Bulgaria receives approval to join the European Stability Mechanism

BRUSSELS – At a meeting of the European Stability Mechanism (ESM), Bulgaria’s accession to the mechanism was approved. This was announced by the European Commissioner for Economic Affairs Valdis Dombrovskis at a press conference after the meeting of the Eurogroup (the finance ministers of the euro area countries). Dombrovskis noted that from 1 January next year Bulgaria will introduce the euro, and the ESM decision represents another step towards strengthening the resilience of the Bulgarian economy.

The Chairman of the ESM Pierre Gramegna announced that Bulgaria has requested to become part of the mechanism and from next year will gain access to “powerful financial protection”.

The ESM is a key element of the financial stability architecture in the euro area. It provides financial assistance to member states that are experiencing difficulties or are at risk of financing difficulties.

The mechanism was created by an intergovernmental treaty of 2 February 2012, and its activities began at the end of the same year. Its headquarters are in Luxembourg. The ESM is an intergovernmental organization under international public law, with the euro area countries as its shareholders. By issuing debt instruments, the ESM finances loans and other forms of assistance in support of the member states.

The European Financial Stability Facility was created in 2010 and was succeeded by the ESM in order to grant loans under macroeconomic adjustment programmes; to purchase debt on the primary and secondary debt markets; to provide precautionary financial support in the form of credit lines; to finance recapitalizations of financial institutions by granting loans to the governments of the countries under the mechanism.

The Governor of the Bulgarian National Bank Dimitar Radev stated in a speech during the Annual Dinner of the European Stability Mechanism in Luxembourg that “Bulgaria is currently experiencing political tensions and waves of public pressure. These dynamics are part of democratic life and give rise to intense public debate. But despite these changes, the strategic orientation towards the euro remains preserved.” Radev also noted that the introduction of the euro requires political responsibility and public trust, and not only technical readiness. (11 December)