State budget news in Lisbon, Lisboa, Portugal

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.

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 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 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.

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.

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.

Minister of Economy and Territorial Cohesion Manuel Castro Almeida announced that two billion euros in projects originally excluded from the Recovery and Resilience Plan (PRR) will now be funded by the State Budget. The minister assured the public that this shift will not result in any tax increases.

Update: PRR execution reaches 100%

Minister Manuel Castro Almeida confirmed that Portugal has reached 100% execution of the PRR. He warned that the country must now prepare to rely less on European funds and increase public investment through the national State Budget (Orçamento do Estado).

Chega president André Ventura has warned that any rapprochement between the governing coalition and the Socialist Party (Partido Socialista or PS) regarding the re-examination of the nationality loss decree will have political consequences. Ventura specifically linked this potential cooperation to the upcoming vote on the State Budget, following recent parliamentary tensions.

Finance Minister Joaquim Miranda Sarmento stated that the difference between the government's deficit projection and the Bank of Portugal's (Banco de Portugal or BdP) forecast is not significant. Miranda Sarmento argued that strong tax revenue and social security contributions indicate the economy is performing better than initial indicators suggested. He also highlighted a record reduction in public debt as a key fiscal achievement.

Minister of Economy Castro Almeida confirmed that over 21 billion euros of the 22.6 billion euro Recovery and Resilience Plan (Plano de Recuperação e Resiliência or PRR) consists of new funding. The minister emphasized that only 4% of the plan had previously defined funding, with private investment expected to cover one-third of the total allocation.

Thousands of students marched in Lisbon on National Student Day (Dia Nacional do Estudante) to demand free higher education and more student housing. The protest coincided with comments from Education Minister Fernando Alexandre, who suggested that tuition fees (propinas) should be adjusted for inflation after being frozen for several years. The government has promised 14,000 new beds in student residences by the next academic year to address the housing crisis. Families with university students should be aware of potential cost increases in future state budgets.

Education Minister Fernando Alexandre announced that a major restructuring has reduced the ministry's staff by 50% and will save €50 million annually. The reform consolidated 18 entities into seven, focusing on the digitalization of human resources and administrative services. Parents and students should note that these changes aim to improve the efficiency of the National Education System.