In the report “Economic and Budgetary Outlook 2025-2029 (update),” the CFP maintains the forecast for a balanced (zero) budget surplus this year, but projects that the deficit will be 0.6% of GDP, instead of 1%, as estimated in April.
Both projections are below the expectations set by the Government, with the Finance Minister stating that the administration expects to achieve a budget surplus of 0.3% of GDP this year and 0.1% in 2026.
However, the CFP continues to foresee a return to deficits next year due to the “negative budgetary impact of permanent measures to increase public expenditure and reduce revenue, applied in 2024 and 2025, aimed at improving the incomes of families, young people, pensioners, companies and increasing salaries for various groups of public sector professionals.”
In addition, public accounts are also affected by the use of loans from the Recovery and Resilience Plan (PRR). Without the effects of the PRR, the 2026 deficit would be 0.1% of GDP, according to these calculations.
Despite the upward revision of the budgetary balance for 2026, for 2028 and 2029, the trajectory of this indicator is revised downward.
“In each of these years, the revision is determined by the expected reduction in public revenue, mainly induced by tax revenue, particularly corporate tax, given the lower expected execution for 2025 as previously mentioned, and by lower personal income tax revenue, which reflects an upward revision of the CFP’s own estimates regarding the impact of automatic adjustments of specific IRS deductions by the IAS value and the brackets in line with the evolution of inflation and productivity,” the entity explains.
The CFP projects a deficit of 0.6% of GDP in 2027, 0.7% in 2028, and 0.8% in 2029.
This projection is made under a scenario of invariant policies, so it does not take into account measures that are not yet in effect or announced with little detail, such as the new reprogramming of the PRR and the sale of state properties.
“Thus, the possibility of a slight budget surplus cannot be excluded,” the CFP admits.
As for public debt, the organization projects a decreasing trajectory, expected to reach 85.6% of GDP in 2029. The CFP points to a debt ratio of 91.2% this year and 89.4% next year.
