The financial rating agency forecasts that “the greater loan uptake from the Recovery and Resilience Plan (PRR), additional tax cuts, and increased public investment will drive the budget deficit,” as stated by analyst Utku Bora Geyikci.
However, the analyst noted that “even with a 0.7% deficit, Fitch sees a strong commitment to fiscal prudence, with the deficit well below the expected median for the A rating, approximately 3%, in 2026.”
To achieve a surplus, a “stronger revenue performance and/or tighter expenditure controls than in the baseline scenario or a more favorable macroeconomic environment” would be necessary.
In September, Fitch upgraded Portugal’s rating from A- to A, with a stable outlook.
This decision was “based on medium-term credit fundamentals and the policy framework, not on an annual result,” the analyst highlighted, noting that “a clear consolidation plan offers directional support, but the reinforcement depends on effective implementation and sustained delivery that meets or exceeds assumptions.”
The government submitted the OE2026 to parliament, predicting the Gross Domestic Product (GDP) to grow by 2% this year and 2.3% in 2026.
The executive aims to achieve surpluses of 0.3% of GDP in 2025 and 0.1% in 2026. Regarding the debt ratio, it expects a reduction to 90.2% of GDP in 2025 and 87.8% in 2026.
