Romania, like Bulgaria and other Eastern members of the European Union, will be forced to accept stricter conditions than past entrants to join the Eurozone, according to a Bloomberg analysis.
Bulgaria, the latest ex-communist country to set its sights on the single currency, was already forced to accept stricter conditions – and Euro-area finance ministers have indicated the new terms will still apply when the likes of Croatia and Romania follow suit.
To the irritation of Bulgaria’s government, additional demands from the EU included cooperation with the bloc’s banking union and steps to curb corruption.
Bulgaria meets the formal criteria for euro adoption and was hoping to apply to enter this summer the common currency’s waiting room, known as ERM-2.
But, after the turmoil of Greece’s debt struggles and money-laundering scandals in recent euro entrants such as Latvia, the EU is taking no chances.
“Issues related to bank supervision, institutional and real convergence have gained an important weight in accepting new members into the euro club. This may sound like changing the rules during the game, but looks necessary after the European debt crisis,” Ciprian Dascalu, chief economist at ING Bank, said in an emailed note.
The new entry terms applied to Bulgaria are almost certain to apply to Croatia, which reiterated last week that it’s aiming to join ERM-2 by 2020, but also to Romania.
According to Bloomberg, the EU has similar concerns over graft, an issue that’s keeping the two neighbors out of Schengen zone.
Another worry for Bulgaria, Croatia and Romania is the wealth gap to richer EU nations.
Bulgaria, EU’s poorest member, has to ensure sustainable economic convergence, a condition the Baltic states didn’t face when they applied to join ERM-2.
In 2017, Romania, with 63 percent of EU average in terms of gross domestic product (GDP) per capita in purchasing power standards (PPS), rankes above Bulgaria (49 percent) and Croatia (61 percent), and approaches Latvia and Greece (both 67 percent), Hungary (68 percent) and Poland (70 percent), according to Eurostat.
The new requirements show the EU is learning from past euro entrants as the currency area expands, according to Daniel Gros, director of the Center for European Policy Studies in Brussels.
“The experience in the Baltic countries has shown that if a country with a much lower income level joins, it might get into a dangerous boom bust cycle,” Gros said.