Portugal to increase defense spending to 5% in two steps

Portugal’s foreign minister Paulo Rangel says that Portugal will meet its 5% defence commitments to NATO in “two steps”: spending 3.5% of GDP in “clear investment” and “1.5% on infrastructures”.

Rangel reiterated the commitment at a joint press conference with German defence minister Johann Wadephul in Lisbon, saying that Portugal was a founding member of NATO and would meet its commitments.

“Obviously, there are two stages here, one stage is the 2% (of GDP) stage, in which Portugal was not yet at the level that required for NATO countries. In addition, we have this 5% proposal, but, as you know, Secretary-General Mark Rutte divided this into 3.5%, which will actually be investment in defence in the most classic and traditional sense of the term, and then 1.5% in infrastructure,” he specified.

“This means roads, ports, airports, many of them dual use structures that are critical for the State, but in times when risks run high, have to be prepared for other eventual uses”, he said.

Military expenditure in Portugal increased to US$4.6Bn in 2024 from US$4.2Bn in 2023, but while its defence budget for 2025 rose to 1.46% it was still below the 2% GDP threshold for spending.

In fact, Portugal has run an investment deficit in defence of around €1.3Bn since 2014 and now has to play catch-up to meet its NATO commitments.

According to the State Budget for 2025, Portugal has earmarked an extra €3.1Bn for defence.

Portugal will ask the European Commission to activate the so-called fiscal escape clause to allow for higher defence spending worth up to 1.5% of gross domestic product, the finance ministry said on Wednesday, one of the first member states to do so.