Bulgaria’s first days in the euro area have been marked not by economic shock but by a familiar domestic problem: the inability of its parties to produce a durable parliamentary majority.
On 1 January Bulgaria became the 21st member of the euro zone, replacing the lev with the euro. ATMs in Sofia began dispensing euro banknotes and the lev will remain usable for cash payments during January, with change given in euros. The legal path to entry was completed in 2025, after the European Commission concluded that Bulgaria met the convergence criteria and the EU Council adopted the final legal acts enabling adoption from 1 January 2026.
The political rupture came before the currency changeover. Prime Minister Rosen Zhelyazkov resigned on 11 December 2025 after weeks of street protests over economic policy and allegations of entrenched corruption. The resignation was announced minutes before parliament was due to vote on a no-confidence motion, and less than three weeks before euro entry. Parliament accepted the resignation the following day, triggering the constitutional procedure for forming a new government.
President Rumen Radev is now set to hand the first mandate to form a government to the largest parliamentary group, the centre-right GERB-UDF/GERB-SDS alliance, on Monday 12 January. Under Bulgaria’s constitution, if the first attempt fails the president must offer the mandate to the second-largest party and then the third-largest. If none can assemble a majority, a snap election follows.
GERB-SDS is the largest bloc in the 240-seat National Assembly but has only 66 seats, leaving it well short of a governing majority. Boyko Borissov, GERB’s leader, has said the group will return the mandate unfulfilled as soon as it receives it, indicating limited appetite for another complex coalition bargain. Analysts see it as unlikely that GERB-SDS can secure sufficient backing for a stable cabinet, making another election a plausible outcome if subsequent mandates also fail. Bulgaria has held seven parliamentary elections in the past four years, reflecting a cycle of fragmented parliaments and short-lived governing arrangements.
The street protests that preceded the resignation fused demands for institutional change with anger over fiscal policy. Demonstrators projected slogans such as “Resignation” and “For Fair Elections” onto the parliament building and called for judicial reform, arguing that corruption had become systemic. The immediate trigger was the 2026 budget. In late November, the government withdrew its draft after protests over proposed tax increases, including higher social security contributions and changes to dividend taxation, amid external warnings about the direction of fiscal policy.
Euro adoption alters the institutional setting but not the underlying political arithmetic. The lev had been pegged to the euro for decades under a currency board arrangement, so the change does not represent a sudden shift in monetary conditions. It does, however, remove conversion costs for households and companies and gives Bulgaria a seat in euro-area decision-making, including representation on the European Central Bank’s rate-setting Governing Council. In that context, the question is less about technical currency conversion than about whether a government can pass a budget, set credible tax and spending priorities, and speak with authority in euro-area discussions while managing domestic pressures over prices and living costs.
For Brussels and investors, the central issue is governance capacity. Reuters has linked political stability to Bulgaria’s ability to accelerate the absorption of EU funds, address infrastructure deficits and respond to long-running corruption concerns that have shaped both protest politics and coalition negotiations. A prolonged stand-off over government formation would leave key fiscal choices in caretaker hands and could delay decisions connected to investment plans and reform commitments, even if the euro changeover continues according to schedule.
Public opinion remains split. Surveys in 2025 found widespread scepticism, driven largely by concern that the changeover would push up prices, while parts of the business community argued that euro membership would cut currency risk and reduce friction in trade. President Radev previously called for a referendum on adoption, keeping the issue politically active even as the timetable moved towards implementation.
The next stage is procedural but consequential. If GERB-SDS declines or fails quickly, the president will move to the next mandates in line. If those efforts also fail, Bulgaria will return to the ballot box shortly after entering the euro area. The euro is now established; the uncertainty is concentrated on whether Bulgaria can produce a government able to legislate a budget and govern with continuity.
