Bulgaria is in no rush to join the euro zone, according to Kalin Hristov, Deputy Governor of the Bulgarian National Bank.
In an interview for Dow Jones Newswires cited by Bloomberg, Hristov has toned down Bulgaria's enthusiasm for adopting the common European currency even though this goal has been constantly reaffirmed as a priority by the Borisov Cabinet and especially by Finance Minister and Deputy PM Simeon Djankov.
"We're not rushing... there's no point running into a burning building," Bulgaria's No. 2 banker said on the sidelines of the Euromoney central and eastern Europe conference.
Hristov stressed Bulgaria remains committed to joining the single currency, but his comments extend a gradual cooling of rhetoric from Sofia, which was initially targeting rapid accession. According to him, Bulgaria will first monitor the debt situation in the euro zone before advancing on its bid.
Dow Jones Newswires reminds that in December, Bulgaria's finance minister Simeon Djankov said euro zone's sovereign debt woes had "muted" discussion about rapid entry, but stressed that the ruling center-right GERB party was still "convinced that it should join soon."
The report says that not just the Bulgarian authorities but also business and economic factors in Central and Eastern Europe are questioning the benefits of "rapid euro adoption."
"I can definitely tell you there's a genuine change in policymakers' perceptions of euro adoption, but right now, its not a substantial one...The bottom line is that everyone wants to end up on the winning side, so it makes sense to take your time," says Radovan Jelasic, former Serbian central bank governor and current adviser to Unicredit.
The report points out that fiscal discipline is especially important for Bulgaria, as a large budget deficit may put pressure on the economy's currency board, which pegs the Bulgarian lev to the euro.
The currency board, in place since an economic crisis in 1997 led to hyperinflation and the lev's collapse, compels Bulgarian policy makers to preside over a tight fiscal policy to guard against speculative attacks, Dow Jones says.
Up until the spring of 2010, the Borisov Cabinet was ardently enthusiastic about Bulgaria's euro zone prospects aspiring for a speedy accession to the euro zone waiting room, ERM II. Subsequently, however, Bulgaria's 2009 and 2010 budget deficits ended up being above the 3% benchmark set by the EU Stability and Growth Pact.
Latest data showed that Bulgaria registered a budget deficit of 3.9% in 2010 instead of the forecast 4.8%. Bulgaria's deficit under the consolidated fiscal framework on cash basis was BGN 2.8 B in 2010, or 3.9%.
The accrual deficit, which is measured according to EU accounting rules, was 3.6%. According to Bulgaria's revised 2010 State Budget Act approved in June, the expected 2010 budget deficit was 4.8%, or BGN 3.691 B.