Preparing to join ERMII
Overview:
The Currency Board Arrangement (CBA) has proved, once again, to be robust despite the adverse effects of the global financial crisis. The banking system has remained stable with very little of the outflow of deposits seen elsewhere in the region. On the other hand, the lev is fixed to a strong Euro at a time when many of Bulgaria’s competitors are benefitting from the effects of a weaker local currency. The combination of this strong currency and the tight fiscal policy needed to support the CBA suggest that the economic recovery will be slightly slower in Bulgaria than in most of its neighbours. While Q4 GDP data remained weak due to very soft domestic demand, exports are showing signs of recovery. ERMII entry this year with a view to joining EMU in 2013 is a key strategic goal of the GERB administration.