ECB Says Croatia, Bulgaria May Join Pre-Euro System This Year

(Bloomberg) -- Croatia and Bulgaria could join waiting room to adopt the euro this year, European Central Bank board member Fabio Panetta said, praising the countries’ efforts to switch to the common currency.

His comments in an interview with Le Monde newspaper on Tuesday suggest the process of euro-area enlargement remains firmly on track despite the economic toll wrought by Covid-19. Croatia and Bulgaria rely heavily on tourism.

“Croatia and Bulgaria took bold measures to converge,” said Panetta, who’s responsible for international and European relations at the ECB. “If the process is completed successfully, they could join ERM-2 by the end of the year.”

With countries usually staying in the system for at least two years to prove their currencies are stable, “the first available window for Croatia and Bulgaria to join the euro area would be 2023, if all preliminary assessments are successful,” Panetta said.

Bulgaria and Croatia are the only European Union countries actively seeking to adopt the euro. Croatia this month cleared one hurdles on the way to membership after the ECB said its five biggest banks faced no capital shortfalls.

In its biannual progress report on non-euro member states released last week, the ECB said the coronavirus crisis raises questions about inflation and the health of public finances in both nations.

Prime Minister Andrej Plenkovic said last month that Croatia expects to spend about 2 1/2 years in the euro waiting room before adopting the currency. Bulgaria hopes to be able to join the mechanism along with Croatia by July, its premier said in April.

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