Bulgaria’s euro passed the price test. Its politics has not

Bulgaria’s first quarter in the euro area has separated two questions that were long treated as one. The first was whether replacing the lev would push up prices. On the official data so far, it has not: measured inflation fell in January and again in February. The second was whether Bulgaria had the political stability to run a currency union’s fiscal rules from the inside. On that, the quarter has produced a resigned government, a resigned president, a caretaker cabinet, no 2026 budget and an election on 19 April. The currency switch was the easier part.

What the price data show

The National Statistical Institute (NSI) recorded annual consumer price inflation of 5.0 per cent in December 2025, the last month of the lev. In January, the first month of the euro, the annual rate was 3.5 per cent, and in February 3.3 per cent. On the harmonised index used for euro-area comparisons, the fall was from 3.5 per cent in December to 2.3 per cent in January and 2.1 per cent in February.

Month-on-month changes are the better guide to a changeover effect, because annual rates depend on what happened a year earlier. Consumer prices rose 0.6 per cent in January and 0.4 per cent in February, against 0.1 per cent in December. January’s biggest increase was in personal care and miscellaneous goods and services, at 1.8 per cent, while clothing and footwear fell 4.0 per cent. In February, restaurants and accommodation rose 0.8 per cent and food 0.7 per cent. These are not trivial monthly moves, but they are not the jump that opponents of the euro had predicted.

Two cautions apply. First, from January the NSI adopted a new European classification of consumption and moved its base year to 2025, so the break between December and January is partly methodological. Second, the monthly rises were concentrated in services and in everyday purchases, which weigh more heavily in what households notice than in the index as a whole. A headline figure that is falling can coexist with a widespread sense that prices went up. The absence of a statistical shock does not prove there was no rounding; it shows that rounding, where it happened, was not large enough to move the aggregate.

Public opinion before and after

Bulgarians entered the changeover divided. An Alpha Research poll cited by RFE/RL in July 2025, when EU finance ministers approved Bulgaria’s entry at 1.95583 leva to the euro, found 46.5 per cent in favour and 46.8 per cent against. Concern about prices and national identity was the main reason for opposition. President Rumen Radev proposed a referendum on the currency that year; parliament rejected it, citing a Constitutional Court ruling that such a vote was not legally possible.

No comparable survey of attitudes to the euro after the switch had been published in the sources reviewed for this piece, so it is too early to say whether the benign price data have changed minds. What can be said is that, in coverage of the campaign so far, the euro has not been the main axis of debate. The campaign has instead centred on corruption and on who should govern, which is where the political risk now sits.

A quarter of political turnover

The government of Rosen Zhelyazkov resigned on 11 December 2025 after weeks of street protests against its draft 2026 budget, which protesters saw as concealing corruption. On 19 January President Radev announced his resignation, criticising what he called the growing influence of domestic oligarchs and corrupt decision-makers; Vice-President Iliana Iotova assumed his duties until January 2027. In February she appointed Andrey Gyurov, a deputy governor of the Bulgarian National Bank, to lead a caretaker government, and on 18 February she set the election for 19 April.

Counts differ on how many times Bulgarians have now voted for a parliament in five years: Al Jazeera calls this the eighth snap election, Balkan Insight the ninth. The difference turns on which votes are counted, but either figure points to the same pattern of fragmented parliaments and short-lived coalitions.

Mr Radev has since launched Progressive Bulgaria, which a Sova Harris poll on 16 March put first with 30.9 per cent, ahead of GERB on 19.3 per cent and the We Continue the Change–Democratic Bulgaria alliance on 12.2 per cent, according to Balkan Insight. The party has no published manifesto. OSW, the Warsaw think tank, noted in January that Mr Radev had opposed sanctions against Russia and military aid to Ukraine, and expected his party to take a sovereignty-focused line critical of the EU and NATO. Mr Radev presents his project primarily as an anti-corruption effort. OSW also cited December polling in which 40 per cent of Bulgarians wanted an entirely new political force to take power, and put trust in Mr Radev at about 45 per cent, the highest of any politician.

Why the missing budget matters more than the changeover

Bulgaria is operating under an extension law that keeps revenue collection and spending going in the absence of an adopted budget. Parliament originally limited it to 31 March. On 25 February the caretaker cabinet approved amendments so that it would run until a full 2026 budget is passed, the finance minister, Georgi Klisurski, said. The same cabinet has begun a review of public procurement, including a €500m guardrail supply and maintenance contract at the Road Infrastructure Agency.

An extension law keeps the state running, but it cannot make policy. Inside the euro area Bulgaria has given up its own monetary policy and its currency board; fiscal policy is now the main national lever over demand and inflation, and it is frozen until a government exists. The 2026 draft that brought down the Zhelyazkov cabinet was never adopted, but the choices it tried to make about revenue and spending have not gone away, and whichever government follows the April vote will have to address it under euro-area fiscal surveillance.

What to watch

Three things will show whether the first quarter was a fair test. The March inflation data, due in April, will indicate whether February’s services increases were a one-off. The election result will show whether a party sceptical of the euro’s political framework governs a country that now uses it, and how it reconciles that with membership obligations. And the first budget of the new parliament will reveal whether Bulgaria can pair a stable currency with a stable fiscal plan. The changeover itself looks, on the evidence so far, to have been handled competently. The questions that remain are political ones, and the currency cannot answer them.

Sources

• National Statistical Institute of Bulgaria — Inflation and Consumer Price Indices, December 2025
• National Statistical Institute of Bulgaria — Inflation and Consumer Price Indices, January 2026 (preliminary data)
• National Statistical Institute of Bulgaria — Inflation and Consumer Price Indices, January 2026 final data and February 2026
• OSW Centre for Eastern Studies — Bulgaria: President Radev resigns
• Al Jazeera — Bulgaria to hold snap parliamentary election on April 19 after protests
• Novinite — Bulgaria: Caretaker Cabinet approves amendments to Budget Extension Law
• Balkan Insight — Bulgaria’s next election already reshaping the political landscape
• RFE/RL — Bulgaria’s euro adoption divides public