Finance: State budget news in Portugal

The Public Finance Council (Conselho das Finanças Públicas or CFP) has classified the government's target of a 0.1 percent budget surplus for 2027 as plausible, though subject to execution risks. In a report published Monday, council president Nazaré da Costa Cabral pointed out that state interest costs appear overestimated in the budget proposal, providing a potential financial buffer. However, the CFP warned that the central state administration faces its largest deficit since 2017, leaving Portugal's headline balance reliant on social security reserves.

Minister of Labour, Solidarity and Social Security Maria do Rosário Palma Ramalho proposed a cross-party pact on Social Security during parliamentary hearings on the 2027 State Budget (Orçamento do Estado). Defending the draft budget on Monday, Ramalho stated that revisions to the Labour Code (Código do Trabalho) concerning salary transparency and digital platform work are inevitable next year. She also disclosed to lawmakers that the social security agency holds only 32 vacant residential properties out of 958 total real estate assets, noting that the remainder are warehouses, land, or occupied parcels.

The Socialist Party (Partido Socialista or PS) reached total consensus to abstain in the parliamentary vote on the 2027 State Budget (Orçamento do Estado), ensuring the minority government's spending plan will pass. Party leadership justified the decision by pointing to the need for political stability. Socialist leader José Luís Carneiro also defended ongoing housing protests against criticism from the Democratic Alliance (Aliança Democrática) and Chega.

The government is meeting with trade unions and employers' confederations on Wednesday for Social Dialogue (Concertação Social) negotiations in Lisbon. Talks focus on potential upward revisions to the national minimum wage following the submission of the 2027 state budget proposal. Discussions will also address proposed changes to the Labour Compensation Fund (Fundo de Compensação do Trabalho), which backs employee severance pay mechanisms.

Socialist Party (Partido Socialista or PS) Secretary-General José Luís Carneiro announced that the party intends to abstain on the 2027 State Budget (Orçamento do Estado). Carneiro stated during a visit to Faro that while the budget proposal deserved a vote against based on party convictions, the socialists chose to serve the country and prevent a political impasse. The decision ensures the minority government's fiscal plan can move forward in parliament.

Portugal submitted its draft budgetary plan for the 2027 State Budget (Orçamento do Estado) to the European Commission, committing to European Union net spending growth limits. The plan pairs fiscal discipline with higher military investment, aiming to raise defence spending beyond the NATO benchmark of 2% of gross domestic product (Produto Interno Bruto or PIB). The government also stated it will address housing affordability and begin phasing out fossil fuel subsidies.

The Portuguese state injected €136 million into public holding company Parpública ahead of acquiring a larger stake in national energy grid operator Redes Energéticas Nacionais (REN). The capital increase occurred immediately before the presentation of the 2027 State Budget and paved the way to purchase a 5.32% share from insurer Fidelidade. The acquisition will raise total public ownership in REN to 19%.

The proposed 2027 State Budget (Orçamento do Estado) includes adjustments to personal income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) brackets, deduction minimums, and standard allowances. Simulations conducted by consultancy EY show that an unmarried worker without dependents earning €1,500 gross per month would save about €37 next year. Larger savings are projected for higher earners, though the ultimate benefit depends on family structure and income level.

Finance Minister Joaquim Miranda Sarmento defended the 2027 State Budget (Orçamento do Estado) against criticism from Bank of Portugal Governor Mário Centeno, who cited poor public expenditure management. The draft budget projects a surplus of €275 million and anticipates public debt will fall to 84.5% of gross domestic product. Miranda Sarmento warned that any opposition amendments from the Socialist Party (Partido Socialista or PS) or Chega creating a budget deficit would be unacceptable.

The Police Professionals' Trade Union Association (Associação Sindical dos Profissionais da Polícia or ASPP/PSP) warned that the salary adjustments in the 2027 State Budget (Orçamento do Estado) fail to compensate for recent inflation. The union argued that the proposed 2.3% adjustment only matches projected inflation rates without restoring lost purchasing power for members of the Public Security Police (Polícia de Segurança Pública or PSP). ASPP/PSP is calling on lawmakers to introduce a formal safeguard clause during parliamentary budget debates.

The National Commission of the Socialist Party (Partido Socialista or PS) agreed to abstain on the 2027 State Budget (Orçamento do Estado), clearing the way for the government's fiscal plan to pass. Party President Carlos César and Secretary-General José Luís Carneiro cited institutional responsibility amid global economic instability, while stressing that the party does not endorse the draft's economic direction. The PS announced plans to present amendment proposals during committee debates to address household costs for fuel, electricity, and groceries.

The government's proposed 2027 State Budget (Orçamento do Estado) includes the first spending reduction in the health sector since 2011, leaving limited room for public investment. Although the sector receives over €17 billion, hospital administrators and medical associations warned that the plan slows the recovery of the National Health Service (Serviço Nacional de Saúde or SNS). The draft sets targets for 3,000 additional continuous care beds and faster emergency medical response times.

Prime Minister Luís Montenegro faced questions in parliament during a fortnightly debate (debate quinzenal) following the presentation of the 2027 State Budget (Orçamento do Estado). The Socialist Party (Partido Socialista or PS) signaled it will abstain during the vote, which should secure the proposal's approval. Opposition parties, led by Communist Party (Partido Comunista Português or PCP) leader Paulo Raimundo, criticized the spending plan over public sector wages and social investment.

Update: Unions and Employers Push Back on 2027 Budget

Trade unions and business associations criticized the government's proposal, with employer groups citing insufficient investment and the General Confederation of the Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses or CGTP) arguing the measures deepen inequality. The Judicial Staff Union (Sindicato dos Funcionários Judiciais) threatened strike action after warning that planned career upgrades were omitted from the budget.

The government projects that Portugal's overall tax burden (carga fiscal) will remain steady at 35% in 2027, according to the draft budget presented to parliament. The plan includes economic projections for public debt reduction and a balanced fiscal outcome alongside modest economic growth. Opposition critics argued the budget proposal is overly cautious and avoids making necessary reforms to public services.

Tenants will be able to deduct up to €1,000 in housing rent from their personal income tax (Imposto sobre o Rendimento de Pessoas Singulares or IRS) in 2027, up from the current €900 limit. The government proposal maintains tax exemptions on workplace productivity bonuses up to 6% of annual base pay for companies raising salaries by 4.5%. The draft budget also updates the threshold for the high-earner solidarity surcharge (taxa de solidariedade), linking it to the ninth tax bracket.

Update: Budget Expands IRS Relief and Cuts Corporate Tax Rate

Finance Minister Joaquim Miranda Sarmento detailed additional tax measures in the draft budget, proposing a 3.88% update to IRS brackets and rate cuts across the first six brackets. The proposal also reduces the corporate income tax (Imposto sobre o Rendimento das Pessoas Coletivas or IRC) rate by one percentage point, raises the annual subsistence threshold to €13,580, and provides a €50 monthly pension increase.

The privatization of flag carrier TAP Air Portugal will likely not conclude until 2028 due to an estimated 18 to 24 month regulatory review by European Union competition authorities. Finance Minister Joaquim Miranda Sarmento stated that the government will select the winning bidder this month, but revenue from the sale is excluded from the 2027 State Budget (Orçamento do Estado). The minister noted that proceeds from the airline sale will directly reduce public debt rather than alter the operating budget balance.

The Portuguese government confirmed that the national minimum wage (salário mínimo nacional) will increase by €50 to €970 per month in 2027. The increase fulfills an agreement signed under the social dialogue (Concertação Social) framework, though the Minister of Labour left open the possibility of future adjustments. Trade unions had pushed for a higher revision, but the target remains locked in the draft state budget report.

Finance Minister Joaquim Miranda Sarmento is set to deliver the 2027 State Budget (Orçamento do Estado) proposal to parliament, featuring personal income tax (Imposto sobre o Rendimento de Pessoas Singulares or IRS) bracket adjustments indexed to inflation. The proposal includes a minimum €60.52 salary raise for civil servants (funcionários públicos) and an increase to the Solidarity Supplement for the Elderly (Complemento Solidário para Idosos). Initial parliamentary passage is expected after the Socialist Party (Partido Socialista or PS) announced plans to abstain.

Update: Budget Delivered as PS Confirms Initial Abstention

Finance Minister Joaquim Miranda Sarmento presented the proposal targeting a 0.1% surplus and debt reduction to 84.5% of economic output. The PS confirmed it will abstain in the initial general vote, but said it will press for guarantees on storm damage recovery and the Recovery and Resilience Plan (Plano de Recuperação e Resiliência or PRR) during specialty committee debates.

A proposed reduction in personal income tax (Imposto sobre o Rendimento de Pessoas Singulares or IRS) rates up to the sixth tax bracket will cost roughly €400 million without affecting the 2027 State Budget (Orçamento do Estado). The government structured the tax cuts so the treasury absorbs the cost during 2026 by adjusting withholding tax (retenção na fonte) tables for November and December salaries. Parliament is scheduled to debate the measure this week.

Update: Finance Minister Confirms Further Income Tax Adjustments for 2027

During the parliamentary debate on the 2026 tax proposal, Minister of State and Finance Joaquim Miranda Sarmento confirmed that the upcoming 2027 State Budget will include an additional IRS reduction. The relief will take effect through statutory updates to income tax brackets, specific deductions (deduções específicas), and the minimum subsistence level (mínimo de existência). Joaquim Miranda Sarmento noted this adjustment marks the government's sixth income tax reduction since taking office, bringing total tax relief to €2.4 billion.

The Socialist Party (Partido Socialista or PS) confirmed it will abstain during the parliamentary vote on the 2027 State Budget (Orçamento do Estado), allowing the bill to pass. Socialist parliamentary leader André Moz Caldas said the party wants to prevent a political crisis and ensure the state avoids operating under emergency monthly twelfths (duodécimos) in January 2027. The leadership stated it would only change its stance if unexpected measures appear in the final proposal.

Update: Carneiro Reaffirms Budget Abstention Ahead of National Commission Meeting

Socialist Party Secretary-General José Luís Carneiro reiterated that the party will maintain its abstention on the budget proposal to keep the country from falling into political instability. José Luís Carneiro said he expects no surprises from the government and warned that pension cuts or tax increases would remain unacceptable. The PS National Commission (Comissão Nacional) will convene in Lisbon on Saturday to formally assess the decision.

The Automobile Association of Portugal (Associação Automóvel de Portugal or ACAP) presented a proposal to phase out the vehicle tax (Imposto Sobre Veículos or ISV) over ten years until its complete elimination in 2036. Prepared in a study by EY, the plan suggests reducing the purchase levy by 10% annually while offsetting lost revenue through increases in the annual single circulation tax (Imposto Único de Circulação or IUC). The proposal seeks to modernize automobile taxation and reduce upfront costs for car buyers.

The government is set to submit the 2027 State Budget (Orçamento do Estado) to Parliament on October 9th. The Socialist Party (Partido Socialista or PS) has already announced it will abstain, ensuring the proposal's approval and leaving the government solely responsible for its implementation.

Update: President Seguro endorses budget cooperation between Government and PS

In his Republic Day address on October 5th, President António José Seguro welcomed the rapprochement between the Government and the Socialist Party regarding the State Budget. Seguro urged political parties to move past adversarial politics and form cross-party commitments on urgent priorities, including housing, healthcare, and cost-of-living challenges.

The Portuguese Communist Party (Partido Comunista Português or PCP) has announced it will vote against the 2027 State Budget. Secretary-General Paulo Raimundo stated that the party does not need to review the document to reach this decision, as it fundamentally opposes the current government's policy direction. The PCP also criticized the Socialist Party (Partido Socialista or PS) for its likely abstention, arguing that this position enables the government's agenda.

The government's plan to increase the reference value of the Solidarity Supplement for the Elderly (Complemento Solidário para Idosos or CSI) to 720 euros will cost the Social Security budget over 700 million euros in 2027. Prime Minister Luís Montenegro announced the 50-euro increase this week as part of the government's social policy agenda.

Socialist Party (Partido Socialista or PS) Secretary-General José Luís Carneiro announced he will propose that his party abstain during the upcoming vote on the 2027 State Budget. Prime Minister Luís Montenegro has secured this path to political stability by providing guarantees on constitutional revision, pension protection, and the Recovery and Resilience Plan (Plano de Recuperação e Resiliência or PRR). Finance Minister Joaquim Miranda Sarmento welcomed the move as positive for the country, though he warned against distorting the budget during the specialty phase.

Prime Minister Luís Montenegro has appealed to the opposition for responsibility during the upcoming State Budget review to ensure political stability. While promising a rigorous and lean budget, he also announced that Paulo Mota Pinto will lead the PSD's project for constitutional revision.

For the third consecutive year, the Court of Auditors (Tribunal de Contas or TdC) has rejected the General State Account (Conta Geral do Estado or CGE). Auditors cited significant omissions regarding the consolidated financial statements of the Central Administration and Social Security, preventing a complete view of the state's financial health. The court also warned that tax expenditure has risen significantly, with over 100 tax benefits lacking proper quantification or control.

The government has initiated meetings with political parties to discuss the 2027 State Budget, which projects economic growth of approximately 2% and a surplus between 0.1% and 0.2% of GDP. The party Chega, represented by parliamentary leader Pedro Pinto, criticized the proposal as insensitive and lacking tax relief, while the party Livre indicated it is unlikely to support the final budget.

Update: Government outlines 2027 budget projections and fiscal costs

The government's budget framework (Quadro de Políticas Invariantes) indicates that the planned reduction of the corporate income tax (Imposto sobre o Rendimento das Pessoas Coletivas or IRC) to 19% will cost the state approximately 300 million euros in 2027.

The Portuguese Communist Party (Partido Comunista Português or PCP) has expressed zero expectations for the government's 2027 State Budget proposal. Secretary-General Paulo Raimundo called for a 'fire and brimstone' policy to combat the rising cost of living, warning that the party will not support the budget if it continues the government's current economic path.

Former Finance Minister Mário Centeno has criticized the government's fiscal narrative, warning that the state may face a 12 billion euro cut to public accounts. Centeno argued that the reported budget surplus is misleading because it improperly includes social security balances, leaving no real budgetary margin for the executive led by Prime Minister Luís Montenegro.

The political party Livre has accused the government of a lack of institutional respect after officials warned that the negotiating margin for the 2027 State Budget is very limited. The party spokesperson stated that conditioning the debate before formal meetings with parliamentary parties is inappropriate.

The government will begin presenting the general outlines of the 2027 State Budget (Orçamento do Estado) to parliamentary groups starting next Monday. Finance Minister Joaquim Miranda Sarmento and Minister of Parliamentary Affairs Carlos Abreu Amorim will lead meetings with the Socialist Party (Partido Socialista or PS) and Chega, as these parties are essential for the budget's potential approval.

The Public Finance Council (Conselho de Finanças Públicas or CFP) has revised Portugal's 2026 economic growth forecast upwards to 2.2%. While the council anticipates a budget surplus this year, it warns that structural deficits are likely to return by 2027, potentially reaching 1.7% of GDP by 2030 due to increased investment in defense and the conclusion of recovery programs.

The National Statistics Institute (Instituto Nacional de Estatística or INE) reported a budget surplus of 0.5% of GDP for the first half of 2026. Finance Minister Joaquim Miranda Sarmento stated that public expenditure remains under control but warned that proposed tax cuts from the Socialist Party (Partido Socialista or PS) and Chega could risk the country's budgetary targets.

Prime Minister Luís Montenegro, speaking at the New York Stock Exchange, confirmed that Portugal is on track to record a budget surplus this year. He also stated that the country's economic growth is expected to remain higher than the European average, while calling for increased investment from the United States.

Finance Minister Joaquim Miranda Sarmento warned that reducing VAT on fuel and essential food items would cost two billion euros and push public accounts into a deficit. The PS and the Communist Party (Partido Comunista Português or PCP) continue to advocate for these measures to mitigate the rising cost of living.

Prime Minister Luís Montenegro is scheduled to address the nation tonight at 8:00 PM from São Bento. Following a Council of Ministers meeting, he is expected to detail new tax relief for income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) brackets up to the sixth tier and provide extraordinary supplements for pensioners earning up to 1,611 euros. The package, estimated at 800 million euros, also includes support for sectors affected by rising fuel prices.

Update: Government confirms tax relief and sector support measures

Prime Minister Luís Montenegro confirmed that the government has approved a proposal to reduce IRS rates for the first through sixth brackets, with changes retroactive to January 2026. The package also includes 38 million euros in support for sectors heavily impacted by fuel costs, such as taxi services, firefighters, and the social sector, with relief expected to appear in salary withholding tax starting in November.

The Federation of Public Administration and Public Purpose Entities Trade Unions (Fesap) and the Portuguese Communist Party (PCP) have announced new proposals for the 2027 State Budget. Fesap is demanding a base salary of 1,050 euros for civil servants, while the PCP proposes a national minimum wage of 1,100 euros and an interim pension increase of 50 euros.

Political parties are outlining their priorities for the 2027 State Budget, with Livre proposing a national mobility pass and increased child benefits. The Socialist Party (Partido Socialista or PS) has criticized Chega for its fuel tax proposals, labeling them a hoax, while the party also faces internal pressure to distance itself from Chega. Meanwhile, business leaders have expressed concern over potential increases to the national minimum wage.

Prime Minister Luís Montenegro announced that low-income pensioners will receive an extraordinary supplement of up to 200 euros this December. The government plans to fund this bonus and further income tax cuts using additional revenue collected from fuel taxes, though the Left Bloc (Bloco de Esquerda or BE) has criticized the measures as insufficient to counter rising living costs.

The Portuguese Institute for the Sea and Atmosphere (Instituto Português do Mar e da Atmosfera or IPMA) has issued yellow warnings for high temperatures across nine districts in central and southern Portugal this weekend. The warning period begins Saturday morning and extends through Sunday, with additional districts in the north joining the alert on Sunday.

The government confirmed that a new income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) reduction will be retroactive to January and reflected in workers' paychecks starting in November. Prime Minister Luís Montenegro announced the measure during a parliamentary debate, noting it will impact over two million households up to the sixth tax bracket.

Update: Tax cuts and pension bonuses confirmed for year-end

The government has allocated 800 million euros to fund both the IRS reduction and an extraordinary pension supplement, which will be paid in December to pensioners receiving up to 1,611.13 euros. While the PSD government defends the measures as a result of strong economic performance, the Socialist Party (Partido Socialista or PS) has criticized them as opportunistic, and other opposition parties have raised concerns regarding the long-term sustainability of these spending decisions.

Former Finance Minister and former Bank of Portugal governor Mário Centeno has criticized the government's recent announcements regarding pension bonuses and tax cuts. Centeno argued that such measures should be integrated into the formal State Budget (Orçamento do Estado) process rather than presented as ad hoc decisions.

The Standing Committee has confirmed a plenary session for Tuesday to debate and vote on a motion of no confidence against the government, filed by the Chega party. While the motion is expected to fail, Chega leader André Ventura stated that his party will continue to engage in dialogue with the government on fundamental issues. Meanwhile, the PAN party has announced it will vote against the motion, criticizing Chega's strategy.

Update: Socialist Party to abstain from Chega motion

The Socialist Party (Partido Socialista or PS) has officially decided to abstain from the upcoming no-confidence vote. Party leadership, including Secretary-General José Luís Carneiro, described the motion as a diversionary tactic, stating that abstention avoids a political crisis while maintaining their criticism of the government's performance.

The government plans to meet with all parties represented in the Assembly of the Republic at the end of the month to discuss the 2027 State Budget (Orçamento do Estado). These meetings, coordinated by the office of the Minister of Parliamentary Affairs, are a standard part of the budget preparation process.

The Ministry of Finance has submitted the Invariant Policy Framework for the 2027 State Budget, revealing that existing commitments will increase the budget deficit by 4.783 billion euros before any new measures are added. Former Minister José Luís Carneiro stated that the government has only met one of the four demands set by the PS for their potential support of the budget proposal.

Portugal's state budget surplus fell to 281.7 million euros through July, a significant decrease from the same period last year. The government attributed the decline to a 10.6% rise in expenditure, driven partly by debt repayments to the National Health Service (Serviço Nacional de Saúde or SNS) and tax exemptions for storm-affected businesses.

Prime Minister Luís Montenegro announced the creation of the University of Bragança and the Northern Interior during the PSD Summer University. While outlining new education policies, he also addressed recent technical failures in national secondary school exams, which forced a delay in grade releases. Socialist Party Secretary-General José Luís Carneiro criticized the Prime Minister, accusing him of attempting to politically whitewash the exam disruptions.

Portuguese Communist Party (Partido Comunista Português or PCP) secretary-general Paulo Raimundo has warned the government against any attempts to privatize or alter Social Security (Segurança Social) funds. Speaking in Fronteira, Raimundo challenged the government to avoid such measures, threatening that they would face the same defeat as their previous labor proposals.