Bulgaria urged to keep faith with Euro

Economists say the country will benefit in the long term from joining the single currency, whatever the current worries over the troubles in Ireland and Greece. Leading economists in Bulgaria say the ongoing crisis in the country - and in the euro-zone - should not dissuade Sofia from aiming to enter the single currency, a move they believe will ultimately benefit the economy. Fears about the stability of the EU’s single-currency zone are growing, centered on the worsening climate in hugely indebted Ireland and Greece. But Bulgarian economists are convinced that the euro-zone will recover and prosper in the long term. "Twenty years after it adopts the euro, Bulgaria’s GDP will be 15 to 20 per cent higher it is than today, by attracting more investment and more intensive trade," Georgi Ganev, an economist with the Centre for Liberal Strategies in Sofia, said.

Ganev said he was convinced that the current problems in the euro-zone will be over long before Bulgaria joins the single currency, which will be in several years' time at the earliest.

Lachezar Bogdanov, another economist, also sees euro-zone membership as the best future option. As the national currency, the lev, is already pegged to the euro, it remains highly vulnerable to problems afflicting the euro-zone anyway, he noted.

"It would be better to be part of the euro-zone and enjoy some of its benefits and take part in the decision-making process," he told Balkan Insight. On Wednesday, the Finance Minister, Simeon Dyankov, told Reuters that the country was determined to apply for ERM II, a so-called "waiting room" for the euro-zone, by as soon as the second half of 2011, when the government plans to meet the EU’s requirement to bring budget deficits under 3 per cent of GDP.

Bulgaria's economy is still struggling to find its way out of financial crisis. In a faint sign of recovery, for the first time in 18 months, the economy grew by 0.2 per cent for the third quarter of this year, compared to the same period in 2009. Earlier this year, Bulgaria, which joined the EU in 2007, was forced to abandon plans to apply for ERM II after it was revealed that it had hidden a deficit of over 3 per cent of GDP for the previous year. The government expects to cut the 2011 deficit to 2.5 per cent and hopes the economy will expand by 3.6 per cent that year. Some economists dismiss these plans as too optimistic.

News source: BalkanInsight link: article