The recently announced government plan, worth over 10 billion euros, is designed to provide swift support for exporting companies. Despite its substantial financial volume, Finance Minister Joaquim Miranda Sarmento emphasized its minimal fiscal impact during an interview. The plan primarily involves financing lines from Banco Português de Fomento, an entity not included in public accounts, alongside export insurance managed by the privately-owned COSEC and a reprogramming of European funds under Portugal 2030, resulting in a budget-neutral initiative.
Minister Sarmento explained that any budgetary impact would be minor and occur at the end of the lending period, approximately five or six years from now, affecting only a small margin of the loans. He pointed out that merely about 200 million euros out of the 10 billion euro program relate to subsidies, describing these as “small portions” of credits potentially assumed by the state if companies meet specific employment and investment criteria.
He further clarified that these loans could partially convert into subsidies, which would not require repayment, thereby reinforcing the program’s negligible fiscal impact.
This response comes amid the European Commission’s recommendation for caution in the EU’s fiscal approach following newly announced U.S. tariffs. European Commissioner for Economy Valdis Dombrovskis highlighted the need for prudence, considering recent crises such as the COVID-19 pandemic, the Russian aggression in Ukraine, substantial security challenges, and existing high deficits and debts.
The Portuguese program will support exporting firms within the country. This week, EU finance ministers are reviewing the economic impacts of the latest U.S. tariff measures, following the temporary suspension announcements by both the U.S. and the EU.
According to European Commission calculations, the new U.S. tariffs could lead to GDP losses of 0.8% to 1.4% in the U.S. by 2027, whereas the EU might experience approximately a 0.2% GDP decline. In a worst-case scenario where tariffs remain or countermeasures are implemented, economic impacts could be more severe, with GDP declines reaching up to 3.3% for the U.S. and 0.6% for the EU.
Globally, the European executive anticipates a 1.2% reduction in world GDP and a 7.7% decrease in global trade within three years.
In his interview, Minister Sarmento stated that the government continues to monitor these developments, noting their dependence on final U.S. protectionist decisions, while maintaining growth projections. “The situation is difficult, and the risk is very high,” he concluded.
