Brussels gives green light to Portugal’s Medium-Term Budget Plan
The European Council has given the green light for Portugal’s Medium-Term Budget Plan that had been delivered in October last year.
The plan was drawn up by the current government led by Luís Montenegro and sets out the direction that the country’s spending should follow in order to reduce the ratio of its public debt vis-à-vis its GDP since it is still above levels recommended by Brussels.
“The Council welcomes Portugal’s medium-term structural fiscal plan and considers that its full implementation would contribute to ensuring sound public finances and supporting public debt sustainability, as well as sustainable and inclusive growth,” reads the document that brings together the final assessment of the plan.”
Even so, the Council recommends that Portugal should avoid that “the growth of net expenditure does not exceed the established maximums”.
The Government’s medium-term plan reflects the macroeconomic scenario underlying the State Budget for 2025 (OE2025), delivered in October.
In the document delivered to Brussels on October 11, 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 (in a no-policy-change scenario).
However, it points to an improvement in public accounts from then on, with a budget surplus of 1.1% in 2027 and 1.3% in 2028.
Overall, to limit government deficit and debt, member states have agreed reference values, which they have enshrined in the EU treaties: a 3% deficit ratio and a 60% debt ratio. The ratios are always calculated relative to a member state’s GDP.
All member states must avoid exceeding these reference values.
Photo: Portuguese finance minister Joaquim Miranda Sarmento