site.btaIMF's Alfred Kammer Catalogues Gains for Bulgaria from Eurozone Entry

Addressing Friday a Sofia conference discussing the advantages and opportunities that the Eurozone will bring for Bulgaria, IMF Director of European Department Alfred Kammer catalogued what he expects to be the benefits. Joining the euro area as a full member will bring important benefits for Bulgaria, will strengthen its institutions and will put it at the table where the European Central Bank (ECB) decides all financial issues for the EU, he said.

The conference is organized by Dir.bg, the Confederation of Employers and Industrialists in Bulgaria and the Small and Medium Enterprises Promotion Agency. It was opened by Vice President Iliana Iotova and among the speakers were Finance Minister Rositza Velkova, Deputy Prime Minister in charge of the management of EU funding Atanas Pekanov, the central bank governors of Croatia, Slovenia, the Netherlands, an IMF official, MPs, former finance ministers, union representatives, employers and experts.

Kammer pointed out that euro area membership is not a panacea and the accession process requires additional work by politicians as well. Eurozone membership brings its own challenges, but Bulgaria already has two decades of experience with the currency board, he noted.

Among the benefits for Bulgaria of joining the euro zone, Kammer enlisted the reduced costs of financial transactions, trade and increase economic efficiency; improved credit rating of the country and reduced cost of public financing.

Kammer spoke about the Baltic countries as a euro changeover success that Bulgaria can have, too. He said that Lithuania and Latvia have seen their public debt costs fall, and inflation remained low and rose at a slow pace even after the start of the Ukraine war. This allowed for a more flexible labor market and for maintaining high labor productivity, contributing to preserving the competitive advantages of both countries, he explained.

He underscored the importance of maintaining strong financial discipline and flexible financial markets before and after the introduction of the euro, and to continue the reforms that have been initiated, if Bulgaria is to develop well. It is also necessary to speed up reforms to further boost productivity. This is key as labour costs are rising faster in Bulgaria than in the euro zone, but productivity levels are not rising as fast, he noted.

He also underscored the importance of investing in human capital, healthcare and social protection.