Portugal’s medium-term budget plan, and its spending targets for the years 2025 to 2028 complies with the new European Union budgetary rules, allowing for what the European Commission called a “solid budgetary situation.”
EU’s Assessment of Portugal’s Budget Plan
On Tuesday, the European Commission announced that Portugal’s medium-term budget plan, which outlines public spending targets from 2025 to 2028, adheres to the EU’s new budgetary regulations. Valdis Dombrovskis, the Commission’s executive vice-president, emphasized that Portugal has respected the reference path provided by the EU, maintaining an average annual increase in net expenditure of 4.5%.
Dombrovskis stated, “It’s worth pointing out that Portugal does indeed have a very strong budgetary position.” He highlighted that the budget plan is expected to maintain a surplus throughout the period, indicating a solid fiscal situation. The debt-to-GDP ratio is also anticipated to decline significantly.
Economic Growth Projections
The Portuguese government has outlined its economic growth expectations in the budget plan:
- 2025: 2.1%
- 2026: 2.2%
- 2027: 1.7%
- 2028: 1.8%
These projections are slightly higher than the European Commission’s forecasts, which estimate growth of 1.7% for this year and 1.9% for 2025.
Public Debt Reduction
The budget plan includes a commitment to reduce public debt significantly. The government anticipates a drop of 12.7 percentage points in public debt, bringing it down to 83.2% of GDP by 2028. This reduction translates to an average decrease of 3.2 percentage points per year, reflecting a commitment to fiscal responsibility.
New EU Budget Rules
Since April, the EU has implemented new regulations regarding public deficit and debt, maintaining the ceilings of 3% and 60% of GDP, respectively. These reforms are part of a broader effort to enhance the bloc’s budgetary framework, which member states will begin applying in 2025.
Conclusion
Portugal’s successful compliance with EU budgetary rules marks a significant step towards ensuring fiscal stability and economic growth. The positive assessment from the European Commission not only reinforces Portugal’s strong budgetary position but also sets a promising outlook for the country’s economic future.
