BULGARIA.

The article discusses the political and economic conditions of Bulgaria. The European Commission has pencilled in January 1 2007 as the date for Bulgaria's entry to the EU. The European Council will decide on the terms of a formal accession treaty early in 2005, but it appears likely that entry will be made conditional upon significant reforms being achieved— particularly in the area of criminal justice— and measures to address corruption being put in place. The key threat arises from strong domestic demand, which is keeping inflation relatively high, and could put pressure on the currency if it leads to excessive accrual of debt.