
The budget proposal for 2026 forecasts a global budget balance, supported in part by extraordinary revenues and assumptions that, in some cases, reflect unfounded changes to the normal dynamic of expenditure, according to the report by the Public Finance Council (CFP) analyzing the proposed State Budget for 2026.
The entity believes that “although this strategy allows for projecting a positive budget outcome and the continued reduction of the public debt ratio, it raises doubts about its sustainability, recalling practices that in the past limited the transparency and credibility of fiscal policy.”
“To ensure the sustainability of public finances, it is essential to focus on a budget balance less dependent on cyclical factors and one-off measures. This balance should be achieved without compromising productive public investment, thereby also ensuring the sustainability of economic growth and intergenerational equity,” argues the CFP.
The executive aims to achieve surpluses of 0.3% of GDP in 2025 and 0.1% in 2026. Regarding the debt ratio, it estimates a reduction to 90.2% of GDP in 2025 and 87.8% in 2026.
However, the CFP considers that the Ministry of Finance’s scenario “is based on a set of assumptions and forecasts that raise questions about achieving the budgetary objectives.”
Factors such as a forecast for defense spending “appear to fall short of the effort committed by Portugal under European cooperation,” as well as an underestimation of some components of primary current expenditure and capital expenditure.
The CFP projects a neutral balance this year and a deficit of 0.6% of GDP for 2026.
In this analysis, it is also mentioned the net expenditure indicator, which is now used in European budgetary rules and whose values were corrected by the Government on October 22.
For 2025 and 2026, the net expenditure growth rate is 5.5% and 4.8%, respectively, which for this year is higher than the commitment agreed in the National Structural Budgetary Plan of Medium Term, while lower for 2026.
Despite these differences, “considering the flexibility provided for in the national exemption clause regarding the increase in defense investment expenditure, the accumulated deviation of the net expenditure forecast in POE/2026 is in line with the agreed trajectory.”
The Government submitted the 2026 State Budget to parliament on October 9, with discussions and a general vote scheduled between October 27 and 28. The final global vote is set for November 27, after the detailed debate process.
In the macroeconomic scenario, the PSD/CDS-PP Government forecasts that the Gross Domestic Product (GDP) will grow by 2% this year and 2.3% in 2026.