Lisbon, Nov. 17, 2025 (Lusa) - The European Commission predicts that Portugal will record a zero budget balance this year and a deficit of 0.3% of Gross Domestic Product (GDP) in 2026, according to projections released on Monday that are more pessimistic than the government's.
"Government revenue growth is expected to be solid in 2025, only partially offsetting the sustained expansion of government spending," says Brussels, which estimates that the budget balance "will contract to 0.0% of GDP in 2025, compared to the 0.5% of GDP recorded in 2024".
As for 2026, although tax revenue will benefit from economic activity and the dynamics of the labour market, the impact of measures such as the Youth Personal Income Tax, the reduction in personal income tax rates, wage increases, and pension bonuses will weigh on public finances.
"By 2026, the public accounts balance is expected to show a deficit of 0.3% of GDP, reflecting the impact of new permanent measures that worsen the balance," says Brussels.
The government's forecasts in the State Budget for 2026 (OE2026) are for a surplus of 0.3% this year and 0.1% in 2026, making it the most optimistic among the institutions that forecast for Portugal.
These European Commission projections for 2025 represent a downward revision from the 0.1% surplus forecast in May, but an upward revision from the 0.6% deficit projected in the spring forecasts.
Brussels is thus in line with the majority of institutions that follow the Portuguese economy and estimate a deficit for next year, such as the Bank of Portugal, the Public Finance Council and the OECD.
For 2027, Brussels also projects a budget deficit of 0.5% of GDP.
As for public debt, the European Commission estimates that the ratio should continue to decline to below 90% of GDP by the end of the forecast horizon.
"Portugal's public debt-to-GDP ratio should continue to decline, albeit at a slower pace," the document reads, reaching 91.3% in 2025, 89.2% in 2026 and 88.2% in 2027, "driven by primary surpluses and favourable differentials between growth and interest rates”.
In the 2026 state budget, the government estimates a reduction in the public debt ratio to 90.2% of GDP in 2025 and 87.8% in 2026.
MES/ADB // ADB.
Lusa/Fim
