The Minister of Finance, Joaquim Miranda Sarmento, admitted today that there is a risk of recording a fiscal deficit this year, which should not exceed the limit of 0.5% of the Gross Domestic Product (GDP).
In an interview with Antena 1, the government official pointed out that there must be a “balance between keeping the accounts balanced, which does not mean that there cannot be a small deficit, and responding to crises”.
“There is a number that would keep the country much more comfortable, which is that the deficit should not exceed 0.5%, because if it does, it puts us at the decision-making discretion of the European Commission”, he admitted, still believing that Brussels “would not open a procedure for excessive deficit”.
The new European budgetary rules, approved in 2023, “still have many areas in which the methodology is not fixed”, he highlighted.
The minister therefore highlighted this threshold of a deficit of 0.5% as the value that can maintain the country with a “good image that allows it to attract investment and cheap financing”.
In the State Budget for 2026, the government predicted a surplus of 0.1% of GDP this year, a value that may be at stake due to the impact of the storms and also the war in Iran, which caused a rise in fuel prices.
Miranda Sarmento also assumed that it is necessary to continue reducing public debt, pointing out that there are projections that estimate a ratio of around 70% of GDP at the end of the decade, which could put it at the same level as Germany.
With regard to support to respond to the impact of the conflict in the Middle East, the government official reiterated that the executive will act depending on the evolution of the situation, adding that “soon” there should be measures to respond to the rise in fertilizer prices.
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