Brussels, Mar. 5, 2026 (Lusa) - In a report published on Thursday, the European Fiscal Board considers that Portugal “will probably deviate from the recommended expenditure path” set by the European Commission under the new European Union (EU) budgetary rules, but highlights its “favourable fiscal position.”
"Most [EU] countries are expected to be on track. Three countries, Ireland, Cyprus, and Portugal, are expected to deviate from the recommended spending path, but they benefit from a favourable budgetary position, close to balance or in surplus," the European Fiscal Board said in an analysis of the implementation of national medium-term budgetary plans.
In the document on budgetary developments for 2026, this independent advisory body to the European Commission considers that, “in the case of Portugal, a large part of the projected cumulative deviation originates in 2024, with revenue reducing discretionary measures.”
In the report, which was produced before recent budgetary impacts, such as those related to storms in the country or current geopolitical tensions, the European Fiscal Board notes that, in general terms, the EU's new economic governance rules are based “on a net expenditure indicator that relies on forecasts and estimates, even after final data on total government expenditure are available.”
“Differences between national and Commission forecasts and estimates—as in the case of discretionary revenue measures—can have significant implications for surveillance decisions,” it warns.
For this advisory body, “the Commission's approach to assessing future compliance may not be consistent with a central objective of the 2024 reform, namely the transition to risk-based and country-specific surveillance as a means of effectively safeguarding the sustainability of public finances.”
At issue is the reform of EU budgetary rules, which maintain ceilings of 3% and 60% of gross domestic product (GDP) for the public deficit and public debt ratio, respectively.
Lisbon submitted the medium-term plan with targets for expenditure, investment, and reforms to Brussels in the fall of 2024 under these new EU budgetary rules.
In the document, the government indicated that medium-term budgetary commitments represent, on average, net expenditure growth of 3.6% or less in the period 2025-2028, a percentage that coincides with the reference trajectory transmitted by the European Commission to the Portuguese authorities.
Last November, however, the European Commission considered that Portugal “risks significantly exceeding” the maximum ceiling for net expenditure set out in the medium-term plan, even as it spoke of a budgetary situation “close to balance” in 2026.
The EU Council adopted a recommendation that Portuguese net expenditure growth should not exceed 5.0% in 2025, 5.1% in 2026, 1.2% in 2027, and 3.3% in 2028.
This corresponds to the maximum cumulative growth rates calculated with reference to 2023, of 17.4% in 2025, 23.4% in 2026, 24.8% in 2027, and 28.9% in 2028.
Nevertheless, Portugal is one of the EU countries that has requested and been authorised to activate the safeguard clause under the budgetary rules in order to be able to invest more in defence, which allows it, during the period 2025-2028, the country to deviate from and exceed the recommended maximum rate of growth in net expenditure, provided that the deviation does not exceed 1.5% of GDP.
ANE/ADB // ADB.
Lusa
