The reduction in public debt has helped Portugal stand out among investors and financial analysts. “Debt reduction has been the main driver of rating upgrades,” Fitch Ratings states in a report on Cyprus, Greece and Portugal.

The credit rating agency notes that the “decline in debt-to-GDP ratios has been dramatic since the 2020 peaks, far outpacing the euro-area average”. In Portugal, this trend culminated in a historic reduction in the public debt ratio in 2025, when it fell to 89.7% of Gross Domestic Product (GDP), outperforming the 90.2% target set in the 2025 State Budget.

The 3.8 percentage point decrease compared with the end of 2024 brought the debt ratio below 90% for the first time since 2009, to 89.7%, consolidating a sustained downward trajectory in public indebtedness. For this year, the Government estimates that the debt-to-GDP ratio will fall to 87.5%.

Minister of State and Finance Joaquim Miranda Sarmento stressed that this work must continue. “This reduction is the result of the efforts made by families and businesses in recent years,” he said, adding that this process “cannot be interrupted and we must maintain the pace of public debt reduction”.

Joaquim Miranda Sarmento also stressed that, at the same time, “we need to significantly reduce bureaucracy, which stifles businesses and citizens and constrains and delays private investment, particularly Foreign Direct Investment”. This, he added, will have “a significant impact on our country’s potential GDP”.

Fitch also highlights that what has distinguished these southern European economies is that “growth has been accompanied by sustained primary surpluses, creating a durable and politically driven anchor for debt reduction”. According to Fitch, Portugal’s fiscal performance has also benefited from “cautious budgeting”.

The improvement in Portugal’s financial position has been reflected in increased confidence among credit rating agencies and investors. All credit rating agencies currently place Portugal’s sovereign rating in the A category, the highest tier of their rating scales.

More recently, Fitch Ratings, Standard & Poor’s (S&P) and Morningstar DBRS (DBRS) revised the outlook for the Portuguese Republic from “stable” to “positive”.