There is a lot of talk about introducing the euro, but nothing is being done to familiarize businesses with the practical transition to the single currency. “The state should be more adequate in its approach to the currency change“. This opinion was expressed in an interview with FACTS by attorney Galin Popov, executive director of the Association of Non-Food Traders. Traders need practical details to be prepared for a smooth currency change. Most companies indicate that they need up to 6 months or between 6 months and 1 year to make a purely technical transition to the euro. If the entire technical process of switching to a single currency is left to the last minute, there will be market turmoil, difficulties in the transition and, respectively, a higher price for switching from lev to euro. And we will all pay this price - both traders and consumers, the lawyer warns.
Adv. Popov, a law has been adopted regulating the introduction of the euro. However, it turns out that it cannot be implemented in practice. Could you clarify the situation?
The Law on the Introduction of the Euro in the Republic of Bulgaria (ZVERB) was adopted and entered into force in August 2024. It regulates various deadlines, some of which begin to run even before our country enters the eurozone, such as the dual designation of prices in leva and euro. The starting dates from which these periods will run are not yet known, as they depend on various unknown factors, such as the Decision of the Council of the European Union on the introduction of the euro in our country.
The ZVERB regulates the mandatory adoption within a certain period of amendments and supplements to subordinate regulations, which are of key importance for traders in the country to be able to operate peacefully. However, there is still no official draft of such amendments and supplements. That is, The law cannot yet be fully implemented because there is no EU Council Decision on the one hand, and on the other hand, because business needs clearly defined rules.
What bylaws must be adopted and by whom in order for the law to start functioning?
A number of bylaws must be adopted, but here I will highlight the Ordinance under Art. 118, para. 4 of the Value Added Tax Act (the so-called Ordinance H-18), which concerns the relationship between traders and the tax authorities. This regulation should have been brought into line with the ZVERB within two months of the law coming into force by the Minister of Finance. However, this has not yet happened, and is of utmost importance for the normal operation of trade turnover in general in the country.
Regulations should also be adopted to implement provisions of the ZVERB related to the distribution and exchange of euro banknotes and coins, various banking activities.
The Bulgarian National Bank should publish these regulations in the State Gazette within three months of the date of adoption of the Decision of the Council of the European Union on the introduction of the euro. We hope that the final dates of these deadlines will not be waited for, because this will make it more difficult for traders and will shorten the time for preparation and a normal transition.
The law on the adoption of the euro alone requires changes to 52 more laws. How far has this change gone?
The transitional and final provisions of the ZVERB provide for amendments and supplements to 52 laws. Among them are the Commerce Act, the Consumer Protection Act, the Social Security Code and many others. These amendments and supplements enter into force on the date that will be determined in a Decision of the Council of the European Union on the adoption of the euro.
There is an interesting legislative paradox here: if you open, say, the Commerce Act, you will see these amendments and if you are not an expert, you will be convinced that the currency in force in our country is the euro. True, it is written that the amendments enter into force when the euro is adopted as the national currency, but if you do not get to that point with your reading, you will be left with the above impression.
In general, we have gaps in the legislative technique. I understand that it is complicated and requires coordination and taking a position on the part of many experts, working groups and institutions, but still the state should be more adequate in its approach to the currency change.
A year ago, in a survey among businesses, half of the participants stated that they expected the state to provide more practical distractions regarding the transition from lev to euro. Did this happen?
In fact, apart from the political talk and the state's activity regarding the expected EU Council Decision, there is no practical work here, in the internal market. There is no talk of training, no practical activities are planned aimed at traders as part of the market. If there is anything practical, it is aimed mainly at consumers and, unfortunately, again on the basis of political talk and populism.
Banks and big business have been preparing for months, which was also influenced by the campaign we organized in the summer of 2024, before the final adoption of the ZVERB. But we, as traders, still need practical details in order to be ready for a smooth currency changeover.
From the study you cite, it is clear that companies need at least 6 months to prepare for the introduction of the euro, and most of them indicate between 6 months and a year. But as I said above, there are deadlines that run even before the introduction of the euro, such as the obligation for dual labeling. In the absence of clear regulatory rules, each element of the activities that we have to carry out becomes complicated and puts us in conditions of uncertainty and instability. For the changes that need to be made to the companies' software, it is necessary to have complete clarity on what to step on and only then can the actual work on changing them begin. Then the training of the staff in legal, commercial, accounting, auditing, etc. activities will begin.
What are the most useful explanations that, in your opinion, the state should explain to the business?
Practical advice. The joint work of the state and traders to clarify and unify the expectations and requirements related to the implementation of legal provisions. This way, doubts about what and why should be done can be avoided, and the requirements for business are clear.
Our concerns are that if things are left to be prepared and come into force at the last minute, there will be market turmoil, difficulties in the transition and, respectively, a higher price for switching from lev to euro. And we will all pay this price - both traders and consumers. This can be avoided by preparing the full regulatory framework that outlines the necessary activities and giving the market enough time to do them. I have already mentioned the deadlines above. Ultimately, this is possible if the Progress Report on Bulgaria and the Decision are adopted in June, and the entry into force is from the beginning of 2026 and provided that the aforementioned regulatory acts are adopted on time. It is also good to have increased work on practical training by the state.
We cannot fail to touch on the issue of commodity prices, namely that after the adoption of the euro they will increase. What is your thesis?
The prices of a given commodity do not change because of the change in the currency in which it is sold. There are such examples all over the world. Prices change because of the market. If demand is high - prices rise. If it is low - prices fall. In this sense, it is good to say that in Bulgaria we work in an extremely competitive environment. If a trader simply decides to raise prices for some non-market reason, such as a change in the currency, then the likelihood of redirecting customers to their competitors is high.
I do not see common sense in the claim that prices will change because of our entry into the eurozone. Apart from that, observing the countries that have entered the eurozone, in a short period after the immediate adoption of the euro, a tendency for an attempt to raise prices and subsequent calming down is noticeable. And let us bear in mind that it is not the increase or decrease in prices that is the main point, but the increase or decrease in incomes. And with the adoption of the euro, we have every opportunity to raise them. This is because in recent years many finance ministers have raised incomes in an unjustified manner, without any real economic processes and results behind this increase. As a result, we are observing a serious outflow of foreign business from Bulgaria. Upon entering the eurozone, this business will begin to return, if only because of the clear and predictable financial framework. This will bring in technologies that we otherwise do not have, and incomes will also rise, respectively. So, the economic result in a medium-term aspect will be more than positive.