Government surplus could be above 1% from 2027
The European Commission says that Portugal could enjoy a budget surplus of 1% from 2027 after the government had stated there would be no conditions for any meaningful surpluses in 2027 and 2028.
The forecasts are included in the Medium-Term Structural Budget Plan 2025 – 2028, released this Monday by the European Commission, after being sent by the Ministry of Finance on Friday.
In the medium-term plan, the government expects to go from a budget surplus of 0.4% this year to 0.3% in 2025, reducing to 0.1% in 2026.
This results from the negative impact on the balance of the execution of Recovery and Resilience Plan (PRR) projects financed through loans and, in 2025, from the impact of the discretionary measures approved in 2024, and the new measures included in the State Budget for 2025 (OE2025).
However, it points to an improvement in public accounts thereafter, with a budget surplus of 1.1% in 2027 and 1.3% in 2028. The Ministry of Finance says the improvement of the projected balance is “structural and concentrated on the expenditure side”.
In the plan, the government expects total state expenditure to fall from 45.2% of GDP in 2025 to 41.3% in 2028, so the fiscal adjustment for 2025 2028 is mainly driven by developments on the expenditure side.
Primary expenditure is expected to decrease by about 3%, with approximately half of the reduction resulting from the phasing out of the implementation of the RRP and, to a lesser extent, the gradual decrease in inflation and the dissipation of the effects that increased expenditure in 2024.
Photo: Lusa