Portugal presents 2027 budget targeting 2.1% growth and 0.1% surplus

Budget delivery and legislative timeline

Portuguese Minister of State and Finance Joaquim Miranda Sarmento submitted the draft 2027 State Budget to the Assembleia da República on Thursday, 8 October 2026. The Council of Ministers approved the document during a morning meeting at São Bento before Sarmento arrived at parliament at 14:15 with Parliamentary Affairs Minister Carlos Abreu Amorim. Sarmento delivered the proposal to parliament president José Pedro Aguiar-Branco two days before the 10 October deadline. Before reporters left the room, the finance minister addressed the procedural context of the handover.

Another Budget delivered to the Assembly, we already know of its approval, calmer.

Lawmakers will debate the budget on 27 and 28 October, with the final vote scheduled for 24 November.

Macroeconomic forecasts and interest rate pressures

The macroeconomic scenario underpinning the budget projects real GDP growth of 2.1% in 2027, following a revised 2.3% expansion in 2026. Government figures forecast a budget surplus between 0.1% and 0.2% of GDP, alongside 2.3% inflation and export growth exceeding 3%. Private investment is projected to increase 10.4% in real terms (13% in nominal terms), offsetting a decline in public investment after the Recovery and Resilience Plan ends.

However, the finance ministry based its framework on more restrictive financial conditions for businesses and households. The budget projects three-month Euribor rates rising from 2.2% in 2025 and 2.5% in 2026 to an annual average of 3.4% in 2027. The ministry also assumed Brent crude oil will average 86.1 dollars per barrel in 2027, higher than the 79 dollars forecast by the Banco de Portugal.

Regional allocations and personal income tax changes

The proposal includes specific regional transfers alongside national fiscal measures. Regional government president Miguel Albuquerque confirmed Madeira secured 79.69 million euros to offset the loss of the cohesion fund following talks with Prime Minister Luís Montenegro. The region will also receive 82 million euros in extraordinary health funding, alongside three-year support for the University of Madeira.

Regarding personal taxation, the government previously lowered IRS rates across the first six brackets by 0.3 to 0.5 points, effective in 2026 at a cost of 400 million euros. The 2027 draft adds further IRS adjustments by updating tax brackets, specific deductions, and the minimum subsistence level.

Opposition reactions and head of state remarks

Approval of the budget is guaranteed after the opposition Socialist Party announced its planned abstention. Other political parties criticized the arrangement that ensures the minority executive passes its legislation. Bloco de Esquerda coordinator José Manuel Pureza announced his party will vote against the proposal during a visit to Coimbra.

We do not hesitate. We do not sign the cheque of bad governance of Luís Montenegro.

Pureza stated that the Socialist Party gave the government a blank cheque without winning concessions on housing rents, fuels, or essential food prices. President of the Republic António José Seguro addressed reporters at the Calouste Gulbenkian Foundation in Lisbon, emphasizing institutional stability.

We need to have stability in our country so that we can do what is necessary to improve people's lives. That is the message I want to leave today.

Seguro reiterated that the presidency remains outside the parliamentary debate, leaving legislative examination entirely to political parties.