In its December bulletin, the last to include budget projections, the central bank anticipated a deficit of 0.1% of GDP for this year, a forecast it maintains. However, it has now increased the projected budget shortfall for 2026 from 1% to 1.3%.
For 2027, the central bank continues to project a budget deficit of 0.9%.
The BdP attributes these projections to the “pro-cyclical expansionist policies” currently being implemented.
In contrast, the government expects a surplus of 0.3% of GDP, according to the forecasts in the State Budget for 2025 and confirmed in the Annual Progress Report submitted to the European Commission.
The organization also has projections for the public debt ratio, which is expected to continue to decline over the projection period, dropping from 94.9% in 2024 to 85.8% in 2027, although at a slower pace than in recent years.
In the June Economic Bulletin, the institution led by Mário Centeno warns that “although Portugal’s position remains favorable in the euro context, it is essential to contain budgetary deterioration, ensuring compliance with European budgetary rules.”
“High public debt remains a vulnerability,” the BdP cautions, emphasizing that “Portugal must maintain a sustained trajectory of debt reduction, mindful of the structural challenges that will continue to shape the near future: public investment, especially in the area of climate transition, digital and defense, and the budgetary consequences associated with population aging.”
