The second proposal from the PSD/CDS governments led by Luís Montenegro arrives at the Assembleia da República three days before Sunday’s local elections, with parties engaged in an electoral dispute. Typically, such a setting would be unfavorable to consensus.
However, unlike the situation in October 2024, the government’s 2026 budget proposal will enter parliament without threats of opposition votes from major political forces: Chega and PS.
Last year, in the initial reaction to the budget, then PS parliamentary leader Alexandra Leitão warned: “There is no agreement with the government, and from here on, we will analyze and decide in due time.” Eventually, Pedro Nuno Santos’s PS facilitated Luís Montenegro’s first budget, dispelling concerns of possible opposition only a week later, following a tense negotiation process on October 17.
Last year, André Ventura accused the prime minister of offering him a government position in private if Chega supported the budget, which then led to Luís Montenegro accusing him of lying.
Currently, indicators suggest a different political climate, despite the upcoming local elections.
Presidency Minister António Leitão Amaro indicated that the upcoming budget, in terms of content, will avoid being a document of public policies—essentially lacking inherent ideological charges—which he believes will ensure parliamentary passage.
PS Secretary-General José Luís Carneiro emphasized that while the budget will still be reviewed, he was pleased with the choice to exclude “fiscal and labor matters, as well as issues related to the basic law of the National Health Service, pensions, and social protection.”
André Ventura is attempting to separate the budget issue from Chega’s electoral campaign in the local elections. Chega MP Rita Matias, after meeting with the finance minister, argued that Chega should be the government’s preferred partner.
Similarly, Liberal Initiative President Mariana Leitão—whose party voted against the PSD/CDS executive’s proposal in 2024—expressed confidence that the budget would include inputs from liberals already discussed with the government.
Among parties with parliamentary representation, only the PCP has announced it will vote against the 2026 budget.
The budget proposal is expected to include a 0.3 percentage point reduction in IRS rates applied to the second to fifth brackets. In January 2026, IRS brackets are set to be updated by 3.51%, above the projected inflation rate of around 2% for the coming year.
During the current local elections campaign, the prime minister, also the leader of the PSD, announced that the Solidarity Supplement for the Elderly would increase by 40 euros to 670 euros next year.
Regarding the macroeconomic scenario, the government is expected to set a target of 2.2% GDP growth in 2026 and aim to renew a budget surplus of 0.1%.
In meetings with parliament-represented parties, the finance minister stressed the continuation of reducing public debt as a percentage of GDP, potentially reaching 90% by the end of the following year.
The general debate on the 2026 budget proposal in parliament will take place on October 27 and 28. The detailed budget process, in plenary, will begin on November 20, with the final overall vote scheduled for November 27.
