Bulgaria needs one bill to fulfil ERM-II requirements

Bulgaria has fulfilled almost all of its commitments required for ERM-II entry with the exception of receiving the final results from ECB’s comprehensive assessment of the local banking sector, as well as the adoption of the bill on state-owned enterprises, according to the Finance Ministry. The ECB is expected to publish the results of the six audited Bulgarian banks on Jul 26, but the stress tests are over and banks have been already informed for the preliminary results, according to unofficial media sources. The bill on the state-owned enterprises aims to fulfil the requirement for improving the public companies’ management and still remains to be adopted by the parliament, the Finance Ministry said. The bill was drafted with the assistance of the OECD and the final version was discussed and adopted at first reading in the parliament in June. The deadline for amendments in the bill expires on Jul 17, which means that the second reading of the law by parliamentary commissions and the assembly could be completed within one week after Jul 17. MPs will also have to improve the latest amendments in the anti-money laundering measures law, which include the transposition of the new EU’s directive on the issue.

We think that the bill approval should be completed by end-July, so the final outcome of Bulgaria’s aspirations to enter ERM-II and EU’s Banking Union will be mostly dependent on ECB’s stress tests results. We expect more clarity on Bulgaria’s prospects to join the ERM-II by the end of 2019 in the autumn after the scheduled meeting of the eurozone’s finance ministers in October.

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