The 2025 budgetary results confirm the solidity of public accounts and reinforce the Government’s strategy to pursue a debt reduction, tax relief, and State reform agenda in a budgetary discipline and financial stability framework.

Public accounts surpass forecasts and reinforce structural position

The Minister of State and Finance Joaquim Miranda Sarmento, claimed in a Budget, Finance and Public Administration Commission hearing in Parliament that Portugal recorded a 0.7% of GDP budget surplus in 2025, following on from 0.6% in 2024; and cut public debt to less than 90% of GDP, which had not been done since 2009. These results surpassed the national and international institutions’ forecasts and take on greater relevance for having been achieved in a context set by extraordinary expenses, such as legal rulings, support for Ukraine, loans under the Recovery and Resilience Facility, and the additional benefit for pensioners.

Excluding these temporary factors, the budget balance is above 1% of GDP, showing a more robust structural position. At the same time, the Portuguese economy grew above the EU average, with unemployment at around 6% and inflation close to de 2%, while public debt was on a downward trajectory.

The Minister stressed that, despite the pressure on expenditure, especially in 2024, the evolution in 2025 shows effective control of expenditure and reinforces the country’s foreign credibility, reflected in the improvement in ratings and reduction of funding costs for the State, households, and companies.

Debt reduction remains a strategic priority

Debt reduction remains a strategic priority with the aim of reaching values below 80% of GDP by the end of the decade. Joaquim Miranda Sarmento, claimed that "we must continue on this path", identifying debt as the main factor in the economy’s vulnerability.

As for public policy, the Government pursues its strategy based on lowering taxes, boosting investment, and enhancing household income. The Minister noted the cuts in income tax and corporate income tax, the tax incentives for youth when buying a home and the acceleration of public and private investment, stressing that the investment is above capital depreciation, reversing a trend of many years.

Measures to respond to rising fuel prices

Given the rising fuel prices, Joaquim Miranda Sarmento noted the fact that Portugal was the first country in Europe to react to the price escalation by lowering the tax on Oil Products, as well as other measures that have recently been approved to assist certain sector such as agriculture, passenger and freight transport, firefighters, taxis and entities in the social sector.