Bulgaria: Likely Adoption of Euro Supports Policy Credibility but Does Not Have Immediate Credit Rating Implications

Today, the European Commission and the European Central Bank announced that the Republic of Bulgaria (rated BBB (high), Stable) has met the convergence criteria for joining the Euro area. This positive assessment paves the way for Bulgaria's accession to the Euro area in January 2026, pending a final decision by all EU member states. While this development is likely to bolster economic sentiment, it does not have short-term credit rating implications as the credit profile continues to be constrained by important credit challenges such as a comparatively low level of labour productivity and governance shortfalls.

Key highlights
-- Bulgaria's accession to the Euro area does not have immediate credit rating implications.
-- The adoption of the Euro is likely to support economic sentiment and, as a result, investment activity.
-- Upside pressure on the credit ratings could result from an improvement in institutional quality and a convergence of labour productivity to the EU average.

"Bulgaria's accession to the Euro area adds credibility to the macroeconomic policy framework and boosts economic sentiment but does not have immediate credit rating implications," said Yesenn El-Radhi, Vice President of the Sovereign Group at Morningstar DBRS.