Bulgaria, which delayed entry into the euro area in 2011, won’t join it “until the dust settles” possibly several years from now, the nation’s finance minister said.
“We are going to wait, probably a number of additional years,” said the minister, Simeon Djankov, speaking at the Peterson Institute for International Economics in Washington yesterday. Djankov said in July 2011 Bulgaria was putting its euro-adoption plans on hold until the currency union overhauled its rules to prevent future crises
“If I start the path of entry, I don’t know exactly what I’m entering,” Djankov said yesterday. “We are basically going to wait until we see all the institutions that are in the euro zone.”
Bulgaria pegs the value of its currency, the lev, to the value of the euro, the common currency of 17 European countries. The economy of the European Union’s poorest country by per-capita output relies on the rest of the 27-nation bloc to buy its exports of machinery, metals and furniture.
“Bulgaria also wants to join the euro, and we have multiple times said that,” he said. “Do we have to pay for the bad policies of others already in the euro zone?”
EU finance ministers agreed to a plan in December that will place euro-area banks under a single supervisor, which Djankov said is a step in the right direction.
“Is it enough? No, I don’t think it’s enough,” he said.
Bulgaria has the lowest corporate and personal income tax rate in the European Union at 10 percent, according to the finance minister. Djankov said he is concerned that the EU could adopt a policy of tax harmonization.
“We want to make sure that such ideas are not a part of the future set of institutions of the euro zone,” he said.
Djankov said he expects Latvia will become the 18th member of the euro zone by the beginning of next year.
Bulgaria’s economy expanded for a 10th quarter as rising domestic demand offset a drop in exports to European nations struggling to emerge from the debt crisis.
Gross domestic product rose 0.5 percent in the fourth quarter from a year earlier, matching the rate in the previous three months, the Sofia-based Statistics Institute said yesterday in a preliminary estimate.