By January 1, 2025, the European Monetary Union (eurozone) should expand to include another member country, Bulgaria. The country of the Balkan Peninsula is the closest to adopting the euro of all the current member states of the European Union that do not yet pay in the euro. Bulgaria has been in the ERM II system (a kind of eurozone antechamber) since 2020, while the minimum required is only two years.

However, in recent weeks there have been opinions that Bulgaria will not join the eurozone on January 1, 2025. It was supposed to enter it from the beginning of 2024, but postponed this date by a year. The reason was primarily the failure to meet all the Maastricht criteria, especially inflation. Currently, Bulgaria is better off, but the political crisis has more or less condemned the country to further postponement.

That's what some experts who spoke to Politico think so. "January 2026 would be much more realistic also due to technical issues related to the exchange of the national currency for the euro," Cinzia Alcidi, an analyst at the Brussels think tank CEPS, told Politico.eu. Politico also quotes several other political leaders, including the governor of Bulgaria's central bank, as saying that as late as mid-2025 would be a possibility.

In contrast, Eurogroup President Paschal Donohoe is convinced that Bulgaria will join the euro next year. “The question is when the country will introduce the euro as its currency. And not if,“ Donohoe said to Politico.eu.

Yes, one could agree that Bulgaria's entry into the eurozone is really only a matter of time. The remaining EU member states, which do not have a negotiated exemption from adopting the euro, could be viewed similarly. These are practically all the countries of Central and Eastern Europe that have expanded the European Union in the last twenty years.

From an economic point of view, Poland is closest to the eurozone. Economically, it makes sense for this country of 40 million people not to use a currency other than Germany, which is Poland's largest trading partner. And Poland is somewhat closer to the eurozone from a political point of view. The recent parliamentary elections were won by forces that are a little more pro-European than the previous government. Poland can thus be described as the country with the highest probability of adopting the euro. [1]

The euro also makes economic sense for the Czech Republic. In this case too, Germany is the largest trading partner, the Czech Republic is even referred to as Germany's seventeenth federal state when it comes to the economic side of things. But the Czech Republic is one of those EU countries where the support for the adoption of the euro among the population is almost the smallest. From a political point of view, the entry of the Czech Republic into the eurozone is quite far away.

For similar reasons, Hungary's entry into the eurozone is almost unimaginable at the moment. In addition, Hungary has had tense relations with Brussels itself for several years. And, Hungary does not meet the Maastricht criteria, which relate to the balance of public finances. Its public budget deficit reached 6.7 percent of GDP in 2023 (the maximum allowable limit is 3% of GDP) and the government debt exceeds 70 percent of GDP (the maximum allowable is 60% of GDP).

Perhaps Romania would like to join the eurozone, following the example of its Bulgarian neighbour. But even in his case, one of the key Maastricht criteria is not met - the deficit of the government sector reached 6.6 percent of GDPlast year and is expected to be even worse this year. Last year, the government debt was slightly below the threshold of 50 percent of GDP, and Romania met this Maastricht criterion.

All in all, if the eurozone expands in the coming years, it will most likely include Bulgaria, which already has one foot in the eurozone, and later perhaps Poland, whose political constellation is quite supportive of this move.

ApmeFX

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.