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Bulgaria Changes Legislation To Join Euro 'Waiting Room'

Finance Minister Vladislav Goranov (left) said Bulgaria would like to join the ERM2 as soon as April. (file photo)
Finance Minister Vladislav Goranov (left) said Bulgaria would like to join the ERM2 as soon as April. (file photo)

Bulgaria's parliament has adopted amendments to the country's central-bank law in order to ease its accession to the "waiting room" of the eurozone.

Bulgaria has operated an International Monetary Fund (IMF)-led currency-board arrangement since 1999 that pegs its national currency, the lev, to the euro at a fixed rate of 1.95583.

An EU member since 2007, Bulgaria would seek to join the ERM2 Exchange Rate Mechanism -- known as the "waiting room" to the eurozone -- at this rate as soon as April, Finance Minister Vladislav Goranov announced.

ERM2 rules require that after admission, Bulgaria's central bank allow currency fluctuations of up to 15 percent above or below the central rate.

Parliament voted to allow the central bank to now operate on that basis.

Under the amendments, for the duration of Bulgaria's membership in ERM2, the central bank would negotiate the lev-euro rate with the European Central Bank, the eurozone member states, and Denmark.

Bulgaria would need to spend at least two years in the mechanism before it is allowed to join the eurozone.

Last month, the head of the IMF, Bulgaria's Kristalina Georgieva, said the country's accession to the euro "by 2023 is entirely possible".

During Bulgaria's worst banking and financial crisis, in 1996-97, 14 banks went bankrupt and inflation soared to 300 percent.

The IMF-led currency board and the fixed rate helped the country control that hyperinflation. Bulgaria is the European Union's poorest country.

With reporting by Reuters
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