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Bulgaria is still interested in joining the euro zone as quickly as possible despite tensions in the bloc over the fiscal troubles of Ireland and Greece, Bulgarian Finance Minister Simeon Djankov said on Wednesday.
Djankov said Bulgaria was likely to apply to join the pre-euro currency grid, the ERM-2, in the second half of 2011, once it could demonstrate that next year's budget deficit would be lower that the European Union's ceiling of 3% of economic output.
"Our determination to join the euro is as strong as ever," Djankov told Reuters in an interview. "The best option is to join the euro zone as fast as we can."
However, a decision to allow a country to join ERM-2 needs unanimity among euro zone countries, the European Central Bank and the EU's executive European Commission.
Some EU diplomats have said privately that there is limited enthusiasm for allowing Bulgaria to move closer to the euro, because of its reputation on corruption and organised crime, although that situation was improving.
Opinion polls show public support for adopting the euro is waning in some EU member states in central and eastern Europe since the debt crisis first erupted in Greece last year.
Djankov said he did not expect the euro zone's problems to make it reluctant to recruit new members.
"The euro zone needs countries like Estonia and Bulgaria which have shown over the years that they have conservative fiscal policies, low deficits and low levels of debt," he said. Estonia joins the euro zone on January 1, 2011.
Once it becomes evident that Bulgaria will meet the budget deficit criterion, it will ask the EU and the European Central Bank to join the ERM-2. Negotiations on entering the currency grid may last several months or more.
A country wishing to adopt the euro must stay for at least two years in ERM-2, where its currency is allowed to fluctuate within a certain band around a fixed rate against the euro. The minister said this would not be a problem since Bulgaria's lev was pegged to the euro in a currency board.
"If next year we follow this budget policy path, then we will be knocking at the door of the euro zone. I think … as early as the second half of next year, we could be ready to discuss this option (joining the ERM-2)," Djankov said.
Djankov also said that Bulgaria's planned eurobond issue next year would probably be lower that 1 bln euros envisaged in a draft budget.
"Better public finances in the last several months gave us larger fiscal reserves, about 3.3 bln euros, which gives us some cushion for next year. So it is very likely we will not need the whole 1 bln, we will need less," he said.
He said Bulgaria would meet macro-economic targets enshrined in the 2011 draft budget — cutting the deficit to 2.5% of GDP from 3.9% this year and boosting economic growth to 3.6% next year from 0.7% in 2010.
