“The confirmation of Portugal’s A3 rating reflects the country’s competitive and diversified economy, as well as its relatively high standard of living,” Moody’s stated in today’s decision.
The rating agency noted that Portugal’s “strong institutional and governance framework also supports its credit profile.”
“However, the A3 rating also accounts for a high level of indebtedness and strong debt repayment capacity, although both are weaker compared to other similarly rated countries, despite fiscal and debt improvements in recent years,” Moody’s pointed out.
The risk susceptibility is described as “moderate and related to geopolitical risk.”
The ‘outlook’ remains stable, reflecting the agency’s assessment that the risks to Portugal’s credit profile are “balanced.”
“Although political uncertainty has increased in recent years, with repeated early elections and parliamentary fragmentation making policy formulation more complex, we expect these internal political changes will not significantly alter the outlook for robust economic growth of around 2% and further public debt reduction over the analyzed period,” Moody’s concluded.
In the State Budget for 2026, the PSD/CDS-PP government forecasts the Gross Domestic Product (GDP) to grow by 2% in the present year and 2.3% in 2026.
The executive aims for surpluses of 0.3% of GDP in 2025 and 0.1% in 2026. It estimates the debt ratio to reduce to 90.2% of GDP in 2025 and 87.8% in 2026.
This is the last assessment scheduled this year by the rating agencies monitoring Portugal, following one upgrade by Fitch and DBRS and two by S&P.
The rating is an evaluation issued by financial rating agencies, significantly impacting the financing of countries and companies as it assesses credit risk.
