Portuguese finance council lifts growth and budget surplus outlook

The Conselho das Finanças Públicas revised its outlook for Portugal, raising both the growth forecast and the expected budget surplus. The upward revision is attributed to increased public investment after the Recovery and Resilience Plan concludes, despite inflation running above earlier estimates. The council’s current projection does not yet include the fiscal effect of the announced IRS reduction or the extraordinary pension supplement, but it does factor in the extra revenue from indirect taxes such as VAT.

It also highlighted potential risks from geopolitical tensions and possible additional fiscal measures. Positive scenarios include revenue from the sale of EDP’s dams, a levy on excess oil profits, and proceeds from the privatization of TAP and SATA, which could help lower public debt. Nonetheless, the council warned that the projected surplus does not signal a structural improvement in public finances.