Montenegro rules out austerity as Portugal rolls out 25-cent fuel discounts

Fiscal discipline and the Spanish comparison

Speaking in Esposende during a tribute to former ministers João de Oliveira Martins and António Couto dos Santos, Prime Minister Luís Montenegro rejected calls for larger state interventions against rising prices. Montenegro stated that excessive public spending would increase borrowing costs and recreate the economic conditions that previously forced Portugal into austerity. In his remarks, the head of government explicitly compared Portugal's economic policy with that of Spain, arguing that Spanish authorities have accumulated higher public debt and deficits while imposing heavier fiscal burdens on labor and corporate income. Montenegro emphasized that he would not exchange Portugal's economic position for Spain's framework.

I am not going to be the father of austerity, I really am not, in any way. I am here to look after today, but also tomorrow, with balance.

Montenegro maintained that temporary political rewards from oversized subsidies would ultimately lead to spending cuts and economic sacrifices for Portuguese families.

Targeted aid for fuel costs and transport sectors

The Portuguese government framed its cost-of-living response around specific, calibrated measures to address rising fuel prices without destabilizing the budget. On Thursday, the Council of Ministers approved 38 million euros in dedicated financial aid targeting sectors most exposed to energy costs. These allocations cover freight and passenger transport operators, taxis, volunteer firefighters, and private social solidarity institutions (IPSS). In addition to sectoral funding, a general fuel discount will take effect across the country.

Under the upcoming measures, drivers will receive a cumulative reduction of 25 cents per litre on gasoline and diesel. The executive also established a supplementary subsidy of 10 cents per litre for agricultural and colored diesel to support rural producers and primary industries.

Income measures and budgetary strategy

Beyond fuel-specific interventions, Montenegro placed the government's response within a broader package of tax reductions and income support mechanisms. The coalition executive formed by the Social Democratic Party (PSD) and CDS-PP is cutting personal income tax for the fifth time while delivering an extraordinary pension supplement for the third consecutive year. Montenegro stressed that preserving balanced public finances remains the only viable way for the country to finance its operations without facing sharp increases in interest rates.

If we unbalance the accounts, if we are too voluntaristic and easy-going, money will become more expensive, and if money becomes more expensive, it has to be paid.

The prime minister noted that overall spending on living-cost measures, including the solidarity gas cylinder program and subsidies for fertilizers and farming inputs, will reach approximately 2,300 million euros by the end of 2026.

Market stabilization and international engagement

Addressing public frustration and complaints from transport associations and emergency services, Montenegro argued that no government intervention can entirely erase global commodity price increases. The prime minister questioned whether an extra five or ten cents in immediate subsidies would justify exposing the country to larger future repayments of 40 or 50 cents. To complement domestic relief, Montenegro pledged that Portugal will deploy its diplomatic channels across international organizations to push for price stabilization in global fuel markets. He concluded that voters will ultimately evaluate whether the government's balanced fiscal approach delivered the intended protection for household purchasing power.