The Eurozone is getting stronger. There will be clear economic benefits for Bulgaria after the introduction of the euro, such as reduced currency exchange costs, financial stability, lower interest rates, and therefore better opportunities for attracting investments. This was stated by European Commissioner for Economy and Productivity Valdis Dombrovskis for the "Panorama" program.
Boyko Vassilev, BNT: Was Bulgaria prepared to join the euro? Or was the decision purely political?
Valdis Dombrovskis: Look, the preparatory work has been going on for many years. Let us remind you, Bulgaria first joined the ERM II Exchange Rate Mechanism in 2020. This was a preliminary commitment, then there was more. All this guarantees that Bulgaria is truly prepared. And it is prepared macroeconomically. It meets all the convergence criteria. Now the focus is on practical readiness. How exactly the changeover to the euro will be carried out. How will the dual display and price monitoring be organized, all of that. That is the purpose of my visit. Not only to discuss it with the Bulgarian authorities, but also with the Association of Banks. The work is underway.
- Who benefits more - Bulgaria or the eurozone, which needs strong support in these turbulent days?
- The news is positive, both for Bulgaria and for the eurozone and the EU. There are clear economic benefits for Bulgaria - reduced currency exchange costs, financial stability, lower interest rates, therefore better opportunities for attracting investments. Bulgaria, with its fixed exchange rate, is already implementing the monetary policy of the European Central Bank, but without the benefits of the euro. Well, now you have the benefits. For the eurozone, all this shows that the euro is an attractive currency, and the eurozone is getting stronger.
- Do you understand the concerns of Bulgarians? Prices are still rising today, and some goods are already more expensive than in other countries.
- This is one of the concerns - how the introduction of the euro will affect prices. The European Commission is monitoring the process very closely, as well as in the countries that recently introduced the euro. It is expected that the one-time effect of the introduction will be somewhere from 0.1 to 0.3%. In the medium term, this will be offset by savings from lower currency exchange costs and lower interest rates. Obviously, we will monitor this. That is why the transition period is necessary, in which prices will be displayed in both euros and leva. So that people can get used to it. That is why prices will be monitored. We are also working with businesses on campaigns for a smooth introduction of the euro, so that it cannot be used as an excuse for raising prices.
- Why was it so bad to put the date of the euro to a referendum? That is not forbidden. Is it so bad to ask people?
- Since 2004, 13 countries have already joined the EU, and eight of them - to the eurozone. Bulgaria would be the ninth. There was no referendum in any of them. The argument was similar for all: these countries have treaties on accession to the EU, and they were voted on in referendums. And the introduction of the euro is stipulated as an obligation under the treaty on accession to the EU.
- What was the most difficult thing when your native Latvia joined the euro? Because Latvia had recently had its own currency. Wasn't it proud of that?
- In Latvia, the context was different. First, we said that the introduction of the euro was a kind of political anchor in the financial crisis. Second, when we approached, there was a crisis in the eurozone. So for us, it was a process with many challenges. It was also difficult to explain the benefits through public communication. Today, I will say that the decision for the euro has paid off for us completely. More than 80% of the people support the euro. We saw that it was like an anchor of stability for COVID-19, the Russian invasion of Ukraine, the energy crisis. And when Russia openly talks about aggression against other European countries.
- Some supporters of the euro describe it as a ticket to heaven. How can we measure the real benefit of the euro when someone says: "Well, it will solve all our problems"?
- Well, everyone has visited the eurozone countries. I leave it to everyone to judge whether it is heaven or not. That is why we emphasize the practical benefits: lower currency conversion costs, stabilization and potential reduction of interest rates, greater attractiveness for attracting foreign investment, price transparency. All these things are tangible. We have seen them elsewhere in the euro area. But membership does not absolve countries from the responsibility for sound fiscal and macroeconomic policies. Bulgaria traditionally does so. It has the second lowest debt-to-GDP ratio in the EU. It is important to continue like this.
- How do you perceive the European economy, for which you are partly responsible? The European path has always been soft, compromising, delicate. Can the delicate flower Europe survive the storm where wild beasts are fighting? Where it is caused by Russia, China and even the USA?
- First of all, if we talk about the economy, the EU has proven resilience throughout all these geopolitical turbulences. We expect the European economy to grow by 1.1% this year, by 1.6% next. But you are right that in these turbulent times Europe must also become a hard power. This means investing much more in our defense and security. That is why we are working on significantly increasing our defense investments and spending. This week we granted a number of member states, including Bulgaria, additional flexibility under European fiscal rules to increase defense spending. We need to work to deter Russia's aggressive intentions and to show ourselves strong in this turbulent world.
- Is this delicacy of Europe a problem or an opportunity?
- As I mentioned, we need hard power. But when you say "delicacy", at the same time we are committed to the rules-based international order. And we will do everything to uphold it. In a turbulent world, if we are talking about investments and if you want stability, predictability and the rule of law, the place is Europe.