Bulgaria is on the verge of joining the eurozone, prompting questions about the possible inflationary impact of adopting the euro. An economic analysis by iBanFirst, a major provider of currency exchange and international payment services for businesses, forecasts Bulgaria’s harmonized inflation rate for 2026 to be between 2.8% and 3.3%. The inflation specifically linked to the euro transition is expected to be limited, contributing roughly 0.3 percentage points.
The bigger challenge for Bulgaria will be maintaining its competitiveness beyond price factors. iBanFirst’s report examines the economic consequences of the switch, identifying key opportunities and hurdles for businesses, as well as outlining the essential steps ahead.
Looking at experiences in other countries, Slovenia’s 2007 euro adoption caused a modest price rise of around 0.3 percentage points, mainly due to rounding effects, without sustained inflation despite the global financial crisis. Croatia, which joined the eurozone in 2023, saw a slightly higher inflation impact of 0.4-0.5 percentage points, driven by rounding combined with a global inflation surge linked to the energy crisis. For Bulgaria, inflationary pressures are expected to be mild, following a similar path to Slovenia.
Thanks to Bulgaria’s existing currency board system, there is no currency risk linked to the euro, but companies currently bear costs from currency conversions. These small but meaningful exchange rate differences will disappear with the euro, lowering costs and providing greater clarity in business operations. This change is anticipated to make Bulgaria more attractive to foreign investors, explains Dean Todorov, iBanFirst’s Director for Bulgaria.
Foreign trade is also expected to benefit significantly. According to European Commission data, the eurozone’s internal trade share rose from about 25% to roughly one-third of GDP during its first decade, with half of this increase due to removing currency risk and cutting costs. Bulgarian small and medium enterprises (SMEs) have promising opportunities to strengthen their presence in established markets like Germany and Italy, and to expand into new ones such as the Benelux countries, Austria, and Portugal.
The euro is also projected to boost Bulgaria’s appeal for investment and tourism. Although foreign direct investment levels in Bulgaria remain below the highs seen in 2007, the introduction of the euro could attract more interest. Croatia, for example, saw an 8% rise in eurozone tourists within eight months after joining, an effect Bulgaria expects to experience more moderately but still significantly.
Another positive impact is the so-called “Rose Effect,” which describes how a shared currency encourages increased trade between countries. This benefit is especially important for SMEs, which often face high costs and complexity in cross-border transactions.
Furthermore, joining the eurozone may improve Bulgaria’s credit ratings, lower interest rates, and enhance access to capital, particularly for smaller enterprises. Bulgarian banks will gain access to European Central Bank credit facilities, enabling them to offer more loans at reduced interest rates.
Post-euro adoption, Bulgarian businesses will need to focus increasingly on innovation, operational efficiency, and producing higher value-added goods. iBanFirst notes a shift in exports towards goods with greater technological intensity, though still relatively simple in complexity. Growth is seen in chemicals, refined fuels, non-ferrous metals, food products, and machinery, while sectors like textiles and low-value clothing decline. This transition will be vital for Bulgaria to compete effectively within deeper European integration.
Starting August 8, 2025, all prices will have to be shown in both leva and euro. Euro reserves will be distributed in December 2025, and the official euro adoption date is January 1, 2026, with a fixed conversion rate of 1.95583 leva per euro. A one-month dual currency circulation will follow.
Existing contracts denominated in leva will remain valid, with values converted to euro beginning January 1, 2026. Accounting rules will stay the same, with changes limited to numerical conversion to euros. Internal documents referring to leva must be updated by the end of 2026 to reflect the new currency.
Source: https://m.novinite.com/
