenges coming from Asia, Russia, Latin America.
Integration should continue at a quick pace.”
The Black Sea nation of 7 million people is pushing its bid to bind itself to the euro region at a time when the wider EU is still reeling from shocks including the Greek debt crisis, a surge in refugees and, most recently, Brexit. Five of the currency union’s existing members are from the former Eastern Bloc. The Balkan region endured a spate of bloody conflicts following the breakup of Yugoslavia.
Bulgaria already meets most EU requirements for joining ERM-2. Public debt is 27 percent of gross domestic product, well within the bloc’s 60 percent limit, while a projected 2017 budget deficit of 1.4 percent of GDP is less than the half the 3 percent maximum.
Bulgaria’s currency, the lev, is pegged to the euro under a currency board system imposed 20 years ago in the wake of a banking crisis. Under the system, central bank lending is banned and lev in circulation must be fully covered by foreign-exchange reserves.