BRUSSELS (Reuters) -The European Commission said on Wednesday Bulgaria can enter the euro zone and become the bloc’s 21st member from 2026.
European Union countries aspiring to adopt the single currency need to fulfil criteria in four areas: inflation, public finances, the exchange rate and long-term borrowing costs.
INFLATION
* Inflation in the candidate country needs to be close to that in the three best performing EU members for a period of one year before examination of the country’s bid. The upper limit for inflation is calculated as the average of the three best performers, plus 1.5 percentage point.
DEFICIT/DEBT
* The candidate cannot be under the EU’s excessive deficit procedure which is designed to discipline countries that run a budget deficit above the EU limit of 3% of GDP.
EXCHANGE RATE
* A candidate country’s currency must remain stable within a corridor of +/- 15% around a central parity rate against the euro over two years, in what is called the Exchange Rate Mechanism (ERM-2). The currency can appreciate, but should not devalue in a significant way.
LONG-TERM BORROWING COSTS
* Yields on long-term government bonds issued by the candidate country should not be more than 2 percentage points above the average of the three European Union countries with the lowest inflation, which were used for setting the price stability criterion.
(Reporting by Jan Strupczewski)
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