“The Portuguese budget proposal does not change, at this stage, S&P’s forecast of a slight budget deficit of 0.6% of GDP in 2026 – a more conservative view than the Portuguese Government’s target of a budget surplus of 0.1%,” stated Adrienne Benassy, sovereign credit analyst at S&P Global Ratings, to Lusa.
The analyst mentioned that S&P’s projection “reflects additional spending pressures from defense and capital investments as the country accelerates projects funded by the Next Generation EU”.
Nonetheless, Adrienne Benassy admitted that “Portugal’s strong track record of fiscal prudence could lead to a better-than-expected outcome”.
“The main driver for S&P’s upgrade to A+ remains the solid external position of the country, despite ongoing trade tensions, which is consistent with our assumptions,” she concluded.
On August 29, S&P raised Portugal’s rating to ‘A+’, with the outlook changing from positive to stable.
S&P forecasts that the public debt ratio should continue its reduction trajectory, reaching 82% of GDP in 2028, projecting a surplus of 0.2% of GDP this year, below the 0.3% estimated by the Government, and a deficit of 0.6% in 2026.
The Government delivered its OE2026 proposal to parliament on Thursday, aiming for surpluses of 0.3% of GDP in 2025 and 0.1% in 2026.
Regarding the debt ratio, it estimates a decrease to 90.2% of GDP in 2025 and 87.8% in 2026.
Lusa has also requested comments from the other rating agencies that monitor the Portuguese economy and is awaiting responses.
