By Jan Strupczewski

BRUSSELS (Reuters) -The European Commission is likely to give Bulgaria the green light on June 4 to adopt the euro currency from the start of 2026, several euro zone officials said, making Bulgaria the 21st country to join the single currency area.

The Commission will publish a "convergence report" next Wednesday on whether Bulgaria meets the criteria to adopt the euro, now used by 347 million Europeans in 20 countries.

Three senior euro zone officials said they expected the Commission report to be positive for Bulgaria, which has been striving to switch its lev currency to the euro ever since it joined the European Union in 2007.

Becoming a member of the euro zone, apart from using euro notes and coins, also means a seat at the European Central Bank's rate-setting Governing Council. The ECB will issue its own assessment on June 4 whether it thinks the country is ready, and if its central bank is independent.

It is the Commission's view that is decisive, however.

A positive recommendation from the EU executive arm would mean that EU finance ministers would endorse it and fix the conversion exchange rate for the Bulgarian lev into the euro in July, leaving the rest of the year for the country to technically prepare for the transition.

MEETING THE CRITERIA

For a positive recommendation, Bulgaria has to meet the inflation criterion, which says that the euro-candidate cannot have consumer inflation higher than 1.5 percentage points above the three best EU performers.

In April, the best performers were France with 0.9%, Cyprus with 1.4% and Denmark with 1.5%, which put Bulgaria with its 2.8% just within the limit.

The euro candidate country also cannot be under the EU's disciplinary budget procedure for running a deficit in excess of 3% of GDP. Bulgaria meets this criterion with a budget deficit of 3.0% in 2024 and 2.8% expected in 2025.

The country's public debt of 24.1% of GDP in 2024 and 25.1% expected in 2025 is well below the maximum level of 60%, and its long-term interest rate on bonds is well within the 2 percentage point margin above the rate at which the three best inflation performers borrow.

Finally, the euro candidate country has to prove it has a stable exchange rate by staying within a 15% margin on either side of a central parity rate in the Exchange Rate Mechanism II.

Bulgaria has been running a currency board that fixed the lev to the euro at 1.95583 since the start of the euro currency in 1999.

Bulgaria's euro adoption will come three years after the last euro zone expansion, when Croatia joined the single currency grouping at the start of 2023.

The Commission will also look at whether Bulgaria's economy and markets are integrated with the rest of the EU, as well as the trends in the country's balance of payments.

(Reporting by Jan StrupczewskiEditing by Bernadette Baum)