The Prime Minister, Luís Montenegro, clarified on Wednesday that activating the clause allowing an exception to budgetary rules to accommodate increased defense spending will enable investment in this sector without compromising the “health” of national finances.
“It allows us to invest more in the area of Defense over the coming years without jeopardizing the sustainability path of public finances,” Montenegro explained in statements to journalists broadcasted by RTP3.
The Prime Minister stated that the aim is to ensure that investment in Defense “does not harm or penalize financial stability, nor the promotion of social policies and ongoing processes in public services, education, and health.”
The Government will request the European Commission to activate the clause that permits an exception to the compliance with budgetary rules to accommodate increased defense spending.
A note released today by the Ministry of Finance explains that the activation of this clause allows defense-related expenditures, up to 1.5% of GDP, not to be counted within the limits imposed by the primary net expenditure caps defined in the National Medium-Term Structural Budget Plan (POENMP) for 2025-2028.
Similarly, it adds, defense-related expenditures up to 1.5% of GDP will not be included in the assessment of compliance with the reference value for the deficit (3%).
“This decision was consensual with the main opposition party, with the Socialist Party being consulted by the Government in this process,” the note states.
The Ministry of Finance recalls that the European Commission “has made efforts to ensure significant adherence by Member States to this national derogation clause,” in order to increase financing capability in this sector.
Following the submission of requests by Member States, which should be presented by the end of April, it will be the responsibility of the European Commission to evaluate and validate the submitted requests.
