With a real GDP growth of about 2%, the increase in defense spending will always be limited by maintaining a small budget surplus,” stated Miranda Sarmento in an interview with a British newspaper.
Nevertheless, the official assures that Portugal still has room to meet NATO’s defense spending goals at a time when U.S. President Donald Trump is pressuring Europe to pay more for its security.
Describing Portugal as a country “focused on the Atlantic and further from Kyiv,” which therefore “does not feel the same pressure to increase its military spending as countries closer to Ukraine,” the report notes that for instance, Poland’s defense budget is almost 5% of GDP, the highest among NATO allies, while Portugal’s ranks seventh, representing only 1.6% of GDP in defense last year.
Portugal has committed to reaching NATO’s target of 2% by 2029, anticipating that the organization’s leaders will raise this target to at least 3% of GDP at a summit in June, against Trump’s advocated 5%.
Highlighting Portugal as “one of the few” European Union countries with a budget surplus – 2 billion euros or 0.7% of GDP in 2024, the second largest in percentage terms in at least 50 years – the report underscores the Portuguese Finance Minister’s forecast of a 0.3% surplus in 2025.
“If tough economic times come in the coming years, we will be prepared to face them,” Miranda Sarmento stated in the interview, adding: “We need to reach 80%, or even below 80%, by the end of the decade.”
According to the minister, “Portugal’s fiscal position, combined with the flexibility of EU fiscal rules,” will grant the country “more leeway, more room, to increase defense spending more rapidly.”
In remarks to the publication, Sarmento also mentioned that the Portuguese government is “very likely” interested in using funds from a 150 billion euro loan program for member states to channel to their defense industries, but noted that Lisbon wants to first compare the loan terms and costs with Portugal’s sovereign debt market options.
Regarding spending priorities, the Finance Minister emphasized the importance of coordinating with EU members to develop specialized industries in each country.
