COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Portugal Accompanying the document Proposal for a Council Implementing Decision on the approval of the assessment of the recovery and resilience plan for Portugal
Date: 2021-06-16
Institutions: European Commission, Secretariat-General
Subjects: EU aid, EU loan, Portugal, coronavirus disease, economic and social cohesion, economic recovery, economic reform, epidemic, investment, structural adjustment

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 16.6.2021  SWD(2021) 146 final  COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Portugal Accompanying the document Proposal for a Council Implementing Decision on the approval of the assessment of the recovery and resilience plan for Portugal {COM(2021) 321 final}  
 
 
Table of contents 

1.  EXECUTIVE SUMMARY ............................................................................................................ 2 

2.  RECOVERY AND RESILIENCE CHALLENGES: SCENE-SETTER ................................................. 5 

2.1.  Macroeconomic outlook and developments since the 2020 country report .............. 5 

2.2.  Challenges related to sustainable growth, cohesion, resilience and policies for the 
next generation .......................................................................................................................... 9 

2.3.  Challenges related to the green and digital transition .............................................. 15 

3.  OBJECTIVES, STRUCTURE AND GOVERNANCE OF THE PLAN ................................................ 25 

3.1.  Overall strategy of the plan ......................................................................................... 25 

3.2. 

Implementation aspects of the plan ............................................................................ 36 

4.  SUMMARY OF THE ASSESSMENT OF THE PLAN ..................................................................... 42 

4.1.  Comprehensive  and  adequately  balanced  response  to  the  economic  and  social 
situation .................................................................................................................................... 42 

4.2.  Link with Country Specific Recommendations and the European Semester ........ 51 

4.3.  Growth  potential,  job  creation,  economic,  institutional  and  social  resilience, 
European Pillar of Social Rights, mitigating the impact of the crisis, and social territorial 
cohesion and convergence ....................................................................................................... 59 

4.4.  The principle of ‘do no significant harm’ .................................................................. 71 

4.5.  Green transition............................................................................................................ 73 

4.6.  Digital transition ........................................................................................................... 78 

4.7.  Lasting impact of the plan ........................................................................................... 85 

4.8.  Milestones, targets, monitoring and implementation ............................................... 87 

4.9.  Costing ........................................................................................................................... 90 

4.10.  Controls and audit ........................................................................................................ 92 

4.11.  Coherence ...................................................................................................................... 95 

5.  ANNEX ................................................................................................................................... 98 

1 

 
 
 
 
1.  EXECUTIVE SUMMARY 

Following  several  years  of  above-average  growth  and  an  improving  labour  market,  the 
COVID-19 pandemic hit Portugal’s economy hard. It took a toll on all aspects of social and 
business activity, especially on the country’s large hospitality sector. Real GDP, which was 
growing  faster  than  EU  average  before  the  crisis,  fell  by  7.6%  in  2020.  After  a  resurgence  of 
infections brought new lockdown restrictions early in 2021, real GDP is set to recover from the 
second  quarter  onwards.  Substantial  government  support  has  shielded  the  labour  market 
throughout the crisis, limiting the increase in the unemployment rate, which nevertheless went up 
0.4 percentage points year on year to 6.9% in 2020. Youth employment, in particular, remains an 
issue, with more than a fifth of people aged 15-24 unemployed in 2020 and, overall, there is a 
risk  of  increasing  job  destruction.  The  fiscal  policy  response  to  the  COVID-19  pandemic 
provided significant stabilisation to the economy but resulted in a worsened budgetary outlook. 
The general government debt-to-GDP ratio, which had been on a steady downward path since its 
2016 peak of 131.5%, spiked to an all-time high of 133.6% in 2020. 

support 

in  non-repayable 

requested  EUR 13 907 294 284 

Portugal  has 
and 
EUR 2 699 000 000  of  loans  under  the  Recovery  and  Resilience  Facility1.  Portugal’s  long-
term challenges relate mainly to social and educational needs, institutional resilience, including 
the  efficiency  of  the  justice  system,  and  the  need  to  boost  the  productive  potential  of  the 
economy by investing in skills, research and development, as well as by improving the business 
environment  and  enhancing  framework  conditions  for  the  sustainability  of  public  finances.  Its 
recovery  and  resilience  plan  should  make  a  significant  contribution  to  boosting  the  country’s 
economic  rebound  and  contribute  to  a  green,  digital,  inclusive  and  resilient  future.  Structured 
around the three elements of resilience, green and digital transitions, the plan is designed to give 
a  focused  response  to  Portugal’s  key  structural  challenges,  in  line  with  the  Draft  Council 
Recommendation  on  economic  policy  in  the  euro  area2  and  a  significant  subset  of  the  recent 
country-specific recommendations addressed to Portugal by the Council.3 

The  plan  pursues  the  general  objective  of  the  Facility  to  promote  the  Union’s  economic, 
social  and  territorial  cohesion  and  is  balanced  in  its  response  to  the  six  policy  pillars 
referred to in Article 3 of the Regulation.4 About three quarters of the 20 components in the 
Portuguese plan are directly related to the green transition and roughly half directly address the 
digital transition (pillars 1 and 2). The remaining four policy pillars are appropriately addressed 

1   Portugal has published its Recovery and Resilience Plan at 
   https://www.portugal.gov.pt/pt/gc22/comunicacao/documento?i=recuperar-portugal-construindo-o-futuro-plano-

de-recuperacao-e-resiliencia 

2   Pending  final  adoption  by  the  Council,  after  endorsement  by  the  European  Council.  The  text  agreed  by  the 
Eurogroup on 16 December 2020 is available at: https://data.consilium.europa.eu/doc/document/ST-14356-2020-
INIT/en/pdf 

3   Portugal submitted its National Reform Programme on 30 April 2021. The information provided in the National 
Reform Programme is being considered and jointly assessed in this Staff Working Document, together with the 
recovery and resilience plan. 

4   Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the 

Recovery and Resilience Facility. 

2 

 
                                                           
through  measures  to:  (i)  strengthen  the  capacity,  resilience  and  sustainability  of  the  National 
Health  Service;  (ii)  provide  social  housing  and  affordable  housing;  (iii)  offer  integrated  social 
services,  especially  in  deprived  metropolitan  areas;  (iv)  strengthen  education  and  vocational 
education and training systems; (v) ensure the digitalisation of primary and secondary education; 
(vi) implement measures to incentivise innovation and support entrepreneurship; (vii) implement 
measures to digitalise public services, make public administration more efficient and improve the 
quality  and  sustainability  of  public  finances;  and,  (viii)  implement  measures  to  improve  the 
business  environment,  including  the  modernisation  of  administrative  and  tax  courts  and  the 
streamlining of legal procedures. 

The plan is expected to contribute to addressing a significant subset of the recent country-
specific  recommendations  addressed  to  Portugal  by  the  Council.5  The  plan  promotes 
investment for the climate and green transition. Improving the quality of public finances and the 
financial sustainability of state-owned enterprises is central to the plan because it is a necessary 
condition  to  strengthen  Portugal’s  economic  resilience.  The  plan  is  ambitious  in  strengthening 
the  resilience  of  the  health  system  and  improving  access  to  quality  health  care  and  long-term 
care. The plan aims to improve the population’s overall level of skills including digital skills and 
reinforces the link between regional and sectoral  skills  needs and vocational  education and the 
training  offer.  The  plan  provides  a  significant  response  to  improve  the  effectiveness  and 
adequacy  of  social  protection.  The  plan  introduces  relevant  measures  to  reduce  labour  market 
segmentation,  support  quality  employment  and  the  preservation  of  jobs.  The  plan  significantly 
aims to support the use of digital technologies and promote digital skills for various population 
groups  such  as  students,  teachers,  the  workforce,  businesses  and  civil  servants.  The  plan 
introduces  significant  measures  to  promote  access  to  finance,  in  particular  for  SMEs,  and 
promote private and public investment for the country’s economic recovery. The plan introduces 
significant reforms and investments to promote investment in research and innovation and make 
these  more  efficient  and  effective.  The  plan  is  ambitious  in  tackling  the  challenges  of  the 
business environment and improving the efficiency of the justice system. 

The  measures  in  the  plan  contribute  to  the  green  transition,  the  enhancement  of 
biodiversity  and  the  protection  of  the  environment.  They  can  support  Portugal’s 
decarbonisation and energy objectives as set out in the National Energy and Climate Plan 2030 
(NECP 2030) and in its Roadmap for Carbon Neutrality 2050 (RNC 2050), and are thus a step 
towards achieving carbon neutrality by 2050. The green transition is presented as an opportunity 
to  leverage  the  Portuguese  economy  towards  sustainability,  by  promoting  technological 
advancement,  job  creation  and  preservation  of  natural  resources.  This  entails  measures  to 
decarbonise  industry,  reduce  energy  dependency,  promote  sustainable  mobility  and  increase 
energy  efficiency  of  buildings,  deploy  new  technologies  for  renewable  hydrogen  and  other 

5 Council Recommendation of 20 July 2020 on the 2020 National Reform Programme of Portugal and  
delivering  a  Council  opinion  on  the  2020  Stability  Programme  of  Portugal  OJ  C  282/22,  26  August  2020,  and 
Council  Recommendation  of  9  July  2019  on  the  2019  National  Reform  Programme  of  Portugal  and  delivering  a 
Council opinion on the 2019 Stability Programme of Portugal OJ C 301/22, 5 September 2019.  

3 

 
                                                           
renewable  energy  sources,  and  spending  on  research  and  innovation.  Together,  the  measures 
supporting climate change objectives account for 37.9% of the Portuguese plan’s total allocation. 

All  measures  in the Portuguese plan pass  the ex-ante  assessment of the ‘do no significant 
harm’  principle.  For  those  measures  in  the  water  management  component  (Component  9), 
which are sensitive from a climate adaptation and environmental point of view, Portugal ensures 
that  no  significant  harm  to  the  environment  shall  be  done  by  implementing  any  result  and 
condition from the Environmental Impact Assessments (EIA) relevant for these measures. 

In terms of the digital transition, key measures address the digitalisation of businesses and 
education, including the purchase of digital equipment and professional training. They also 
include  decisive  upgrades  to  the  information  systems  for  public  financial  management  and  for 
the provision of health care services, as well as the modernisation of the public administration to 
improve accessibility and simplify public interactions with businesses and citizens. The measures 
under the field of digital transformation could lead to a significant reduction of the complexity in 
processes and procedures, which could make the public administration as a whole more efficient 
in the long term. The measures with a digital impact account for 22.1% of the Portuguese plan’s 
total allocation. 

Once  fully  implemented,  Portugal’s  plan  can  be  expected  to  prompt  structural  changes 
with  a  lasting  impact  to  the  administration,  the  institutions  and  several  policies  of  the 
country. The most relevant measures in this respect relate to creating a more business-friendly 
environment,  notably  through  changes  in  the  justice  system.  They  also  comprise  the 
establishment and capital reinforcement of the National Promotional Bank, Banco Português de 
Fomento  to  facilitate  access  to  finance  as  well  as  improve  financing  conditions  for  viable 
companies,  and  to  address  the  structural  problem  of  undercapitalisation  of  Portuguese  firms. 
Further structural improvements are expected to stem from measures to reduce the administrative 
burden on businesses, the elimination of barriers to  investment linked to burdensome licensing 
requirements,  and  the  lifting  of  restrictions  on  regulated  professions.  In  addition,  structural 
transformation  related  to  the  green  and  digital  transitions  are  widespread  throughout  the  plan. 
The plan’s approach to gender equality and, to a lesser extent, equal opportunities, can also make 
an  impact  by  going  beyond  the  response  to  the  immediate  consequences  of  the  COVID-19 
pandemic and addressing the structural factors leading to inequalities.  

Portugal  has  established  a  dedicated  administrative  structure  ‘Estrutura  de  Missão 
Recuperar Portugal’ (‘task force’) with an adequate organisation and the responsibility to 
implement the plan as well as monitor and report on progress. The milestones and targets of 
the Portuguese plan constitute an appropriate system for monitoring the plan’s implementation.  

Portugal  has  provided  individual  cost  estimates  for  all  investments  and  reforms  with 
associated  costs  included  in  the  plan.  The  cost  breakdown  is  generally  detailed  and  well 
substantiated. Cost estimates, supporting documents and cost justifications show that most of the 
costs are reasonable, plausible, commensurate, and in line with the principle of cost-efficiency. 
However, some gaps remain which preclude the highest rating of this assessment criterion. The 
individual  components  do  not,  as  a  rule,  provide  clear  information  about  additional  and 

4 

 
complementary  investments  from  other  EU  funds,  as  the  negotiation  of  the  Partnership 
Agreement  and  the  Programmes  for  the  programming  period  2021-2027  has  not  yet  begun. 
However,  this  is  compensated  by  strong  governance  and  control  systems,  which  provide 
assurance that the amount of the total cost is not covered by existing or planned Union financing. 

(1) 
Balanced 
Response 

(2) 
CSRs 

(3) 
Growth, 
jobs… 

(4) 
DNSH 

(5) 
Green 
target 

(6) 
Digital 
target 

(7) 
Lasting 
impact 

(8) 
M & T 

(9) 
Costing 

(10) 
Control 
Systems 

(11) 
Coherence 

A 

A 

A 

A 

A 

A 

A 

A 

B 

A 

A 

2.  RECOVERY AND RESILIENCE CHALLENGES: SCENE-SETTER 

2.1. Macroeconomic outlook and developments since the 2020 country report  

Portugal’s economic performance reversed abruptly in 2020, as the spread of the COVID-
19  pandemic  hit  the  country.  Portugal’s  GDP  fell  by  7.6%  in  2020,  mostly  on  the  back  of  a 
significant  contraction  in  the  second  quarter  of  the  year.  This  was  followed  by  a  partial  and 
short-lived  recovery  in  the  second  half  of  2020,  as  the  resurgence  of  COVID-19  infections 
towards  the  end  of  the  year  brought  a  gradual  increase  in  social  distancing  measures.  In  turn, 
further  tightened  restrictions  as  of  mid-January  2021  weakened  economic  activity  in  the  first 
quarter of the current year. According to the Commission 2021 spring forecast, the economy is 
now projected to resume its recovery in the second quarter of 2021 and to gain momentum this 
summer, when international travel is expected to rebound. In full-year terms, GDP is projected to 
grow  by  3.9%  in  2021  and  5.1%  in  2022.  A  full  return  to  pre-pandemic  levels  is  expected  by 
mid-2022. 

The country’s large hospitality industry, particularly activities related to foreign tourism, 
faced the largest volatility as the number of airport passengers fell by more than 90% in 
Q2-2020 (y-o-y). Among the main economic sectors, only construction retained positive growth 
rates in 2020. On the demand side, export of services and investment in equipment recorded the 
largest  drops,  but  private  consumption  also  fell  significantly  amid  a  steep  rise  in  savings. 
Consumer  prices  (HICP)  dropped  marginally  by  0.1%  in  2020,  mainly  due  to  constrained 
demand for energy and services. Prices are set to gradually increase in 2021 and 2022. 

Headline  labour  indicators  remained  quite  resilient  against  the  backdrop  of  the 
unfavourable  economic  environment,  benefiting  from  substantial  government  support. 
Unemployment increased from an annual average of 6.5% in 2019 to 6.9% in 2020. The labour 
force and the number of employed persons decreased by 1.4% and 1.7%, respectively, in 2020. 
However, labour market utilisation fell at a much steeper pace, reflecting a drop of 23.6% y-o-y 
in  hours  worked  during  the  strict  lockdown  in  Q2-2020.  Moreover,  the  number  of  registered 
unemployed 
implying  certain  statistical 
discrepancies  due  to  the  complexity  of  the  situation,  where  many  persons  were  forced  into 
temporarily paid or unpaid leaves. 

increased  significantly  during 

lockdown, 

the 

5 

 
 
The economic downturn in 2020 also weighed on Portugal’s social situation, although the 
welfare  state  and  government  measures  played  an  important  role  in  stabilising  incomes. 
Prior  to  the  crisis,  the  country’s  poverty  and  inequality  indicators  were  improving,  though 
against  the  background  of  a  weak  social  protection  system  and  rising  house  prices.  The 
proportion of people at risk of poverty and social exclusion stood at 21.6% in 2019, according to 
the  latest  available  estimates.  The  steep  contraction  in  the  hospitality  sector  in  2020,  where 
income levels are below the average, is expected to have had a negative impact on the country’s 
poverty and inequality indicators, despite the resilience of the labour market and social transfers 
from the government. The pre-existing tax-benefit system and government measures to address 
the  exceptional  socio-economic  situation  have  cushioned  part  of  the  shock  on  households’ 
income, limiting the rise in income inequality and poverty risk. Monetary compensation schemes 
absorbed the largest share of the market income shock.6 

Fiscal policy was used to sustain the economy during the COVID-19 crisis, which has put a 
strain on public finances. The general government balance was hit, turning from a small surplus 
of 0.1% of GDP in 2019 to a deficit of 5.7% of GDP in 2020. The package of crisis mitigation 
measures,  with  an  estimated  overall  direct  budgetary  cost  of  about  3%  of  GDP,  was  the  main 
driver of this deterioration. Spending increased across the board, with transfers and subsidies to 
firms and households – including through short-time work and furlough schemes – contributing 
the  most.  The  decline  in  tax  revenue  by  about  1¾%  of  GDP  also  pushed  the  deficit  upwards, 
reflecting the operation of automatic stabilisers on the back of the sharp drop in output. Whilst 
Portugal’s  public  debt  was  on  a  declining  path  prior  to  the  COVID-19  crisis,  the  debt-to-GDP 
ratio reached an all-time high in 2020, soaring by about 17 percentage points to 133.6%. With 
the expected economic rebound, the public debt-to-GDP ratio is set to resume a downward path 
already  in  2021,  but  it  will  take  years  for  it  to  reach  its  pre-pandemic  level.  Furthermore,  the 
projected  gradual  decrease  in  the  public  debt-to-GDP  ratio  would  crucially  hinge  on  Portugal 
attaining  structural  primary  surpluses  and  favourable  nominal  GDP  growth-interest  rate 
differentials over the medium term. 

In the short term, Portugal is projected to face high fiscal sustainability risks according to 
the S0 indicator.7  This  reflects  the abrupt and  considerable deterioration  of public finances in 
2020,  against  the  background  of  the  COVID-19  outbreak  and  the  direct  budgetary  cost  of  the 
crisis  mitigation  measures.  At  the  same  time,  financial  market  data  show  historically  low  and 
stable spreads of credit defaults swaps and credit ratings. Moreover, historically low borrowing 
costs,  supported  by  the  Eurosystem’s  interventions  and  EU  initiatives,  have  contributed  to 
mitigate short-term risks. In addition, Portugal’s treasury reported an accumulation of currency 
and deposits by 4.7% of GDP in 2020, while gross financing needs are projected to decline over 
the forecast horizon. 

6   See  ‘Households´  income  and  the  cushioning  effect  of  fiscal  policy  measures  during  the  Great  Lockdown’, 
https://ec.europa.eu/jrc/sites/jrcsh/files/jrc121598.pdf. More updated results are forthcoming in a JRC Working 
Paper. 

7   The S0 indicator evaluates fiscal sustainability risks in the short term – that is, in the upcoming year – stemming 

from the fiscal, macro-financial or competitiveness sides of the economy. 

6 

 
                                                           
In the medium term, Portugal is deemed to face high fiscal sustainability risks according to 
an overall conclusion based on the S1 indicator8 and the Commission’s debt sustainability 
analysis  (DSA).9  While  the  S1  indicator  indicates  medium  fiscal  sustainability  risks  in  the 
medium term, the Commission’s DSA for Portugal points to high sustainability risks based on its 
baseline  scenario  and  plausible  alternative  scenarios,  which  project  public  debt-to-GDP  ratios 
above 90% by 2031, and justify the overall conclusion of high fiscal  sustainability risks  in  the 
medium  term.  According  to  the  Commission’s  baseline  scenario  based  on  the  2021  spring 
forecast, the public debt-to-GDP ratio is expected to steadily decline at a gradual pace of about 
2.5 percentage points  per  year on average to  a relatively high level  of 105% by 2031.  Only in 
2027 would the public debt-to-GDP ratio reach its pre-crisis level at the end of 2019. In plausible 
scenario alternatives to the Commission’s baseline scenario – incorporating potential shortfalls in 
nominal  GDP growth,  interest  rate hikes, or slower fiscal  adjustment – the public debt-to-GDP 
ratio would still be forecast to remain on a downward path over the 10-year projection horizon, 
but the pace of debt reduction would be visibly impaired. The Commission’s DSA also indicates 
that there is a significant probability of the public debt ratio to be higher in 2025 than in 2020, 
according  to  a  stochastic  extension  of  the  baseline  projection.  In  the  long  term,  Portugal  is 
projected to face medium fiscal sustainability risks, according to an overall conclusion based on 
the S2 indicator10 and the Commission’s DSA. 

At  the  same  time,  there  are  mitigating  factors  for  the  risks  associated  with  Portugal’s 
public  debt  position,  notably  linked  to  the  public  debt  profile.  The  lengthening  of  debt 
maturities  in  recent  years,  relatively  stable  financing  sources  (with  a  diversified  and  large 
investors’ base), the gradual smoothening of the public debt redemption profile, the substantial 
cash buffer, and historically low borrowing  costs supported by the Eurosystem’s interventions, 
jointly contribute to mitigate the medium- and long-term risks. In addition, the implementation 
of  reforms  and  investments  under  Next  Generation  EU,  notably  the  Recovery  and  Resilience 
Facility (RRF), is expected to have a substantial positive and long-lasting impact on GDP growth 
in  the  coming  years,  which  should  contribute  to  strengthening  debt  sustainability.  However, 
some non-insignificant degree of uncertainty is related to the accumulation of public contingent 
liabilities  – on  top  of  non-negligible  pre-pandemic  levels –  stemming  from  some  state-owned 

8   The S1 indicator evaluates fiscal sustainability risks linked to the government’s capacity to bring the debt ratio to 
60%  of  GDP  over  the  medium  term.  The  definition  used  in  the  Debt  Sustainability  Monitor  2020  (European 
Commission, Institutional Paper 143, February 2021) corresponded to the required fiscal adjustment, measured 
as the cumulated adjustment of the structural primary balance over 5 years as from the year when the baseline 
structural primary balance would return to its pre-COVID crisis value (2029 in the case of Portugal), to bring the 
debt-to-GDP ratio to 60% 15 years after that year. 

9   A  progressive  unwinding  of  the  negative  impact  on  public  finances  of  the  COVID-19  crisis  is  assumed  –
 meaning that the structural primary balance is set to progressively adjust over the projection period, converging 
back to its pre-crisis forecast level (i.e. the level projected for 2021 in the Commission 2019 autumn forecast). 
For  more  information  on  the  Commission’s  fiscal  sustainability  assessment  framework  and  the  additional 
assumptions made therein, see the Debt Sustainability Monitor 2020 (European Commission, Institutional Paper 
143, February 2021). 

10   The S2 indicator evaluates fiscal sustainability risks in the long term related to the country’s capacity to meet its 
debt obligations, over an infinite horizon, with a stream of future primary surpluses. This condition requires that 
public debt stabilises over the long term (i.e. by 2070). 

7 

 
                                                           
enterprises  and  the  private  sector,  including  through  the  possible  materialisation  of  state 
guarantees granted to firms during the COVID-19 crisis. 

As regards macroeconomic imbalances, the outbreak of the COVID-19 pandemic has put a 
significant  upward  pressure  on  Portugal’s  indebtedness  in  2020.  The  ratios  of  both  public 
and  private  debt  to  GDP  increased  amid  a  further  deterioration  in  the  external  position  in  the 
context  of  a  relatively  high  share  of  non-performing  loans.  However,  the  projected  economic 
recovery  is  set  to  move  back  these  indicators  on  a  favourable  track,  as  specified  in  the 
Commission’s 2021 in-depth review for Portugal published on 2 June 2021.  

The  macroeconomic  scenario  underpinning  Portugal’s  2021  stability  programme  – which 
reflects  the  growth-enhancing  impact  of  a  successful  implementation  of  the  Portuguese 
plan – projects real GDP growth of 4% in 2021. Domestic demand is projected to be the main 
driver of the economic recovery, but external demand is also expected to contribute. Economic 
growth is projected to improve further to 4.9% in 2022, and to gradually ease afterwards to 2.2% 
in 2025, with the RRF impact on growth estimated at an annual average of about 0.7 percentage 
points  over  the  program’s  five-year  horizon.  Portugal’s  2021  stability  program,  including  the 
impact of the recovery and resilience plan, projects the unemployment rate at 7.3% in 2021 and 
6.7% in 2022, with a further improvement to 5.8% in 2025. Inflation is expected to pick up only 
moderately to 1.5% in 2025. 

The Commission forecasts a similar macroeconomic scenario for 2021 and 2022 as that of 
the  2021  stability  program.  As  regards  domestic  demand,  and  according  to  its  2021  spring 
forecast, the Commission projects stronger growth in both private consumption and investment 
in  2021,  compared  with  the  2021  stability  program.  The  Commission  projects  private 
consumption in 2022 to grow at a similar rate as in the program’s scenario, while the growth in 
investment  is  expected  to  be  slightly  lower.  As  regards  the  external  environment,  the 
Commission  forecasts  a  significantly  lower  contribution  to  growth  from  net  exports  in  2021, 
while  its  projections  are  in  line  with  the  programme’s  scenario  in  2022.  As  regards  the  labour 
market,  the  Commission  projections  envisage  more  favourable  developments,  particularly  in 
2021. Inflation projections are slightly higher in the Commission forecast in both years. 

The 2021 stability programme foresees the improvement of Portugal’s fiscal position in the 
period 2021-2025. For 2021, the government plans an improvement of the general government 
deficit to 4.5% of GDP from 5.7% of GDP in 2020, while the debt ratio is planned to decrease to 
128%  of  GDP.  According  to  the  program,  the  deterioration  of  the  primary  budget  balance  in 
2021  compared  with  the  pre-crisis  level  (2019)  is  set  to  amount  to  5%  of  GDP,  reflecting 
discretionary  budgetary  measures  of  about  3%  of  GDP  in  support  of  the  economy  and  the 
operation  of  automatic  stabilisers.  For  2022,  the  government  plans  a  further  decline  of  the 
general government deficit to 3.2% of GDP – mainly due to the phasing-out of fiscal support and 
the expected economic rebound –, while the general government debt ratio is planned to decrease 
to  123%  of  GDP.  These  program’s  budgetary  plans  for  2021  and  2022  are  in  line  with  the 
Commission  2021  spring  forecast.  According  to  the  program’s  medium-term  budgetary  plans, 
the  general  government  deficit  is  planned  to  decrease  from  2.2%  of  GDP  in  2023,  to  1.1%  of 
GDP in 2025. The general government deficit is thus planned to no longer exceed 3% of GDP in 

8 

 
2023. The general government debt ratio is planned to decrease from 120.7% of GDP in 2023 to 
114.3% of GDP in 2025. 

Table 1: Comparison of macroeconomic and budgetary developments and forecasts 

The macroeconomic and fiscal outlook continue to be affected by high uncertainty related 
to  the  COVID-19  pandemic  and  its  economic  consequences.  Overall,  the  macroeconomic 
scenario presented in the Portuguese plan and underpinning the budgetary projections for 2021 
and  2022  in  the  2021  stability  programme  is  realistic,  based  on  plausible  macroeconomic 
assumptions compared to the Commission 2021 spring forecast. 

2.2. Challenges  related  to  sustainable  growth,  cohesion,  resilience  and  policies  for  the 

next generation 

Smart, sustainable and inclusive growth  

The COVID-19 pandemic heavily affected the Portuguese economy and aggravated its pre-
existing  challenges  and  vulnerabilities,  reversing  relevant  parts  of  the  positive  socio-
economic  trends  observed  over  recent  years.  Before  the  COVID-19  outbreak,  the  economy 
was  growing  at  a  higher  rate  than  the  EU  average,  catching  up  from  the  lows  reached  at  the 
beginning of the past decade. Since the COVID-19 outbreak, however, unemployment has risen, 
particularly  affecting  the  youth,  reversing  the  favourable  developments  of  the  pre-pandemic 
period.  Productivity  has  also  been  impacted,  as  has  the  level  of  investment,  which  in  the  pre-
pandemic period was already relatively low in Portugal, compared with the EU average. 

The  COVID-19  pandemic  strongly  affected  the  Portuguese  labour  market,  with  young 
people  bearing  the  brunt  of  job  destruction,  but  swift  government  support  prevented  a 
more severe disruption. The employment rate decreased from 76.1% in 2019 to 74.7% in 2020. 
The authorities swiftly implemented short-time work schemes and ancillary measures, the most 
important of which was a tailor-made scheme allowing for the temporary interruption of work or 
reduction  of  normal  working  time,  in  combination  with  an  exemption  from  employers’  social 
security contributions, commonly designated as ‘simplified lay-off’ in Portugal. This prevented 
the unemployment rate from rising more sharply (6.5% at the end of 2019 compared to 6.9% at 
the  end  of  2020).  Youth  employment  (15-24  years)  experienced  the  most  noticeable  fall, 
dropping  from  28%  in  2019  to  23.4%  in  2020,  while  the  youth  unemployment  rate  rose 
significantly from 18.3% in 2019 to 22.6% in 2020. The share of temporary contracts dropped to 
17.4%  in  2020  (from  20.3%  in  2019),  representing  a  reduction  of  about  126 000  jobs  (mostly 

9 

202320242025COMRRP/SPCOMRRP/SPCOMRRP/SPCOMRRP/SPRRP/SPRRP/SPRRP/SPReal GDP (% change)2.22.2-7.6-7.63.94.05.14.92.82.42.2HICP inflation (%)1.21.2-0.1-0.10.90.81.10.91.11.31.5Employment (% change)0.80.8-1.7-1.71.00.21.21.10.80.80.8Unemployment rate (%)6.56.56.96.86.87.36.56.76.46.05.8GG net lending (% of GDP)0.10.1-5.7-5.7-4.7-4.5-3.4-3.2-2.2-1.6-1.1Government debt (% of GDP)116.8116.8133.6133.6127.2128.0122.3123.0120.7117.1114.3The Commission 2021 spring forecast and the 2021 stablity programme of Portugal include the projected impact of RRF201920202021Note:2022 
 
related  to  the  tourism  sector  and  affecting  mostly  youth),  which  was  not  compensated  by  the 
creation of permanent jobs. 

Productivity  growth,  which  mildly  recovered  in  2019,  significantly  deteriorated  in  2020. 
Starting  from  a  traditionally  low  base,  productivity  growth  in  2020  returned  from  its  feebly 
positive  trend  to  a  significantly  negative  one  on  the  back  of  the  COVID-19  pandemic  (labour 
productivity per person contracted by 13.2% y-o-y in Q2-2020, 3% y-o-y in Q3-2020, and 5.7% 
y-o-y  in  Q4-2020).  Productivity  growth  in  Portugal  has  remained  sluggish,  held  back,  among 
other  factors,  by  the  low  levels  of  capital  per  worker,  relatively  low  levels  of  investment 
(particularly in intangibles), moderate innovation capacity, and the overall low skills level of the 
population.  Other  factors  related  to  the  business  environment  may  have  also  hampered 
productivity  growth,  such  as  the  large  share  of  micro  and  under-capitalised  firms11,  an 
underdeveloped  capital  market,  inefficiencies  in  the  justice  system,  and  regulatory  restrictions 
weighing on competition (notably in professional business services). In 2020, the number of new 
firms  registrations  fell  by  11%  compared  to  2019,  and  new  business  registrations  remained 
subdued in Q1-2021, with possible further unfavourable effects on investment and productivity. 
Transportation  bottlenecks,  mainly  on  ports  and  railways  – where  interoperability  with  Spain 
remains limited – also act as significant deterrents to productivity growth in Portugal. 

Although  net  total  investment  turned  positive  in  2019  for  the  first  time  since  2011,  a 
sizeable  investment  gap  has  built  up  over  the  pre-pandemic  period.  After  sustaining 
investment  levels  that  were  above  the  EU  average  over  the  decade  2001-2010,  the  subsequent 
decade  2011-2020  was  marked  by  structurally  low  investment  in  Portugal  (at  an  average  of 
16.7% of GDP, compared with  the EU average of 20.7% of GDP over the period 2011-2020). 
Against  that  background,  the  total  investment  observed  in  Portugal  was  lower  than  the 
consumption  of  fixed  capital  over  the  period  2012-2018,  with  net  total  investment  becoming 
mildly positive only in 2019. In detail, the private investment-to-GDP ratio was on an increasing 
path since its trough in 2013, and net private investment became positive as of 2017. However, 
the public investment-to-GDP ratio was visibly reduced during the economic and financial crisis, 
and  it  remained  particularly  subdued  throughout  the  post-programme  period  (at  an  average  of 
1.9%  of  GDP  over  2015-2020,  compared  with  the  EU  average  of  3%  of  GDP).  While  this 
correction of public investment from the high earlier levels may have reflected a stronger focus 
on  high-quality  projects,  such  a  protracted  period  of  continuously  subdued  public  investment 
opened  a  sizeable  investment  gap  vis-à-vis  the  EU  benchmark.  Importantly,  decade-long 
negative net public investment may have contributed to the gradual erosion of the public capital 
stock.  In  2020,  private  investment  growth  was  halted  by  the  COVID-19  crisis  and,  in  spite  of 
public investment growth accelerating to a double-digit rate, it was not sufficient to fully offset 
the  former’s  fall.  Therefore,  there  is  scope  for  targeted  public  investment  that  would  fuel 

11   Bauer, P., Fedotenkov, I., Genty, A., Hallak, I., Harasztosi, P., Martinez Turegano, D., Nguyen, D., Preziosi, N., 
Rincon-Aznar,  A.  and  Sanchez  Martinez,  M.,  Productivity  in  Europe:  Trends  and  drivers  in  a  service-based 
economy , EUR 30076 EN, Publications Office  of the  European Union, Luxembourg, 2020, ISBN 978-92-76-
10610-4, doi:10.2760/469079, JRC119785. 

10 

 
                                                           
productivity growth through improved human capital and technological innovation, and generate 
a crowding-in effect by providing relevant infrastructure for additional private investment. 

Notwithstanding a slight increase in Portugal’s R&D intensity in recent years, R&D levels 
have  remained  low.  R&D  intensity  – that  is,  expenditure  on  research  and  development –  has 
been traditionally low in Portugal. The convergence process towards the EU average during the 
period 2003-2009 came to a halt during the financial crisis, after which R&D intensity bottomed 
at 1.24% of GDP in 2015. Since then, R&D intensity recovered only moderately to 1.4% of GDP 
in 2019 (0.74% of GDP in the business enterprise sector, 0.57% of GDP in the higher education 
sector and 0.07% of GDP in the government sector). The relatively low levels of R&D intensity, 
in combination with the modest cooperation between academia and businesses (Portugal ranked 
25th in the EU in terms of ‘public-private scientific co-publications’ in 2019 and 20th in terms of 
‘public expenditure on R&D financed by business enterprise (national) as a percentage of GDP’ 
in 2018) and the limited monitoring and coordination of the smart specialisation agenda12, jointly 
hamper the potential upgrade of the Portuguese R&I system. 

Social and territorial cohesion  

The  socio-economic  consequences  of  the  pandemic  are  unevenly  distributed  across 
Portuguese  regions,  and  their  different  economic  specialisations.  Regions  where  economic 
activity is oriented towards the commercial and hospitality sectors are more affected, largely due 
to the immense shock in the latter sector, which in 2019 accounted for 8.7% of GDP. Regions 
most affected include the Algarve, the major urban centres, and the outermost regions of Madeira 
and  the  Azores.  Regions  with  a  higher  concentration  of  industrial  activity,  such  as  Portugal’s 
northern  region,  have  suffered  the  consequences  of  restrictions  in  the  exporting  sectors,  but 
showed more resilience  in  economic activity with the reopening of the sector during Q3-2020. 
The  distribution  of  opportunities  is  concentrated  within  urban  and  coastal  regions,  which  are 
wealthier than their rural and interior counterparts. Another challenge lies in the depopulation of 
rural  areas, some of which are projected to  lose  population  at  a rate above 1% a  year between 
2015 and 2025. Specific challenges  concern the  outermost regions  of Madeira and the Azores, 
such as high transport and communication costs, as well  as their dependence on few economic 
activities. 

The  effects  of  the  COVID-19  crisis  and  the  pre-pandemic  trend  of  rising  house  prices, 
combined with the low supply of affordable and social housing, could revert recent positive 
developments in the reduction of poverty and social exclusion. The ability of social transfers 
to reduce poverty remained limited over the past ten years and in 2019 stood at 24.2%, compared 
with the EU average of 32.4%. Monetary poverty – that is, people at risk of poverty after social 
transfers –  was  also  slightly  above  the  EU  average  in  2019  (at  17.2%,  compared  with  the  EU 
average  of  16.5%),  while  in-work  poverty  increased  from  9.7%  in  2018  to  10.8%  in  2019 
(compared  with  the  EU  average  of  9%  in  the  latter  year),  as  did  the  share  of  people  living  in 

12   Laranja, M., Edwards, J., Pinto, H. and Foray, D., Implementation of Smart Specialisation Strategies in Portugal: 
An assessment, EUR 30287 EN, Publications Office of the European Union, Luxembourg, 2020, ISBN 978-92-
76-20400-8, doi:10.2760/363370, JRC121189 

11 

 
                                                           
households  with  poor  housing  conditions.  The  risk  of  poverty  is  highest  in  the  Autonomous 
Regions,  with  36.7%  at  risk  of  poverty  in  the  Azores  and  32.2%  in  Madeira,  compared  with 
17.8% in the Lisbon region in 2019. While the burden of housing costs in general fell between 
2013  and  2019,  it  increased  for  poor  households.  Over  the  same  period,  the  severe  housing 
deprivation  rate  remained  above  the  EU  average  (affecting  about  26 000  families,  mostly  in 
metropolitan  areas  and  the  outermost  regions).  The  share  of  poor  households  overburdened  by 
housing  costs  increased  to  22.8%  in  2019,  about  ten  times  the  corresponding  share  for  other 
households (2.2%). The situation is likely to worsen with the increase of the house price index in 
2020,  which  in  Portugal  (at  153.4)  was  well  above  the  EU  average  (at  126.7).  Portugal  is 
characterised  by  relatively  weak  public  investment  in  social  and  affordable  housing,  with  the 
public housing supply accounting for only around 2% of the total (below the 5% EU average). 

Health, and economic, social and institutional resilience  

At  the  outset  of  the  COVID-19  pandemic,  the  National  Health  Service  had  already  been 
facing a challenging situation for years. In 2018, the number of hospital beds in Portugal (3.4 
per  1 000  inhabitants)  was  low  compared  with  the  EU  average  (5  per  1 000  inhabitants).  The 
distribution of health resources (facilities and health professionals) was unequal and sub-optimal, 
and there were shortages in specific areas (of nurses in general and of specialists in rural areas). 
Pre-pandemic  challenges existed in  access  to  health care and, in  2018, out-of-pocket  payments 
for  health  care  as  a  share  of  total  health  expenditure  in  Portugal  (29.5%)  were  amongst  the 
highest  in  the  EU  (with  an  average  of  21.7%).  At  the  same  time,  expenditure  in  the  National 
Health  Service  had  been  accelerating  since  2015  (driven  by  costs  of  wages,  medicines  and 
medical  devices),  which  was  exerting  pressure  on  hospitals’  initial  budgets.  The  latter  proved 
systematically  to  be  insufficient,  also  partly  owing  to  weaknesses  in  planning,  costing  and 
management control As a result, public hospitals had accumulated a sizeable stock of arrears that 
reached a peak of 0.5% of GDP in November 2017, before starting to moderate on the back of 
‘ad-hoc’ clearance measures by the government. The emerging track record of recurrent bailouts 
by the government – which had nevertheless not fully succeeded in avoiding a systematic vicious 
cycle of hospitals’ indebtedness – also triggered knock-on effects on supply-chain relationships. 

The planned reforms to strengthen the efficiency and sustainability of the National Health 
Service  came  to  a  temporary  halt  in  view  of  the  COVID-19  pandemic.  The  design  of  a 
comprehensive plan to improve the sustainability of the National Health Service and tackle the 
root-causes  of  arrears  in  public  hospitals  got  under  way  in  2019,  following  up  on  the 
recommendations  of  a  temporary  task  force.  However,  the  COVID-19  crisis  interrupted  its 
implementation. The plan was expected to introduce an enhanced governance model for public 
hospitals,  with  a  view  to  granting  them  greater  autonomy  in  terms  of  investment  and  hiring 
decisions,  in  combination  with  enhanced  monitoring  and  stronger  accountability.  This  strategy 
crucially  hinged  upon  making  best  use  of  the  planning  and  management  tools  foreseen  in  the 
current  legal  framework.  This  includes  revamping  management  contracts  to  strengthen 
performance-based  practices,  and  ensuring  the  wide-spread  approval  of  hospitals’  budget  and 
activity  plans  based  on  compliance  with  quantitative  and  qualitative  targets  that  would  foster 
sustainability. 

12 

 
The  COVID-19  outbreak  coincided  with  a  decrease  in  hospital  procedures  and  added  to 
pre-pandemic  challenges.  In  2020,  there  was  a  sharp  reduction  in  hospital  procedures,  which 
reflected  the  need  to  channel  resources  to  fight  the  COVID-19  pandemic  and  patients’  fear  of 
contracting  the  virus  while  at  the  hospital.  As  many  hospital  procedures  unrelated  to  the 
pandemic were postponed, further pressure has accumulated on the already existing backlogs and 
waiting lists. In particular, in view of the considerable reduction in consultations and diagnosis 
testing in public hospitals during the confinement periods, there is a risk of an increased number 
of  undetected  serious  medical  conditions,  with  possible  long-term  implications.  Furthermore, 
Portugal’s  adverse  demographic  trends  – namely,  accelerated  population  ageing  and  related 
increasing  demand  for  health  care –  coincide  with  changing  disease  patterns,  an  increasing 
burden of chronic and degenerative diseases as well as multi-morbidity gradually becoming more 
prominent.  The  current  and  evolving  health  care  needs  and  associated  increasing  costs  pose 
challenges to the responsiveness, sustainability and resilience of the National Health Service. 

The  COVID-19  crisis  has  exposed  the  fragility  of  the  long-term  care  system  in  Portugal. 
Despite  improvements  in  institutional  long-term  care  in  the  last  decade,  access  rates  are 
low  in  all  regions  of  the  country.  The  long-term  care  system  in  Portugal  is  expected  to  face 
increasing pressure in the coming years, especially due to demographic ageing, which will likely 
translate  into  higher  demand  for  long-term  care  services.  The  share  of  potentially  dependent 
persons in the total population is deemed to increase from 8.3% in 2016 to 9.7% in 2030, and to 
11.3% in  2050. Portugal has been identified as one of the EU Member States with  the highest 
share of out-of-pocket funding for long-term care. Portugal has a high deficit of long-term care 
workers, with only 0.8 workers per 100 people aged 65+, compared with 3.8 on average across 
25 Member States. In 2016, 95.8% of formal long-term care workers in Portugal were women, 
compared  with  90.8%  in  the  EU-27.  According  to  OECD  data,  nearly  two  out  of  three  (64%) 
long-term care workers in Portugal are low-educated, which compares with an average of 15% in 
20 other  OECD countries. A recent reform  approving the status  of care  workers in  Portugal  is 
helping  to  reduce  the  very  high  rate  of  informal  caregivers,  and  to  formalise  employment  and 
skills  levels.  Social  services  should  also  be  reinforced  further  through  the  recently  approved 
National Disability Strategy to accompany the transition towards a model of independent living 
and deinstitutionalisation. 

A stronger budgetary framework would improve conditions for the economic recovery.  In 
particular,  efficiency-oriented  spending  reviews  and  the  effective  implementation  of  the  2015 
Budgetary  Framework  Law  remain  of  central  importance  to  improve  the  quality  of  public 
finances and make them more growth-friendly. First, this would help to strengthen the medium-
term focus of budgetary planning, increasing efficiency when allocating resources to new policy 
priorities,  and  placing  a  greater  focus  on  growth-friendly  spending  that  would  support  the 
economic recovery. Second, the 2015 Budgetary Framework Law would introduce the principle 
of  ‘programme  budgeting’,  making  budget  units  more  accountable  and  the  overall  budgetary 
planning and monitoring more performance-oriented. Third, its multiannual focus would enhance 
overall  transparency  and  accuracy,  making  budgetary  planning  more  stable  and  predictable, 
thereby  supporting  confidence  levels  among  economic  agents.  However,  the  effective 
implementation of the 2015 Budgetary Framework Law has been subject to systematic delays. Its 

13 

 
implementation should come hand in hand with a significant upgrade of the information systems 
for public financial management, as well as full adherence to the new accrual-based accounting 
system (that is, the ‘Sistema de Normalização Contabilística para as Administrações Públicas’, 
SNC-AP).  These  are  expected  to  take  effect  gradually  across  government  sectors  and  bodies. 
Furthermore,  pre-pandemic  vulnerabilities  related  to  the  financial  sustainability  of  state-owned 
enterprises constitute a downside risk for Portugal’s budgetary outlook, further constraining the 
available room of manoeuvre for fiscal policy in view of the country’s high public debt-to-GDP 
ratio. These vulnerabilities were heightened on the back of the COVID-19 crisis, notably for the 
state-owned enterprises that were more vulnerable to the direct consequences of the containment 
measures, such as those operating in the transport sector. 

The efficiency of the justice system remains a major challenge for the Portuguese economy. 
Despite  some  improvements,  Portugal  rates  among  the  Members  States  with  the  lengthiest 
judicial proceedings (notably for administrative and tax justice, with disposition times above 800 
days in the first instance13), and with one of the highest backlogs of pending cases14. Reforms to 
the  legal  and  institutional  framework  for  insolvency  and  debt  enforcement,  as  well  as  the 
stabilisation  in  the  number  of  incoming  cases,  brought  some  improvements  regarding  the 
efficiency  of  insolvency  and  civil  enforcement  proceedings.  However,  a  potential  increase  in 
bankruptcies resulting from the COVID-19 pandemic may lead to a surge in litigation cases that 
could  exacerbate  the  existing  bottlenecks,  namely  the  high  backlog  of  older  cases.  While 
Portugal  adopted  measures  to  ensure  the  functioning  of  the  justice  system  remotely,  the 
suspension of deadlines in non-urgent cases and the adjournment of non-urgent acts may further 
affect the future efficiency of the system. 

Policies for the next generation, children and youth, including education and skills.  

The COVID-19 crisis exposed further the need to invest in education and training systems 
and policies to upskill a population with low levels of educational attainment. Despite some 
improvement  over  the  past  years,  the  share  of  individuals  with  low  educational  attainment 
(44.5% in 2020) and a population lacking basic digital skills (48% in 2019) remain above the EU 
average  (25%  and  44%,  respectively).  Investments  in  skills,  based  on  a  strong  skill  needs 
analysis,  carried  out  with  relevant  stakeholders  (social  partners,  higher  education  and  training 
institutions),  would  help  improve  the  qualification  levels  of  the  active  population  and  reduce 
socio-economic 
technology,  engineering  and 
mathematics  (STEM)  remains  relevant,  and  despite  higher  enrolment  in  information  and 
communications  technology  (ICT)  and  STEM,  graduate  numbers  remain  low.  In  terms  of 
infrastructure,  there  is  a  persistent  lack  of  available  places  in  public  pre-primary  schools, 
particularly  in  large  metropolitan  areas  and  a  shortage  of  affordable  university  student 
accommodations. A National Plan for Accommodation in Higher Education, launched in 2019, 
aims to  double the current  offer in  the coming  years. Remote schooling  during the COVID-19 
pandemic  posed  significant  challenges  for  disadvantaged  students  and  prompted  Portugal  to 

inequalities.  The  gender  gap 

in  science, 

13 Figures 9 and 10, 2021 EU Justice Scoreboard (forthcoming). 
14 Figure 16, 2021 EU Justice Scoreboard (forthcoming). 

14 

 
                                                           
invest  significantly  in  a  national  digitalisation  programme  to  acquire  digital  equipment  for  all 
primary  and  secondary  students,  and  provide  digital  training  for  teachers.  National  as  well  as 
European  structural  and  investment  funds  were  mobilised  to  this  end  too,  including  the 
Coronavirus Response Investment Initiative Plus (CRII+). 

2.3. Challenges related to the green and digital transition 

Green dimension 

The recovery and resilience plan should contribute to the green transition and at least 37% 
of the financial allocation needs to contribute to climate objectives. The measures in the plan 
are  expected  to  contribute  to  achieving  the  2050  climate  neutrality  objective,  and  the  2030 
energy  and  climate  targets,  taking  into  account  Member  States’  national  energy  and  climate 
plans. They should also contribute to meeting environmental targets for waste, water, pollution 
control, sustainable mobility, biodiversity protection and restoration, marine and water resources, 
and  support  the  transition  to  sustainable  food  systems  as  well  as  to  a  circular  economy  as 
appropriate, while ensuring that nobody is left behind. 

Despite  the  progress  Portugal  made  in  recent  years,  challenges  remain  in  water 
management.  This  applies  principally  to  water  governance  and  water  body  rehabilitation. 
Further infrastructure investments are needed to improve water management, such as wastewater 
collection and treatment, reduction of leaks in the networks and general water supply, as well as 
nature  based  solutions  and  river  restoration.  Moreover,  Portugal  should  take  advantage  of  the 
potential of water reuse. 

Alongside  water  management,  forest  fire  prevention  is  the  second  critical  aspect  in  a 
context of increased risk of desertification and climate change vulnerability. Forests cover 
more  than  half  of  the  Portuguese  territory,  of  which  92%  are  privately  owned,  6%  by  local 
authorities  and  only  2%  by  the  State.  Desertification,  depopulation  of  rural  areas  as  well  as 
fragmentation  of  land  ownership,  obstruct  sustainable  land  management,  with  an  impact  on 
biodiversity preservation and on the prevention of forest fires.  

Portugal  is  far  below  the  EU  average  on  circular  economy  and  waste  management 
indicators. With  a rate of 29% in  2019, Portugal  is  missing the EU target  of recycling half of 
municipal waste by 2020. The EU has set even more ambitious targets for the next decade. There 
are also big differences across regions. Therefore, further efforts are needed in this area. 

The  emission  of  several  air  pollutants  has  decreased  in  recent  decades  in  Portugal. 
However, air quality remains a concern, mainly related to nitrogen dioxide (NO2). In particular, 
personal  transport  exacerbates  problems  with  air  quality  and  traffic  congestion  in  the  major 
metropolitan areas of Lisbon, Porto and Braga, leading to health and economic costs. 

Portugal boasts a rich biodiversity. Around 20% of the Portuguese territory belongs to the EU 
Natura 2000 network (EU average is 18%). However, a scientific assessment of Natura 2000 in 
Portugal  concluded  that  some  species  and  habitats,  particularly  in  the  marine  environment,  are 
not  sufficiently  protected.  Therefore,  Portugal  should  extend  its  Natura  2000  network  with 

15 

 
additional  designations,  and  provide  for  the  necessary  management  measures  and  resources  in 
the sites already designated. 

Anticipating the adverse effects of climate change, such as floods, coastal erosion, droughts, 
heat waves and forest fires, remains a core challenge in Portugal. These natural hazards are 
expected to become more frequent and extreme due to climate change and decreased ecological 
resilience  caused  by  the  loss  of  biodiversity,  exploitation  of  natural  resources,  or  pollution. 
Therefore,  measures  and  investments  in  risk  prevention  and  preparedness,  climate  change 
adaptation  and  nature-based  solutions  are  necessary  to  achieve  sustainable  growth.  Access  to 
innovation,  including  technological  solutions,  are  key  for  a  positive  transition  towards  the 
optimal  environmental  performance  of  businesses  in  rural  areas,  which  accounted  for  79%  of 
land in Portugal in 2016, compared to 45% for the EU-27. 

Portugal  is  not  making  use  of  green  budgeting  practices,  which  could  help  deliver  on 
national and international commitments for climate change and environmental protection. 
Evaluating the environmental impact of fiscal policies and assessing their coherence with central 
objectives could help make government more accountable, and hence improve compliance with 
environmental  and  climate  goals.  Revamping  the  spending  review  process  would  offer  an 
opportunity  for  Portugal  to  scrutinise  spending  allocations  with  respect  to  these  priorities,  in 
order to generate further efficiency gains that could be channelled towards them. 

Greenhouse Gas (GHG) Emissions 

Portugal’s targets under the Effort Sharing Regulation (ESR) are 17% emissions reduction 
by  2030  compared  to  2005.  In  addition,  Portugal  targets  reductions  of  85-90%  by  2050 
compared  to  2005,  according  to  its  2050  roadmap  for  carbon  neutrality.  By  continuing  current 
policies, Portugal is expected to meet its ESR 2030 target with a large margin of 23%. As part of 
its carbon neutrality objective by 2050, Portugal plans a total GHG emission reduction compared 
to  2005  of  45%  to  55%  by  2030  and  65%  to  75%  by  2040.  However,  these  national  targets 
exclude the land use, land-use change and forestry (LULUCF) sector. 

The  National  Energy  and  Climate  Plan  (NECP)  provides  a  broad  overview  of  measures. 
However,  these  are  not  always  well  defined  and  there  is  potential  to  reinforce  policies  and 
measures  addressing  emissions  reductions  in  the  building  sector  and  in  the  transport  sector  to 
achieve  significant  GHG  emission  reductions.  The  NECP  describes  the  national  adaptation 
strategy adopted in 2019 for the period 2020-2030. It includes objectives towards climate change 
adaptation, the current policy framework and an action programme. Among the objectives, there 
are  improved  water  management,  risk  prevention  and  preparedness  to  anticipate  the  adverse 
effects  of climate change. The regional dimension of risk assessment and governance could  be 
strengthened.15

15   For  a  complete  assessment,  see  Economidou,  M.,  Ringel,  M.,  Valentova,  M.,  Zancanella,  P.,  Tsemekidi-
Tzeiranaki, S., Zangheri, P., Paci, D., Serrenho, T., Palermo, V., Bertoldi, P., 2020, National Energy and Climate 
Plans for 2021-2030 under the EU Energy Union: Assessment of the Energy Efficiency Dimension, EUR 30487 

16 

 
 
                                                           
 
Renewable share 

Portugal has the 7th highest share of renewables in energy consumption in the EU. The share 
of renewable resources in final energy consumption increased from 19.5% in 2005 to 30.6% in 
2019. Portugal aims to contribute to the EU’s 2030 target for renewable energy by reaching 47% 
of renewable energy. This contribution is above the 42% share calculated using the formula in 
Annex  II  to  Regulation  (EU)  2018/1999  on  the  Governance  of  the  Energy  Union  and  Climate 
Action  (the  ‘Governance  Regulation’),  setting  out  the  national  contributions  for  the  share  of 
energy from renewable sources. However, to achieve this contribution, Portugal will need to add 
additional  policies  and  measures,  in  particular  to  also  respond  to  the  high  ambition  for 
deployment  of  renewable  hydrogen.  While  increasing  the  share  of  renewable  energy  sources. 
Portugal  needs  to  fully  take  into  account  the  impacts  from  combustible  renewable  fuels  on  air 
quality. 

Energy  supply  needs  to  be  diversified  and  transmission  and  distribution  grids  should  be 
reinforced.  For  instance,  the  full  potential  of  offshore  wind  and  ocean  energy  needs  to  be 
exploited,  as  well  as  of  decentralised  solar  photo-voltaic  (PV)  in  cities.  The  repowering  of 
existing  wind  parks  should  also  be  on  the  agenda.  Similarly,  the  sustainable  use  of  forestry 
biomass could contribute towards creating more value in the forestry sector. The integration of 
renewable  energy  generation  requires  the  expansion,  reinforcement  and  digitalisation  of 
transmission  and  distribution  grids  in  the  national  territory,  with  Spain  and  (onwards)  France. 
Adequate  interconnections  are  essential  for  the  security  of  supply,  upholding  demand  for 
renewable  domestic  production  during  supply  surpluses  periods,  and  creating  conditions  for 
competitive and stable electricity prices. 

Portugal presents unique conditions to develop a renewable hydrogen economy. Favourable 
conditions  include  the  existence  of  a  modern  natural  gas  infrastructure,  very  competitive 
renewable  electricity  production  prices  and  a  strategic  geographical  location  that  facilitates 
exports, notably the deep sea water port of Sines. Investment needs in hydrogen-related projects 
are estimated at up to EUR 7 billion and could trigger a reduction of natural gas imports by 2030. 

Energy efficiency 

Portugal’s energy efficiency contribution  to  the EU target is  to be 35% more efficient by 
2030  in  terms  of  primary  energy  intensity  compared  to  2005.  This  translates  into  a 
contribution of 25.5 million tonnes of oil equivalent (Mtoe) for primary energy consumption and 
14.9 Mtoe  for  final  energy  consumption.  The  subsequent  energy  efficiency  contributions  are 
considered to be modestly ambitious, both in terms of primary and final energy consumption. 

The  renovation  of  buildings  is  not  picking  up  in  Portugal.  For  public  buildings,  it  remains 
hampered  by  tight  public  procurement  rules.  For  private  buildings,  there  is  little  demand  for 
renovation.  More  pro-active  and  well-designed  building  renovation  programmes  are  needed  to 
promote  energy  efficiency  renovations,  reduce  energy  poverty,  and  improve  indoor  thermal 

EN,  Publications  Office  of  the  European  Union,  Luxembourg,  2020,  978-92-76-27013-3,  doi:10.2760/678371, 
JRC122862 

17 

 
                                                                                                                                                                                           
comfort, as well as quality and affordability of housing16. Specifically in the residential sector of 
Portugal, it is estimated that for an annual average renovation rate of 2.6% over the period 2021-
2050,  the  primary  energy  saving  potential  is  17.5  TWh,  by  2050.  The  employment  impact 
associated to this renovation scenario indicates the generation of more than 2.5 million full time 
equivalent  jobs  over  the  considered  period.17  The  national  Long-term  Renovation  Strategy 
quantifies that the investment needed for the full transformation of the Portuguese building stock 
is EUR 143 billion until 2050 (EUR 4.95 billion per year). 

To achieve the energy efficiency and renewable objectives, it is also important for Portugal 
to promote other energy investments and reforms. This includes the reinforcement of energy 
transmission  grid, 
cross-border 
smarting/modernisation  of  electricity  distribution  grids,  electrification  of  transport,  and 
regulatory reforms for the complete integration in the internal energy market. 

interconnections, 

coverage  of 

improving 

the 

the 

The  table  below  gives  an  overview  of  Portugal’s  objectives,  targets  and  contributions  under 
Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 
on the Governance of the Energy Union and Climate Action. 

16   For the assessments of Portuguese past building renovation strategies see: Castellazzi L, Zangheri P and Paci D. 
Synthesis Report on the assessment of Member States` building renovation strategies . EUR 27722. Luxembourg 
(Luxembourg):  Publications  Office  of  the  European  Union;  2016.  JRC97754;  and  Castellazzi  L.  et  al., 
Assessment of second long-term renovation strategies under the  Energy Efficiency  Directive, EUR 29605 EN, 
Publications Office of the European Union, Luxembourg, 2019, ISBN 978-92-79-98727-4, doi:10.2760/973672, 
JRC114200. 

17   Zangheri,  P.,  Armani,  R.,  Kakoulaki,  G.,  Bavetta,  M.,  Martirano,  G.,  Pignatelli,  F.,  Baranzelli,  C.  Building 
energy  renovation  for  decarbonisation  and  Covid-19  recovery.  A  snapshot  at  regional  level,  EUR  30433  EN, 
Publications Office of the European Union, Luxembourg, 2020, ISBN 978-92-76-24766-1, doi:10.2760/08629, 
JRC122143. 

18 

 
                                                           
Table 2: Overview of Portugal's energy and climate objectives, targets and contributions 

National targets and contributions 

Binding  target  for  greenhouse  gas 
emissions  compared  to  2005  under 
the Effort Sharing Regulation (%) 

National target/contribution for 

renewable  energy:  Share  of  energy 
from renewable sources in gross final 
consumption of energy (%) 

Latest 
available 
data 

2020 

2030 

-16% 

1% 

-17% 

30.3% 

31% 

47% 

Assessment of 
2030 ambition 
level 

As in ESR, total 
GHG target 
implies higher 
reductions 

Sufficiently 
Ambitious 

(42%  is  the  result  of 
RES formula) 

National contribution for energy efficiency: 

Primary 
(Mtoe) 

energy 

consumption 

Final energy consumption (Mtoe) 

22.6 

(2018) 

16.9 

(2018) 

22.5 

21.5  Modest 

17.4 

14.9  Modest 

Level  of  electricity  interconnectivity 
(%) 

8% 

10% 

15%  N/A 

Source: Assessment of the final national energy and climate plan of Portugal, SWD (2020) 921 final. 

Digital dimension  

The  recovery  and  resilience  plan  should  contribute  to  the  digital  transformation  with  at 
least 20% of the financial allocation dedicated to the digital objective. The measures in the 
plan  should,  among  other  objectives,  support  the  digital  transformation  of  the  economic  and 
social  sectors  (including  public  administration,  public  services,  and  the  justice  and  health 
systems).  The  objective  of  the  plan’s  measures  should  be  to  improve  above  all  the  resilience, 
agility  and  security  of  companies  and  public  sector  actors,  alongside  competitiveness  and 
inclusiveness. 

Portugal ranks 19th amongst EU countries in the Commission’s 2020 Digital Economy and 
Society Index (DESI).18 In March 2020, Portugal approved the action plan ‘Portugal Digital’ to 
accelerate  its  digital  transformation  around  three  pillars:  (i)  training  and  digital  inclusion;  (ii) 
digital transformation of businesses; and, (iii) digitalisation of public administration. 

Portugal  faces  various  challenges  in  the  digital  area:  investing  in  the  digital  transition, 
particularly  in  the  development  of  digital  skills,  both  basic  and  advanced,  in  the  use  of  digital 

18   DESI 2020 ranking refers to 2019 figures and includes the United Kingdom. Excluding the United Kingdom, Portugal would 

rank 18th out of 27 Member States. 

19 

 
 
 
 
 
 
 
 
                                                           
technologies  to  ensure  equal  access  to  quality  education  and  training,  and  to  boost  firms’ 
competitiveness. This is especially relevant in Portugal, where the economy is characterised by 
micro-enterprises concentrated in traditional sectors. 

Other challenges in the field of connectivity concern reducing the connectivity disparities 
between urban and rural areas, allocating 5G spectrum, replacing the submarine cables to 
outermost regions, and the digitalisation of firms’ licensing process. Portugal’s priority is to 
replace  the  Atlantic  submarine  cable  ring  linking  the  mainland  with  Madeira  and  the  Azores 
(CAM submarine cables), which is reaching the end of its life-cycle. Portugal is also interested in 
linking  Lisbon to  Marseille through a new submarine cable.  New submarine cables connecting 
Portugal  with  other  Member  States  would  boost  the  resilience  of  the  EU’s  connectivity  grid, 
together  with  submarine  cables  to  other  continents  (e.g.  South  America  and  Africa),  taking 
advantage of Portugal’s geographical location in Europe. The recently inaugurated transatlantic 
cable,  supported  by  the  EU  through  the  BELLA  programme,  linking  Sines  in  Portugal  to 
Fortaleza  in  Brazil,  will  enable  the  first  direct,  high-capacity  data  connection  between  the  two 
continents to support research and education data exchange and represents a significant step in 
achieving this objective.19 A challenge to network deployment in Portugal is the fragmentation of 
the authorisation rules, necessary to access the infrastructure at municipal level, and the lack of 
coordination between them.  Regarding European projects  of common interest  that complement 
and connect Member States’ infrastructures, Portugal proposes two projects that are important to 
both Portugal and the EU: Lisbon-Madeira-Azores-Lisbon and Lisbon-Barcelona-Marseille. 

In  connectivity,  Portugal’s  results  are  above  average  in  the  deployment  of  very-high 
capacity  networks  and  the  take-up  of  broadband  connections  of  at  least  100 Mbps. 
Additional effort is still needed to ensure very high-capacity network coverage and that mobile 
broadband take-up reaches all households, including those in rural areas. Prices in Portugal are 
higher than the EU average. The successful rollout of 5G will depend on the implementation of 
the  5G  strategy  and  on  the  prompt  completion  of  the  700 MHz  award  procedures  under 
conditions  conducive  to  investment.  To  face  the  challenges  posed  by  the  COVID-19  crisis, 
digital  service  infrastructures  were  reinforced  to  deal  with  higher  demand.  However,  the 
spectrum  auctions  of  the  700 MHz  and  3.6 GHz  pioneer  bands  planned  for  Q2-2020  were 
postponed  to  start  in  January  2021  (with  a  multiple-round  auction).  The  investment  needs  for 
Portugal to reach the 2020 and 2025 EU connectivity targets are estimated at EUR 2.8 billion. 

Portugal’s digital-related public investment in R&D is below the EU average with modest 
levels of R&D expenditures in the business sector. Progress has been limited on upgrading the 
country’s economic structure towards a higher share of value added in high-tech manufacturing 
and services. On the other hand, Portugal has joined the group of Strong Innovators (European 
Innovation  Scoreboard  2020)  and  scores  particularly  well  on  small-  and  medium-sized 
enterprises  (SMEs)  innovating  in-house  and  SMEs  with  product  or  process  innovation.  Yet, 
weak  science-business  links  are  holding  back  the  advancement  of  the  research  and  innovation 
system.  Increased  knowledge  flows  between  academia  and  the  private  sector,  such  as  joint 

19   https://ec.europa.eu/international-partnerships/projects/bella-building-europe-link-latin-america_en 

20 

 
                                                           
programmes to support upskilling of workers could accelerate the twin transition. Portugal could 
boost the R&I public-private cooperation in key sectors for the twin transition, as it is a major 
bottleneck  of  the  Portuguese  innovative  ecosystem.  This  includes  developing  absorptive 
capacities,  accelerating  the  technology  transfer  and  innovation  diffusion.  In  this  area,  Portugal 
has recently adopted the Portugal 2030 Strategy that, among its objectives, aims to increase total 
expenditure on R&D to 3% of GDP in 2030, with 1.25% public and 1.75% private, also to align 
with  the  objective  set  in  the  Commission’s  Communication  ‘A  new  ERA  for  Research  and 
Innovation’ (COM 2020/628). 

Portugal performs weakly on digital skills and the use of internet services. In 2019, 48% of 
the population lacked basic digital skills, and about 26% had no digital skills.20 These skills gaps 
hinders  the  development  of  a  digital  economy  and  society.  The  country  has  made  significant 
efforts, but the approach needs to be both comprehensive an ambitious. Another factor is the low 
share  of  ICT  graduates  (2.2%  in  2018),  which  is  below  the  EU  average  (3.8%).21  Raising  the 
share  of  graduates  in  science  and  digital  technologies,  and  providing  upskilling  and  reskilling 
opportunities could help meet the growing demand for the skills that the twin transition needs. 
Improved access to digital skills, together with better connectivity, could  also contribute to the 
general development of rural and low density areas. 

Portugal  is  a  leader  in  digital  public  services.  It  is  among  the  14  EU  countries  with  two 
national electronic identity schemes recognised by the other Member States. Portugal continues 
to invest in the digitalisation of the public sector in order to reduce the administrative burden for 
businesses.  It  can  affirm  its  leading  position  in  the  field  by  greater  involvement  in  European 
cross-border initiatives for digital public services. Portugal could bring about a qualitative shift 
by  investing  in  public  sector  use  of  novel  technologies  like  Cloud  computing,  predictive 
analytics,  and  other  uses  of  Artificial  Intelligence,  augmented  and  virtual  reality,  as  well  as 
block-chain.  The  European  Digital  Innovation  Hubs  can  help  build  innovative  ecosystems  that 
support the digitalisation of the public sector. During the COVID-19 crisis, the digitalisation of 
the public administration was accelerated mainly through the ePortugal portal. 

Cybersecurity  is  the  biggest  risk  resulting  from  digital  transformation  initiatives.  An 
adequate  level  of  security  is  imperative  in  order  to  manage  and  reduce  financial,  operational, 
reputational and legal risks. Portugal’s national strategy for Cyberspace Security 2019-2023 aims 
to  maximise  resilience,  promote  innovation,  generate  and  guarantee  resources  based  on  six 
actions:  (i)  cyberspace  security  structure;  (ii)  prevention,  education  and  awareness;  (iii) 
cyberspace and infrastructures protection; (iv) response to threats and combating cybercrime; (v) 
R&D and innovation; and, (vi) national and international cooperation. 

Portugal ranks below the EU average on digitalisation of businesses and on integration of 
digital technology in businesses.22 Portugal continues implementing the national strategy for the 

20   DESI (2020) 
21   DESI (2020) 
22   DESI (2020) 

21 

 
                                                           
digitalisation  of  the  economy,  committed  to  the  development  and  deployment  of  advanced 
technologies.  However,  greater  efforts  targeting  key  strategic  technologies  are  needed  to  boost 
growth and jobs.  

One of the main factors hindering the digitalisation of SMEs is the digital knowledge gap. 
Portugal  ranks  21st  in  the  DESI  (2020)  for  human  capital.  Adopting  digital  technologies  and 
improving  skills  levels  would  increase  productivity  and  help  the  country’s  numerous  micro-
enterprises to grow. At the same time, Portugal could invest more in promoting entrepreneurship 
and business scale-up with a view to change the specialisation profile of the productive fabric. 

Figure 1: Digital Economy and Society Index 2020 – relative performance by 
dimension 

Note: The EU aggregate corresponds to the EU-28, based on the 2020 DESI report. 

Supporting the digitalisation of the Portuguese SMEs is an essential element of this effort. 

Promoting  and,  where  appropriate,  co-financing  the  European  Digital  Innovation  Hubs 
would  benefit  the  digitalisation  of  the  Portuguese  companies.  Another  important  facet  is 
ensuring  that  businesses  own  and  control  the  data  they  generate,  participating  in  the  value 
created with ‘their’ data. This requires new ways of data governance. Portugal could support the 
creation  of  common  European  data  spaces  in  crucial  economic  sectors  and  domains  (e.g.  in 
health, manufacturing, and climate). 

22 

 
 
 
Box 1: Progress towards the Sustainable Development Goals 

Sustainable Development Goals and the four dimensions underpinning the Annual Sustainable Growth Strategy 

The objectives of the Sustainable Development Goals (SDGs) are integrated in the European 
Semester  since  the  2020  cycle.  This  provides  a  strong  commitment  towards  sustainability  in 
the coordination of economic and employment policies in the EU. In that respect, this section 
outlines  Portugal's  performance  with  respect  to  SDGs,  with  particular  relevance  for  the  four 
dimensions  underpinning  the  2021  Annual  Sustainable  Growth  Strategy  and  of  relevance  to 
the  recovery  and  resilience  plans  (green  transition,  fairness,  digital  transformation  and 
productivity,  and  macroeconomic  stability),  indicating  possible  areas  where  investments  and 
reforms are in line with the objectives of the Facility and could further accelerate progress on 
the SDGs. 

Green Transition 

An area where Portugal performs significantly better than the EU average is ‘on average CO2 
emissions  from  new  passenger  cars’  under  SDG 9  (industry,  innovation  and  infrastructure). 
However, emissions have slightly increased in recent years. 

Significant  progress  has  also  been  made  in  the  ‘share  of  renewable  energy  in  gross  final 
energy consumption’ under SDG 7 (affordable and clean energy), which increased from 24.1% 
in 2010 to 30.6% in 2019, and stands now well above the EU average. Yet, the country relies 
heavily on imports from other countries to meet its energy needs: energy imports represented 
73.8% of total gross available energy in 2019. 

Portugal has also made some progress towards the targets under SDG 2 (zero hunger) that are 

23 

 
 
related to supporting sustainable agriculture and reducing the adverse impacts of agricultural 
production.  In  2019,  the  share  of  organic  farming  in  total  agricultural  area  increased 
significantly and stands now close to the EU average. Still, funding and government support to 
agricultural R&D remains significantly below the EU average. 

Finally, despite some marginal improvement, current levels for some indicators related to the 
green transition remain significantly lower than the EU average, particularly for the recycling 
rate  of  municipal  waste  and  the  share  of  buses  and  trains  in  total  passenger  transport  under 
SDG 11 (sustainable cities and communities) and the circular material use rate under SDG 12 
(responsible consumption and production), which is more than five times lower than the EU 
average (2.2% in Portugal, compared to the EU average of 11.9%, in 2019). 

Fairness 

Portugal has made progress towards SDG 1 (no poverty) in 2019, bringing the rate of ‘people 
at  risk  of  poverty  or  social  exclusion’,  in  ‘severe  material  deprivation’  and  living  in 
households with very low work intensity to around or below the EU averages. However, the 
monetary  poverty  (‘people  at  risk  of  poverty  after  social  transfers’)  was  still  above  the  EU 
average in 2019 (17.2%, while 16.5% in the EU), as were in-work-poverty, which increased to 
10.8% in 2019 (9% in the EU in 2019), and the share of people living in households with poor 
housing conditions. 

Regarding  SDG 4  (quality  education),  Portugal  has  made  significant  progress  in  most 
associated  dimensions  of  this  goal,  most  notably  in  the  percentage  of  early  leavers  from 
education and training, which dropped from around 39% in 2004 to 8.9% in 2020. This share 
is now below the EU average (10.1%). 

Portugal performs relatively well in SDG 5 (gender equality) dimensions and most notably in 
the gender pay gap rate (10.6% in 2019) and ‘gender employment gap’ (5.9 percentage points 
in 2020), both below the EU average (14.1% and 11.3 percentage points respectively). 

Concerning  SDG 8  (decent  work  and  economic  growth)  and  the  targets  related  to  the 
dimension of fairness, Portugal performs rather well, with the share of young people that are 
not  in  education  or  training  ‘young  NEETs’  (Not  in  Education,  Employment  or  Training)  at 
11%, well below the EU average of 13.7% in 2020. Furthermore, the long-term unemployment 
rate  has  been  on  a  downward  path  since  2013  and  the  employment  rate  surpassed  the  EU 
average. 

Despite steady improvements, income inequality (SDG 10) was still above the EU average in 
2019,  with  households  in  the  top  20%  of  the  income  distribution  having  incomes  5.2  times 
those  of  households  in  the  bottom  20%  (5  in  EU).  Similarly,  the  lowest  40%  of  the  income 
distribution earned 20.7% of the total incomes, slightly below the EU average of 21.4%. 

Digital transition and productivity 

Portugal  is  underperforming  in  all  targets  related  to  the  digital  transition  and  productivity 
dimension  that  fall  under  SDG 8  (decent  work  and  economic  growth)  and  SDG 9  (industry, 
innovation  and  infrastructure).  Despite  some  improvements  observed  in  recent  years,  the 

24 

 
investment  share  of  GDP,  as  well  as  the  gross  domestic  expenditure  in  R&D,  remain  well 
below the EU averages. 

Macroeconomic stability  

Portugal’s performance under SDG 8 (decent work and economic growth) remains moderate. 
Before  the  pandemic,  the  unemployment  rate  had  been  on  a  downward  path  since  2013. 
However, the real GDP per capita and the investment share of GDP are still far below the EU 
average, although some improvements have been observed in recent years. 

With  regards  to  SDG 16  (peace,  justice  and  strong  institutions),  Portugal  made  significant 
progress  towards  ensuring  peace  and  personal  security.  Furthermore,  the  percentage  of  the 
population  with  confidence  in  the  European  Institutions  and,  therefore,  trust  in  European 
policies, is constantly increasing since 2013 and exceeds the European average. 

3.  OBJECTIVES, STRUCTURE AND GOVERNANCE OF THE PLAN 

3.1. Overall strategy of the plan 

The Portuguese recovery and resilience plan aims to address the challenges identified in the 
context  of  the  European  Semester.  The  measures  included  in  the  plan  focus  on  addressing 
these  challenges  by  boosting  the  competitiveness  of  the  Portuguese  economy,  on  improving 
skills and qualifications, on increasing territorial and social cohesion, and on boosting public and 
private investment firmly in line with the twin digital and climate transitions. The plan’s strategy 
is  structured  around  the  three  pillars  of  resilience,  climate  and  digital  transition,  and  the  goals 
mentioned above are reflected throughout its 20 components. 

The 20 components that make up the Portuguese recovery and resilience plan are the following: 

25 

 
 
COMPONENT 1 – National Health Service 
This component of the Portuguese recovery and resilience plan addresses several challenges for 
the  Portuguese  health  system  with  respect  to  current  and  evolving  health  care  needs  and 
associated  costs.  First,  Portugal’s  adverse  demographic  trends  – characterised  by  accelerated 
ageing  and  subsequent  long-term  care  needs –  coincide  with  changing  disease  patterns,  an 
increasing  burden  of  chronic  and  degenerative  diseases,  as  well  as  multi-morbidity  gradually 
becoming more prominent. Second, there is still considerable avoidable mortality in Portugal and 
a relatively low number of healthy life years at age 65. Third, there is available scope to place a 
greater  focus  on  health  promotion  and  disease  prevention,  in  combination  with  addressing  the 
fragmentation  of  health  services  and  the  gaps  in  access  to  health  care.  Fourth,  out-of-pocket 
payments for health care are amongst the highest in the EU and the reported financial burden of 
medical  care  is  relatively  high.  Finally,  Portugal’s  National  Health  Service  has  been  facing  a 
challenging financial situation for a number of years. In particular, Portugal has a track record of 
recurrent  bailouts  of  public  hospitals  by  the  government,  which  did  not  succeed  in  avoiding  a 
systematic cycle of hospitals’ indebtedness, with knock-on effects on supply-chain relationships. 

The  main  objective  of  the  component  is  to  strengthen  the  response  capacity  of  Portugal’s 
National  Health  Service,  with  a  view  to  responding  to  the  demographic  and  epidemiological 
changes  in  the  country,  to  therapeutic  and  technological  innovation,  and  to  the  trend  of 
increasing  demand  for  health  care  and  associated  costs.  To  this  end,  the  component  aims  to 
strengthen the core role of primary health services within the overall architecture of the National 
Health  Service,  upscale  long-term  and  mental  health  services,  and  increase  efficiency  by 
completing  the  reform  of  the  governance  model  of  public  hospitals  and  bringing  forward  the 
digitalisation of health services. 

The component includes 3 reforms and 9 investments, with total estimated costs of EUR 1 383 
million. The component has an overall climate contribution of 22.8%, and a digital contribution 
of 25.4%. 

COMPONENT 2 – Housing 
This component of the Portuguese recovery and resilience plan addresses the challenges related 
to the structural shortage of permanent and temporary housing solutions for the more vulnerable 
groups and contributes indirectly to reinforcing the social protection system. Public housing only 
accounts for 2% of the total stock in Portugal and is deemed to be insufficient in addressing the 
needs of the most deprived and at risk of social exclusion.  

The main objectives of the component are: i) to increase the social and affordable housing supply 
(including addressing other related needs, such as the lack of basic infrastructure and equipment, 
unhealthy  and  insecure  places  of  residence,  precariousness  or  lack  of  contractual  ties, 
overcrowding  or  inadequacy  of  housing  for  the  special  needs  of  residents  with  disabilities  or 
reduced  mobility);  ii.)  to  create  a  national  public  response  to  urgent  and  temporary 
accommodation needs arising from unexpected or unforeseeable events such as natural disasters, 
fires, pandemics, migration movements, asylum applications, or situations of imminent risk such 
as  domestic  violence,  trafficking  in  human  beings,  risk  of  evictions  and  others;  and  iii)  to 
increase  the  supply  of  student  accommodation  at  affordable  prices.  The  investments  in  the 
component entail construction of new dwellings and rehabilitation of existing ones. 

26 

 
The  component  includes  1  reform  and  6  investments  for  a  total  estimated  cost  of  EUR 2 732 
million, out of which EUR 1 583 million for non-repayable support and EUR 1 149 million for 
loans. The component has an overall climate contribution of 45%, and a digital contribution of 
0.1%. 

COMPONENT 3 – Social Responses 
Portugal has been facing important demographic and socio-economic challenges for many years 
which  have  been  amplified  by  the  COVID-19  pandemic.  This  component  of  the  Portuguese 
recovery and resilience plan addresses the following challenges:  demographic ageing, rights  of 
persons with disabilities and other persons with dependency and situations of poverty and social 
exclusion  among  disadvantaged  communities  and  groups.  In  this  context,  this  component 
addresses structural social policy related challenges and shortages in social service coverage for 
populations/regions  in  need,  both  in  mainland  Portugal  and  in  the  Autonomous  Regions  of 
Azores and Madeira.  

The  main  objectives  of  the  component  are:  i)  improving  the  social  care  facilities  and  ensuring 
better territorial coverage; ii) strengthening and expanding the network of social responses with 
innovative solutions and pilot projects and interventions; iii) developing novel community-based 
support  responses,  contributing  to  the  promotion  of  independent  living,  prevention  of 
dependency  and  the  development  of  responses  for  non-institutionalisation  in  line  with  the  UN 
Convention  on  the  Rights  of  Persons  with  Disabilities;  iv)  ensuring  accessibility  to  inclusive 
living  and  participation  in  society  and  the  economy  for  persons  with  disabilities;  and  v) 
promoting  the  eradication  of  poverty  by  developing  an  all-encompassing  national  strategy 
focusing on the most vulnerable and disadvantaged communities. 

The  component  includes  4  reforms  and  6  investments,  for  a  total  estimated  cost  of  EUR 833 
million. The component has an overall climate contribution of 25.3%, and a digital contribution 
of 1.4%. 

COMPONENT 4 – Culture 
This  component  of  the  Portuguese  recovery  and  resilience  plan  addresses  both  the  challenges 
relating  to  the  effects  of  the  COVID-19  pandemic  and  legacy  problems,  resulting  from  a 
situation of chronic lack of resources for the up-keep, renovation and modernisation of cultural 
installations and equipment. 

The  main  objectives  of  the  culture  component  are:  i)  the  renovation  of  buildings  and  national 
monuments; ii) the protection of artisan techniques and professions; iii) the modernisation of the 
technological  infrastructure  and  cultural  installations;  iv)  the  digitalisation  of  works  of  art  and 
the  cultural  heritage;  and  v)  the  internationalisation,  modernisation  and  digital  transition  of 
bookshops and book publishing. 

The  component  includes  2  investments,  for  a  total  estimated  cost  of  EUR 243  million.  The 
component has an overall climate contribution of 24.8%, and a digital contribution of 38.1%. 

27 

 
COMPONENT 5 – Investment and Innovation 

This  component of the  Portuguese recovery and resilience plan  addresses challenges related to 
the  relatively  modest  level  of  research  and  innovation,  notably  through  fostering  the  links 
between business and science and with a particular focus on innovation on the green transition, 
and challenges related to the chronic under-capitalisation of the Portuguese business sector that 
has further deteriorated as a consequence of the COVID-19 pandemic. 

The  objective  of  the  component  is  to  increase  the  competitiveness  and  resilience  of  the 
Portuguese economy through measures designed to strengthen research, by fostering the transfer 
of its results to the business sector, thus promoting innovation and investment. The research and 
innovation  part  of  the  component  aims  to  improve  academia-business  cooperation,  strengthen 
Portugal’s  scientific  and  technological  potential  and  support  the  implementation  of  ambitious 
and  comprehensive  research  and  innovation  agendas  addressing  major  socio-economic  and 
environmental challenges. This is expected to be achieved through increased and more effective 
R&D  and  innovation  investments,  targeted  support  to  better  translate  research  results  into 
investment,  diversification  and  specialisation  of  the  productive  structure,  exploiting  the  actual 
potential  for  competitive  affirmation  of  established  industrial  sectors  and  emerging  areas  and 
contributing  to  the  twin  transition.  In  particular,  this  component  aims  at  increasing  exports  of 
high value added goods and services, increasing R&D investment (both through new high skilled 
jobs  and  by  increasing  the  R&D  expenditure  by  firms),  and  contributing  to  reduce  CO2 
emissions. 
In  line  with  the  need  to  support  the  solvency  of  the  productive  system  and  to  address  market 
failures in access to finance, this component includes a reform and investments that contribute to 
the improvement of the Portuguese corporate financing market, through the creation and capital 
reinforcement  of  the  National  Promotional  Bank,  Banco  Português  de  Fomento  and  the 
development  of  new  financial  instruments.  The  component  also  introduces  capital  market 
reforms to strengthen the capital markets in Portugal in the long term through the revision of the 
existing legal framework and the adoption of new laws, with particular emphasis being placed on 
securities  investment  companies  for  development  of  economy  (SIMFEs),  collective  investment 
undertakings and the revision of the securities code. 

The component includes 5 reforms and 7 investments,  for a total  estimated cost  of EUR 2 914 
million, out of which 1,364 in non-repayable support and 1,550 in loans. The component has an 
overall climate contribution of 18% and a digital contribution of 1.8%.  

COMPONENT 6 – Qualifications and Skills 
In  Portugal,  44.5%  of  the  population  aged  25-64  had  low  education  attainment  levels  in  2020, 
well above the EU average of 25.0%. In addition, the fraction of the population with basic digital 
skills  or  having  never  used  the  internet  is  very  high.  Equally,  labour  market  segmentation  and 
gender imbalances in pay and career opportunities remain high by EU standards.  

This  component  addresses  multiple  challenges  related  with  the  relatively  low  education  and 
qualification  attainment  levels,  lifelong  learning  participation,  labour  market  segmentation, 

28 

 
removing  administrative  barriers  in  the  area  of  highly  regulated  professions,  preparing  for  the 
challenges linked to the future of work, and gender equality and equal opportunities.  

The  objectives  of  the  component  are  broad,  encompassing  skilling  and  upskilling,  some 
bottlenecks in the business environment, labour market segmentation, gender balance and equal 
opportunities. As regards production potential, this component focuses on measures to raise the 
low  qualification  levels  and  improve  lifelong  learning  participation  through  the  reform  of 
education  and  Vocational  Education  and  Training  VET  systems,  foster  knowledge  transfer 
between  universities/public  research  organisations  and  firms,  and  reduce  restrictions  in  highly 
regulated  professions,  while  enhancing  competitiveness  in  the  provision  of  business  services. 
The  component  also  presents  measures  to  address  various  principles  of  the  European  Pillar  of 
Social  Rights  (EPSR), such  as  labour  relations  and  access  to  rights  protection  of  workers  with 
atypical labour contracts, financial support to promote the inclusion of unemployed people with 
permanent quality jobs, and the development of the Portuguese norm for a management system 
of equal pay.  

The component includes 5 reforms and 5 investments, with a total estimated cost of EUR 1 324 
million. The component has an overall climate contribution of 13.7%, and a digital contribution 
of 50.3%. 

COMPONENT 7 – Infrastructure 
This  component of the  Portuguese recovery  and resilience plan addresses the challenge of low 
territorial  cohesion  and  the  low  competitiveness  of  firms  in  the  inland  regions  caused  by 
inadequate links to the road network. This leads to context costs for firms, such as transport costs 
through low road  connectivity or the difficulty to attract  skilled staff. Another challenge is  the 
need to reduce emissions in the transport sector and in business parks.  

The objectives of the component are to increase territorial cohesion and improve competitiveness 
in order to promote the economic development of the inland regions. Through the deployment of 
charging stations, it aims to promote the decarbonisation of road transport.  

To this end, the component aims to make business parks more sustainable and more digital and 
provide  them  with  better  access  to  the  road  network.  It  also  seeks  to  improve  road  transport 
connectivity by expanding the road network, e.g. by addressing missing links, including on the 
Azores,  and  providing  four  cross-border  connections.  The  acceleration  of  the  expansion  of  the 
network of publicly  accessible electric vehicle  charging  stations is  expected to  help  reduce the 
carbon  footprint  of  the  road  transport  sector  in  Portugal  and  make  it  more  sustainable.  This 
investment  is  a  flanking  measure  for  the  expansion  of  the  road  infrastructure,  in  line  with  the 
Commission’s DNSH Guidance (2021/C58/01).  

The  component  includes  6  investments,  with  a  total  estimated  cost  of  EUR 690  million.  The 
component has an overall climate contribution of 13%, and a digital contribution of 3.7%. 

COMPONENT 8 – Forests 
This  component  of  the  Portuguese  recovery  and  resilience  plan  addresses  the  following 
challenges:  the  socio-economic  and  demographic  decline  in  rural  areas,  the  existence  of 

29 

 
extensive  areas  without  active  management  to  prevent  fires  or  to  protect  biodiversity  and  the 
highly  fragmented  private  ownership  of  the  land.  The  exodus  of  the  population  towards  the 
major  urban  centres  and  the  progressive  ageing  of  the  rural  population  has  led  to  the 
abandonment of rural territories and traditional primary economic sectors. This led to the gradual 
expansion of forest areas, unplanned and unmanaged and with a high concentration of fuel load. 
These areas have a strong exposure to the danger of rural fires, which may result in the loss of 
human lives, extensive damage to land and property and the destruction of forests and the goods 
and  services  it  produces.  Portugal  is  the  country  in  southern  Europe  with  the  largest  share  of 
burnt area in rural territories and the highest average number of fires. According to the European 
Forest  Fire  Information  System  (EFFIS),  around  169  000  hectares  were  burnt  on  average  per 
year between 2015 and 2019.  

The  objectives  of  this  component  are  i)  to  promote  the  active  planning  and  management  of 
vulnerable and high-environmental value agricultural and forestry land, ii) to protect biodiversity 
by supporting the restoration of agricultural  and forestry  ecosystems,  especially in  burnt  areas, 
iii) to contribute to territorial cohesion and job creation by revitalising the economic activities of 
rural territories, and iv) to increase the resilience of these territories by reducing the risk of fires 
through effective and efficient fire-prevention and, in case of fires, by reducing damage through 
effective and efficient fire-fighting.  

The  component  includes  3  reforms  and  5  investments,  with  a  total  estimated  cost  of  EUR 615 
million. The component has an overall climate contribution of 100%, and a digital contribution 
of 14%. 

COMPONENT 9 – Water Management 
This  component  of  the  Portuguese  recovery  and  resilience  plan  addresses  the  following 
challenges: deal with the high pressure on storage systems providing water supply and improve 
water efficiency to counteract the constraints imposed by the expected annual rainfall decrease, 
higher  frequency  of  droughts,  seasonality  and  water  leakage  increase.  The  objectives  of  the 
component are to mitigate water scarcity and ensure the resilience of the regions with the biggest 
drought  issue  and  in  critical  need  of  effective  to  ensure  water  supply:  Algarve,  Alentejo  and 
Madeira. 

Increased water resilience is of paramount importance to the development of these three regions, 
representing also  a mandatory  condition  for tourism and ecosystems  (especially in  the Algarve 
and Madeira), agriculture (Alentejo and Madeira), economic activity reconfiguration (Alentejo) 
and  to  attend  to  combined  pressures  of  peaks  in  irrigation  needs  and  human  consumption 
(Madeira). 

The  component  includes  3  investments,  with  a  total  estimated  cost  of  EUR 390  million.  The 
component has an overall climate contribution of 40%, and a digital contribution of 0%.  

COMPONENT 10 – Sea 
This component of the Portuguese recovery and resilience plan addresses the challenge to pave 
the  way  for  a  more  competitive,  cohesive,inclusive  and  furthermore  a  more  decarbonised  and 

30 

 
sustainable  sea  economy,  an  area  in  which  Portugal  has  strong  potential.  The  component  is 
expected to help seizing the opportunities arising from the climate and digital transitions in the 
sea  economy.  The  objective  of  this  component  is  to  support  the  achievement  of  national 
objectives  related  to  the  productive  potential  of  the  sea  economy.  In  particular  the  component 
seeks  to  ensure  the  sustainability  and  competitiveness  of  the  sea-related  business  system.  In 
addition,  the  component  has  the  ambition  to  tackle  at,  at  least  partly,  poverty  in  coastal 
communities, while ensuring  a  competitive and  cohesive territory  in  a context  of adaptation  to 
climate and digital transitions, including with a focus on skills relevant for the sea sectors. The 
component  is  expected  to  also  contribute  to  preserve  the  value  of  the  services  of  the  ocean 
ecosystem. 

The  component  includes  1  reform  and  4  investments,  with  a  total  estimated  cost  of  EUR 252 
million. The component has an overall climate contribution of 45%, and a digital contribution of 
0.6%.  

COMPONENT 11 – Decarbonisation of Industry 
This  component  of  the  Portuguese  recovery  and  resilience  plan  addresses  the  challenge  of  the 
contribution  of  the  industry  and  industrial  processes  to  achieving  the  objectives  of  carbon 
neutrality,  as  identified  in  the  Carbon  Neutrality  Roadmap  2050  and  the  National  Energy  and 
Climate  Plan  2030.  This  requires  a  structural  transformation,  based  on  the  reconfiguration  of 
industrial activity, changes in production processes and the way in which the resources are used.  

The  measure  of  this  component  aims  at  promoting  decarbonisation,  energy  and  resource 
efficiency, and the use of alternative energy sources in the industrial processes. The projects to 
be supported are expected to also be linked to new technologies, innovation and digitisation of 
industry, seeking greater efficiency in the various production and organisational processes. The 
component is set to contribute to the climate transition of the Portuguese industry and support its 
competitiveness.  

The  component  includes  1  investment,  with  a  total  estimated  cost  of  EUR 715  million.  The 
component has an overall climate contribution of 100%, and a digital contribution of 0%. 

COMPONENT 12 – Bioeconomy 
This  component  of  the  Portuguese  recovery  and  resilience  plan  addresses  the  challenge  of  the 
development of a viable, sustainable, circular and competitive bioeconomy. Such a transition is 
expected  to  support  the  modernisation  and  consolidation  of  industry  by  creating  new  value 
chains and greener industrial processes.  
The  objective  of  this  component  is  to  promote  and  accelerate  the  development  of  high  value-
added products from biological resources as an alternative to fossil-based materials.  
The measures of this component aim at supporting structural changes linked to this transition and 
is set to contribute to address current global and local challenges, including climate change, the 
reduction of dependence on fossil resources and sustainable development. Three sectors (textiles 
and  clothing,  footwear  and  natural  resin)  are  expected  to  be  specifically  supported  for  the 
development of bio-based products and to become more resource efficient. 

31 

 
The  component  includes  1  reform  and  1  investment,  with  a  total  estimated  cost  of  EUR 145 
million. The component has an overall climate contribution of 96%, and a digital contribution of 
0%. 

COMPONENT 13 – Energy Efficiency in Buildings 
This  component  of  the  Portuguese  recovery  and  resilience  plan  addresses  the  following 
challenges:  The  residential  sector  accounts  for  18%  of  energy  consumption  and  the  services 
sector for another 14%.  Buildings, therefore, play  an important  role for  Portugal  to  achieve its 
carbon neutrality targets. Measures in this area, and in particular in the residential segment, can 
also help to alleviate energy poverty, which remains an important concern in Portugal with the 
percentage of households unable to keep homes adequately warm still at 19% in 2019. Portugal 
has  committed  to  achieving  carbon  neutrality  by  2050  and,  therefore,  needs  to  promote  the 
decarbonisation  of  its  building  stock,  while  improving  housing  conditions  (indoor  comfort  and 
quality)  and  affordability.  This  is  set  to  be  achieved  by  focusing  on  urban  regeneration  and 
increasing  the  energy  performance  of  buildings  and  by  combining  energy  efficiency  and 
renewable  energy  with  electrification,  and  targeting  in  particular  low-income  households  to 
tackle energy poverty. 

The  objectives  of  the  component  are  to  renovate  public  and  private  buildings  to  improve  their 
energy  performance  and  comfort,  while  reducing  greenhouse  gas  emissions,  and  the  country’s 
energy  bill  and  dependence,  mitigate  energy  poverty  and  to  incorporate  renewable  energy 
sources  the  built  environment.  This  should  provide  numerous  social,  environmental  and 
economic benefits for people and businesses, such as the creation of local jobs and reduction of 
air pollution. 

The  component  includes  3  investments,  with  a  total  estimated  cost  of  EUR 610  million.  The 
component has an overall climate contribution of 100%, and a digital contribution of 0%. 

COMPONENT 14 – Hydrogen and Renewables 
Portugal has made a commitment to achieve carbon neutrality by 2050, positioning the country 
among those taking the lead in the fight against climate change under the Paris Agreement. The 
Carbon Neutrality Roadmap 2050 (RNC 2050) sets as decarbonisation targets to be achieved an 
emission reduction of more than 85% compared to 2005 and a carbon sequestration capacity of 
13 million tonnes. The component addresses the so-called hard to abate sectors by promoting the 
deployment of renewable hydrogen. 

The  objectives  of  the  component  are  to  promote  the  energy  transition  and  decarbonisation  of 
industry  and  transport  with  a  strong  focus  on  the  production  of  renewable  hydrogen  and  other 
renewable  gases.  In  the  case  of  the  Autonomous  Regions,  the  focus  is  on  deployment  of 
renewable  energy  (geothermal,  wind,  photovoltaic  and  hydropower)  and  storage.  This 
component is key to reduce national energy dependency through the production of energy from 
local  sources,  to  improve  the  trade  balance,  and  to  enhance  the  resilience  of  the  domestic 
economy. 

32 

 
The  component  includes  1  reform,  and  3  investments,  with  a  total  estimated  cost  of  EUR 370 
million. The component has an overall climate contribution of 100%, and a digital contribution 
of 0%. 

COMPONENT 15 – Sustainable Mobility 
This component of the Portuguese recovery and resilience plan addresses several challenges of 
the  transport  sector:  the  need  to  reduce  greenhouse  gas  and  pollutant  emissions,  the  need  to 
reduce the dependence on a private car, and the need to guarantee better social cohesion in urban 
areas.  

The  objective  of  this  component  is  to  reduce  emissions  and  enhance  public  transport  by 
expanding  the  networks,  making  them  more  accessible,  and  strengthening  public  transport 
planning capabilities. This is expected to lead to more users of public transport, to encourage the 
modal  shift  from  private  car  to  public  transport  and  promote  better  transport  management  and 
planning  capabilities.  To  this  end,  this  component  consists  of  reforms  and  investments  that 
promote  sustainable  public  transport  through  the  extension  of  the  Lisbon  and  Porto  metro,  the 
construction of a light rail system in Lisbon, a bus rapid transit system in Porto, and the purchase 
of zero emission buses for public transport.  

The  component  includes  1  reform  and  5  investments,  with  a  total  estimated  cost  of  EUR 967 
million. The component has an overall climate contribution of 100%, and a digital contribution 
of 0%. 

COMPONENT 16 – Enterprises 4.0 
This component of the Portuguese recovery and resilience plan addresses the challenges related 
to  the  low  digitalisation  of  enterprises.  According  to  the  results  of  the  Digital  Economy  and 
Society Index (DESI 2020), Portugal ranks 19th in the EU and below the EU average. The most 
fragile  dimensions  in  the  case  of  Portugal  are  those  of  ‘Human  Capital’  and  ‘Use  of  Internet 
Services’  and  some  dimension  of  the  ‘Integrating  digital  technologies’,  all  of  which  reflect 
limitations on the digital capacity and performance of companies.  

The objectives of the component are to target the business sector, in particular SMEs and their 
employees, with investments to accelerate the digital transition complemented by strengthening 
the digital skills of the employed workforce. The investments foresee the following actions: 

33 

 
-  Strengthening of the digital skills of employees in the business sector; 
-  Modernisation of the business model of companies as well as their production processes, 
including  the  digitalisation  of  workflows  such  as  business  management,  innovative 
products and invoicing; 

-  Creation of new digital marketing channels for products and services; 
- 

Innovation and incorporation of advanced digital technologies into the business model of 
firms; and 

-  Fostering of digitally based entrepreneurship. 

The  component  includes  1  reform,  and  3  investments,  with  a  total  estimated  cost  of  EUR 650 
million. The component has an overall climate contribution of 0%, and a digital contribution of 
100%. 

COMPONENT 17 – Quality and Sustainability of Public Finances 
The component addresses challenges related to Portugal’s high public debt-to-GDP ratio, which 
was aggravated further due to the COVID-19 crisis. The size of Portugal’s public debt-to-GDP 
ratio  constraints  the  available  fiscal  space  and,  when  economic  conditions  allow,  calls  for  the 
need  to  ensure  fiscal  sustainability  in  the  medium  term.  In  that  context,  stronger  framework 
conditions for fiscal policy are expected to contribute to a more growth-friendly path for stronger 
fiscal sustainability. 
The  objective  of  the  component  is  to  enhance  public  financial  management  in  Portugal  and  to 
bridge existing gaps in fiscal-structural reforms. Among others, these goals include: 

- 

-  delivering  on  the  full  and  effective  implementation  of  the  2015  Budgetary  Framework 
Law  and  the  associated  structural  changes  in  terms  of  budgeting,  accounting  and 
information systems;  
increasing efficiency savings through the  greater  uptake of centralised procurement and 
spending  reviews,  which  are  planned  to  be  integrated  in  the  regular  budgetary  process 
and subject to systematic ex-post evaluations; 
improving  the  financial  performance  of  state-owned  enterprises  through  greater 
transparency, enhanced monitoring and stronger governance, with management becoming 
more accountable and performance-oriented; and, 
stepping  up  the  efficiency  of  the  revenue  administration  – including  both  the  Tax  and 
Customs Authority and Social Security services – through exploiting the available scope 
for greater digitalisation and business-friendliness. 

- 

- 

The  component  includes  1  reform  and  3  investments,  with  a  total  estimated  cost  of  EUR 406 
million. The component has an overall climate contribution of 0% and a digital contribution of 
100%. 

COMPONENT 18 – Economic Justice and Business Environment 
This  component  of  the  Portuguese  recovery  and  resilience  plan  targets  the  challenge  of 
inefficiencies  in  the  Portuguese  justice  system  as  well  as  remaining  bottlenecks  in  business 
licencing. The length of administrative and tax procedures has been decreasing in recent years, 
but  remains  one  of  the  highest  in  the  EU,  and  the  number  of  pending  cases  (case  backlog) 

34 

 
remains comparatively high. The business environment is also hindered by the low effectiveness 
of collateral and bankruptcy laws and by heavy licencing procedures in some sectors.  

The objective of the component is to strengthen and make more efficient the relations between 
citizens and companies  with the State as well as reduce the burden and complexity that inhibit 
business activity with impact on productivity. It addresses two longstanding issues: obstacles in 
obtaining business licences and inefficiencies in the justice system, as well as the adoption of the 
‘digital  by  definition’  paradigm  in  the  justice  system  and  its  promotion  in  the  licencing 
procedures, both as regards the functioning of courts and on interaction with stakeholders. 

The  component  includes  1  reform  and  1  investment,  with  a  total  estimated  cost  of  EUR 267 
million. The component has an overall climate contribution of 0%, and a digital contribution of 
100%. 

COMPONENT 19 – Digital Public Administration 
This  component of the  Portuguese recovery and resilience plan focuses on the need to  provide 
better, simpler and more digital public services. While Portugal is well placed when it comes to 
the  provision  of  digital  services,  fragmentation  and  duplication  of  requirements  remain  key 
obstacles  to  an  efficient  and  user  oriented  public  administration.  This  reform  aims  at  tackling 
these challenges. 

The  component  aims  at  a  better  public  service,  by  means  of  fostering  the  use  of  technological 
solutions  and  strengthening  proximity  for  simpler,  secure,  effective  and  efficient  access  for 
citizens  and  businesses,  reducing  context  costs.  At  the  same  time,  it  has  the  ambition  of 
promoting efficiency, modernisation, innovation and the empowerment of public administration, 
strengthening its resilience and enhancing the contribution of the state and public administration 
to economic and social growth and development.  

This  component  is  centred  on  the  implementation  of  the  ‘digital  by  definition’  paradigm  and 
‘once only’ principle in the Portuguese public administration, while investing in the upskilling of 
the workforce.  

The  component  includes  3  reforms  and  7  investments,  with  a  total  estimated  cost  of  EUR 578 
million. The component has an overall climate contribution of 2%, and a digital contribution of 
86.8%. 

COMPONENT 20 – Digital School 
Portugal  had,  in  2019,  values  below  European  averages  in  terms  of  daily  use  of  the  Internet 
(65%),  use  of  online  public  services  (41%)  and  ICT  specialists  in  the  labour  market  (2.4%) 
(Eurostat data/Digital Skills Observatory) and set ambitious targets by 2025 for these indicators 
(80%, 75% and 5% respectively). Among ICT specialists in the labour market, women accounted 
for 18.3% and men for 81.7% (Eurostat data).  

The objectives of the component are to create the conditions for the educational, pedagogical and 
managerial  innovation  of  the  Portuguese  primary  and  secondary  education  system.  This  is 
expected  to  be  achieved  by  developing  digital  skills  of  teachers,  students  and  school  staff,  by 

35 

 
integrating digital technologies in the different curricular areas, and by providing the appropriate 
equipment. In turn this is expected to contribute to the digital transition and to an inclusive and 
sustainable growth of the economy. 

The  component  includes  1  reform  and  3  investments,  with  a  total  estimated  cost  of  EUR 559 
million. The component has a 0% climate contribution, and a digital contribution of 100%. 

Table 3: Components and associated costs 

Component 

C1 National Health Service 

C2 Housing 

C3 Social Responses 

C4 Culture 

C5 Investment and Innovation 

C6 Qualifications and Skills 

C7 Infrastructure 

C8 Forests 

C9 Water Management 

C10 Sea 

C11 Decarbonisation of Industry 

C12 Bioeconomy 

C13 Energy Efficiency in Buildings 

C14 Hydrogen and Renewables 

C15 Sustainable Mobility 

C16 Enterprises 4.0 

C17 Quality and Sustainability of Public Finances 

C18 Economic Justice and Business Environment  

C19 Digital Public Administration  

C20 Digital School 

36 

Costs (EUR million) 

1 383 

2 733 

833 

243 

2 914 

1 324 

690 

615 

390 

252 

715 

145 

610 

370 

967 

650 

406 

267 

578 

559 

 
 
 
3.2. Implementation aspects of the plan 

The  plan  describes  and  ensures  consistency  with  the  other  main  European  and  national 
programmes  and  planning  documents.  Portugal  designed  an  overall  economic  and  social 
policy for the decade called ‘Estratégia Portugal 2030’. This broad strategy was updated to take 
into account the COVID-19 crisis and adopted in November 2020. It is based on four thematic 
agendas: 

a)  a better demographic balance, more inclusion, less inequality; 
b)  digitalisation, innovation and qualifications as engines of development; 
c)  climate transition and resource sustainability; and, 
d)  foreign competitiveness and domestic cohesion. 

Portugal  intends  to  use  this  strategy  as  a  framework  for  the  instruments  supporting 
development over the next decade. It includes not only the recovery and resilience plan, which 
is a major implementing arm, but also the Partnership Agreement for 2021-2027 (and subsequent 
Operational  Programmes)  and  other  EU  funds  (both  under  shared  and  direct  management),  as 
well  as  national  funding,  to  ensure  a  comprehensive  overview  and  integrated  planning.  The 
2021-2027 Partnership Agreement is expected to contribute to and complement the recovery and 
resilience plan on the four thematic agendas of the strategy 2030. 

The recovery and resilience plan appears to be coherent with cohesion policy funds, which 
will remain the main EU financing instrument for economic development. The total amount 
of grants to Portugal from cohesion policy funds and the European Agricultural Fund for Rural 
Development  (during the programming period of 2021-2027)  and non-repayable support under 
Next Generation EU (2021-2026), are expected to amount to approximately EUR 44 billion. 

integrated  and 

Funds from cohesion policy and the RRF are expected to benefit from an overall coherent 
governance  model.  This  should  ensure 
interconnected  planning  and 
programming  and,  therefore,  guarantee  that  there  is  no  double  funding.  Furthermore,  the 
measures  of  the  Portuguese  recovery  and  resilience  plan  should  contribute  to  the  objectives  of 
the 
the 
forthcoming  2021-2027  Partnership  Agreement,  ensuring  synergies  between 
programmes.  Over  the  next  nine  years,  Portugal  will  have  to  execute  an  average  of  around 
EUR 5 billion per year of EU grants and non-repayable support, against an average execution of 
EUR 3  billion  per  year  in  the  best-performing  years  of  previous  programming  periods.  This 
represents  both  an  unprecedented  opportunity  and  a  challenge  in  terms  of  programming, 
complementarity  of  instruments,  management  capacity,  audit  responsibility  and  successful  and 
impactful execution. 

The recovery and resilience plan is expected to be a key instrument to finance the climate 
transition. Most components of the recovery and resilience plan include measures that directly 
or indirectly contribute to the eight objectives of Portugal’s National Energy and Climate Plan, 
which is used as a strategic framework for the whole plan. 

Portugal  intends  to  ensure  complementarity  of  the  recovery  and  resilience  plan  with  the 
strengthening  of  the  ‘National  Plan  for  the  Implementation  of  a  Youth  Guarantee’ 

37 

 
currently  under  development.  Various  measures  can  be  identified  as  contributing  directly  to 
the objectives underlying the reinforced Youth Guarantee. In Component 3 – Social Responses, 
the measure ‘Integrated operations in disadvantaged communities in the Lisbon and Porto areas’ 
aims  to  combat  social  exclusion,  in  particular  the  exclusion  of  unemployed  young  people. 
Component 6  – Qualification and Skills  aims to increase the skills  and qualifications of  young 
people  (and  adults)  through  broadening,  improving  and  diversifying  technical  and  pedagogical 
capacities. Also in Component 6, the ‘sustainable employment commitment’ measure is expected 
to  support  the  creation  of  permanent  open-ended  quality  jobs,  through  temporary  and  targeted 
hiring subsidies. 

The Portuguese recovery and resilience plan is broadly consistent with the challenges and 
priorities identified in the most recent Draft Council Recommendation on economic policy 
in  the  euro  area  (EAR).  The  recovery  and  resilience  plan  contributes  to  EAR 1,  ensuring  a 
policy  stance  which  supports  the  recovery,  as  it  implements  measures  contributing  to  the 
resilience  of  the  health  and  social  security  system,  in  particular  by  strengthening  the  social 
response network (Component 3 and Component 1 – National Health Service). Actions focused 
on  the  qualification  of  the  labour  force  (Component  6)  help  to  mitigate  the  social  and  labour 
impact  of  the  crisis.  The  quality  of  the  country’s  public  financial  management  should,  among 
others,  be  strengthened  by  the  digitalisation  of  the  public  administration  and  fiscal-structural 
reforms (Component 17 – Quality and Sustainability of Public Finances).  

Concerning  EAR 2  to  further  improve  convergence,  resilience  and  sustainable  and 
inclusive  growth,  Components  10  to  19  include  investments  to  promote  the  climate 
transition  and  digital  transformation,  respectively.  Component  20  –  Digital  School  should 
support  educational  and  pedagogical  innovation  through  digitalisation  and  modernisation. 
Measures  to  strengthen  vocational  education  and  training,  and  reskilling  and  upskilling 
(Component 6) should enhance productivity, employment and labour market integration. 

The  plan  addresses  EAR 3  on  strengthening  national  institutional  frameworks,  mostly 
through  Component  18  –  Economic  Justice  and  Business  Environment.  This  component 
contributes  to  the  modernisation  and  digitalisation  of  the  justice  system  and  includes  the 
development  of  an  information  system  to  monitor  Portugal’s  national  anti-corruption  strategy. 
Digitalisation measures in Component 1 are expected to strengthen the National Health Service. 
Component  19  –  Digital  Public  Administration  intervenes  in  the  area  of  public  administration 
modernisation  and  digital  transition,  and  should  reduce  the  administrative  burden  and  improve 
the business environment. 

On EAR 4 on ensuring macro-financial stability, reforms and investments in Components 1 
and 17 address several bottlenecks impacting on the quality of public finances. In addition, 
the  measures  in  Component  5  on  the  capitalisation  of  companies,  and  the  establishment  and 
capital reinforcement of Banco Português de Fomento are specifically designed to support viable 
companies and facilitate access  to  finance.  It  is  set  to  be complemented by reforms  to  develop 
the Portuguese capital market. 

38 

 
Some elements of the Portuguese recovery and resilience plan should contribute to EAR 5 
on completing the Economic and Monetary Union and strengthening the international role 
of the euro. This concerns mainly deepening the Capital Markets Union, in particular measures 
to  strengthen  the  Portuguese  capital  market  (reform  in  Component  5)  and  the  justice  system 
(Component  18),  by  increasing  the  efficiency  of  insolvency  and  recovery  procedures.  More 
generally,  measures  in  Components  5,  17,  18  and  19  should  have  a  positive  impact  on  the 
business environment and the removal of bottlenecks to investment, contributing to the resilience 
of the Economic and Monetary Union as a whole. 

The  plan  sets  out  a  clear  administrative  organisation  for  its  implementation.  The  Decree 
Law No 29-B/2021 establishes a four-level governance model: 

a)  An  Inter-ministerial  Commission,  chaired  by  the  Prime  Minister,  is  in  charge  of  the 

strategic and policy coordination;  

b)  A National Monitoring Commission, made up of representatives of the various social and 
economic partners and key civil society figures and chaired by an independent person, is 
set  to  monitor  the  implementation  of  the  recovery  and  resilience  plan  and  its  results, 
promote  its  proper  dissemination  to  citizens,  businesses  and  other  organisations,  and 
examine any issues affecting its performance and propose recommendations; 

c)  An administrative structure ‘Estrutura de Missão Recuperar Portugal’ (‘task force’), the 
Agency  of  Development  and  Cohesion,  and  the  Ministry  of  Finance  is  set  to  ensure 
technical coordination and monitoring (see below); 

d)  The  Audit  and  Control  Committee  (CAC),  chaired  by  the  Inspectorate-General  for 

Finance (IGF), is set to be responsible for audit and control activities. 

Portugal has set up a dedicated structure for implementing the recovery and resilience plan 
(‘Estrutura  de  Missão  Recuperar  Portugal’)  under  the  responsibility  of  the  Ministry  of 
Planning. This task force is set to be in charge of coordinating, monitoring and reporting on the 
implementation  of  the  recovery  and  resilience  plan.  It  will,  among  other  tasks,  (i)  ensure 
compliance with the EU regulations;  (ii) monitor the full and timely fulfilment  of the strategic 
and  operational  objectives  of  the  recovery  and  resilience  plan  through  milestones  and  targets; 
(iii) ensure that the contracting with beneficiaries is compliant with the respective conditions for 
the  use  of  funding;  (iv)  prepare  and  submit  the  requests  for  payment  based  on  the  necessary 
information  from  the  competent  authorities,  as  well  as  drafting  the  reports  to  the  European 
Commission;  (v)  establish  an  internal  management  and  control  system  to  prevent  and  detect 
irregularities, and take appropriate corrective actions; ensure evaluation of the results of the plan 
and dissemination of outputs; (vi) put in place effective and proportionate anti-fraud measures, 
taking into account the risks identified; and, (vii) provide technical assistance to the competent 
authorities.  

The task force  Recuperar  Portugal is expected to conduct these tasks with the Agency for 
Development  and  Cohesion  (‘Agência  para  o  Desenvolvimento  e  Coesão’),  which  is 
responsible  for  coordinating  shared  management  Funds.  It  is  set  to  also  work  with  the 
Ministry  of  Finance  (in  particular,  with  the  Planning,  Strategy,  Evaluation  and  International 
Relations  Office,  GPEARI).  The  Agency  is  directly  responsible  for  the  systematic  analysis  of 

39 

 
to  monitor 

is  expected 

transparency  mechanism.  The  Ministry  of  Finance 

double funding and payments to the direct or intermediate beneficiaries of the plan, and is set to 
be active in the evaluation of the results of the recovery and resilience plan, and the information 
and 
the 
implementation  of  the  recovery  and  resilience  plan,  assess  the  macroeconomic  impacts  of  the 
reforms  and  investments,  and  be  responsible  for  the  exchanges  within  the  Council.  Technical 
support can be requested under the Technical Support Instrument to assist Member States in the 
implementation  of  the  plan.  This  instrument  provides  expertise  in  building  capacities  to 
implement the plans in a number of areas covered in the Portuguese plan such as health, justice 
(including the reform of administrative and tax courts), green, digital and public administration, 
as well as for the overall implementation of the plan. Sectorial support to policy reforms could 
also  be  provided  by  the  Horizon  Policy  Support  Facility,  which  gives  Member  States  and 
countries  associated  to  Horizon  Europe  practical  support  to  design,  implement  and  evaluate 
reforms  that  enhance  the  quality  of  their  research  and  innovation  investments,  policies  and 
systems. 

For  gender  equality  and  equal  opportunities  for  all,  the  plan  has  a  dual  approach:  it 
consists of responding to the consequences of the pandemic and addressing underlying structural 
factors  leading  to  inequalities,  as  addressed  in  the  National  Strategy  for  Equality  and  Non-
discrimination (2018-2030). Portugal describes existing national challenges with gender equality 
and, to  a lesser extent, challenges with  equal  opportunities for all, and explains which reforms 
and investments are expected to help in overcoming the challenges identified. Portugal plans to 
use monitoring mechanisms using data disaggregated by gender. 

Before it was presented to the country’s Parliament, the Portuguese plan was the subject of 
various  public  discussions  and  debates,  which  covered  the  plan’s  main  elements.  In  July 
2020  a  public  consultation  was  conducted  on  the  ‘Strategic  Vision  for  Portugal’s  Economic 
Recovery Plan 2020-2030’. This consultation fed into the first draft recovery and resilience plan 
presented on 15 October 2020. A second draft of the plan was published on 15 February 2021 for 
a  two-week  public  consultation.  Diverse  organisations  and  citizens  made  some  1 700  written 
contributions at that occasion. Several public thematic seminars were held with members of the 
government  participating. Some changes were introduced as  a result of the consultation  on the 
second  draft,  most  notably  two  components  were  added:  on  cultural  activities  (Component  4), 
and  on  the  sea  and  the  blue  economy  (Component  10).  In  parallel  to  this  public  consultation 
process,  the  Portuguese  government  launched  an  agenda  for  consultations  with  a  number  of 
relevant stakeholders (including the Economic and Social Council; the Territorial Coordination 
Council and the National Health Council). For the implementation phase, Portugal has set up a 
National  Monitoring  Commission,  made  up  of  representatives  of  social  partners  and  key  civil 
society  figures,  who  will  be  able  to  make  recommendations  on  the  implementation  of  the 
recovery and resilience plan. 

The Portuguese plan includes only minor investments in 5G deployment. These are limited 
to  local  5G  networks  in  business  parks  and  a  local  project  to  deploy  about  90 km  of  the  5G 
network  for  the  public  administration  in  the  Autonomous  Region  of  Madeira.  The  plan  also 
includes investments in school connectivity and in digital capacities for the public administration 

40 

 
(cloud,  data  centres).  Portugal  has  submitted  a  preliminary  security  self-assessment  for  these 
investments on connectivity and digital capacities. The self-assessment provides for a matrix of 
risks  and  mitigating  measures.  A  total  of  18  possible  risks  are  identified,  including  vendor 
dependency,  high  risk  suppliers,  cybersecurity  concerns,  and  disruption  of  critical  systems. 
Furthermore, the matrix identifies 13 mitigating measures to be enacted to counter the possible 
risks, including requirement for security clearance by the providers, application of restrictions to 
suppliers  considered  to  be  high-risk,  multi-vendor  strategies  and  backup  systems  for  critical 
functions.  The  matrix  is  then  applied  to  all  investments  with  connectivity  and  digital  capacity 
elements to identify the specific risks of each investment and the related mitigating measures that 
are  expected  to  be  taken.  Strategic  measures  mentioned  in  the  security  self-assessment  would 
need to be closely monitored during the implementation of the plan. 

The Portuguese recovery and resilience plan includes the following cross-border projects:  

  On justice (Component 18), the plan aims to: (i) accelerate and develop the interoperability 
of  criminal  record  information  in  the  European  Criminal  Records  Information  System 
(ECRIS); (ii) enable the publication and search of interoperable judicial decisions through 
the  European  Case  Law  Identifier  (ECLI);  (iii)  facilitate  the  exchange  of  information 
between judicial entities on the basis of E-Codex; and, (iv) cooperate in the European Car 
and  Driving  Licence  Information  System  (EUCARIS)  and  the  use  of  cross-border 
identification resources (e.g. eIDAS). Furthermore, the recovery and resilience plan states 
the  intention  of  providing  solutions  for  interoperability  and  facilitating  information 
exchange between Member States, taking advantage of the single digital gateway, or in the 
case  of  the  justice  system  through  the  e-Justice  portal  and/or  international  cooperation 
platforms. 

  On digitalisation of business (Component 16), the  ‘Digital  Innovation Hubs’ measure  are 
set  to  contribute  to  the  European  Digital  Innovation  Hubs  project  by  establishing  in 
Portugal 16 Digital Innovation Hubs that are set to integrate the European network funded 
by the Digital Europe Programme (DEP). 

  On  renewable  energy  (Component  14  –  Hydrogen  and  Renewables),  the  recovery  and 
resilience plan indicates that part of the projects involving renewable hydrogen production 
may also be included in the forthcoming Important Project of Common European Interest 
(IPCEI)  on  hydrogen.  Portugal  has  expressed  interest  and  it  is  working  with  other  EU 
Member  States  to  develop  the  IPCEI  on  hydrogen.  However,  due  inter  alia  to  the  early 
stage  of  this  initiative  and  the  uncertainty  on  its  perimeter  and  on  its  timing,  there  is  no 
clarity  at  this  stage  on  the  use  of  the  budget  allocation  under  the  RRF  for  the  IPCEI  on 
hydrogen. Nevertheless, even absent the IPCEI on hydrogen Portugal, would still be able 
to support the foreseen projects on renewable hydrogen production capacity if complying 
with other State aid compatibility frameworks, and these investments could still be aligned 
with the EU 2020 strategy on hydrogen and other related EU initiatives. 

The  recovery  and  resilience  plan  broadly  outlines  Portugal’s  communication  plans.  The 
task force Recuperar Portugal is to design a detailed communication strategy. A EUR 200 000 

41 

 
budget  is  set  to  be  allocated  to  implement  the  communication  measures.  The  Portuguese  plan 
envisages communication based on the five main objectives of:  

  Recognition: building a brand for the recovery and resilience plan; 
  Information and transparency: clarifying the main features of the facility; 
  Mobilisation:  ensuring  intensive  demand  for  participating  in  the  implementation  of  the 
recovery and resilience plan measures by promoting effective communication to mobilise 
potential beneficiaries; 

  Raising  awareness:  contributing  to  the  understanding,  discussion  and  reflection  on  the 

challenges that the recovery and resilience plan proposes to address; and, 

  Monitoring and evaluation: defining a model to report on the monitoring and evaluation 

of the results of the communication activities. 

Portugal  plans  to  target  different  audiences  throughout  the  different  stages  of  the  plan. 
This  is  expected  to  range  from  the  general  public  at  the  beginning  (including  during  public 
consultation) to  moments  focused on stakeholders, bearing in mind that each  component has  a 
specific target audience. Portugal also plans to build on the experiences and models already used 
for  communication  on  European  Structural  and  Investment  Funds  and  to  request  that  in 
communication  moments 
the 
Representation  in  Portugal  –  participate  as  well  as  other  EU  institutions,  with  a  focus  on  the 
European Parliament. It is expected that the final communication strategy developed: 

the  European  Commission  – 

i.e.  Commissioners  and 

  proposes  a  series  of  key  projects  that  were  selected  for  funding  and  on  which  proactive 

communication could focus – including jointly with the European Commission; and, 

  gives prominence to the European added value of the RRF in the distribution of the funds 

and its priority areas.  

State aid and competition rules fully apply to the measures funded by the RRF. Union funds 
channelled through the authorities of Member States, like the RRF funds, become State resources 
and can constitute State aid if all the other criteria of Article 107(1) TFEU are met. When this is 
the  case  and  State  aid  is  present,  these  measures  must  be  notified  and  approved  by  the 
Commission before Member States can grant the aid, unless those measures are covered by an 
existing aid scheme or comply with the applicable conditions of a block exemption regulation, in 
particular the General Block Exemption Regulation (GBER) declaring certain categories of aid 
compatible with the internal market in application of Articles 107 and 108 TFEU.23 When State 
aid is present and it requires notification, it is the duty of the Member State to notify State aid 
measures to the Commission before granting them, in compliance with Article 108(3) TFEU. In 
this  respect,  the  State  aid  analysis  carried  out  by  Portugal  in  the  recovery  and  resilience  plan 
cannot be deemed a State aid notification. Insofar as Portugal considers that a specific measure 
contained  in  the  recovery  and  resilience  plan  entails  de  minimis  aid  or  aid  exempted  from  the 
notification  requirement,  it  is  the  responsibility  of  Portugal  to  ensure  full  compliance  with  the 
applicable rules. Irrespective of whether they comply with the EU’s State aid regime, measures 

23   Commission Regulation 651/2014, OJ L 187, 26.6.2014, p. 1. 

42 

 
                                                           
taken  under  this  framework  should  be  compatible  with  the  EU’s  international  obligations,  in 
particular under World Trade Organization rules. 

4.  SUMMARY OF THE ASSESSMENT OF THE PLAN 

4.1. Comprehensive  and  adequately  balanced  response  to  the  economic  and  social 

situation 

The plan follows a holistic approach to drive the recovery, while enhancing socio-economic 
resilience. This is  done with the support of 115measures (32 reforms and 83 investments)  that 
refer to the policy areas of European relevance structured in ‘six pillars’. The plan helps tackle 
key  structural  challenges  and  paves  the  way  for  the  twin  transition,  while  protecting  the 
environment.  The  plan  includes  20  components  structured  around  three  dimensions:  resilience, 
climate transition, and digital transition. Portugal submitted its National Reform Programme on 
30 April 2021. The information provided in the National Reform Programme is being considered 
and  jointly  assessed  in  this  Staff  Working  Document  together  with  the  recovery  and  resilience 
plan. 

The  reforms  and  investments  of  the  plan  have  many  interdependent  and  complementary 
objectives. Reforms leverage the impact of associated investments, by bringing structural change 
and increasing the participation and financing of private agents. 

Overall,  the  plan  is  balanced  and  focuses  on  Portugal’s  main  challenges.  Besides  the  twin 
transitions,  these  challenges  largely  refer  to  the  country’s  social  and  educational  needs, 
institutional  resilience  (including  the  efficiency  of  the  justice  system  and  of  the  public 
administration  in  general),  and  the  need  to  boost  the  productive  potential  of  the  economy  by 
investing in research and development, and by improving the business environment. The green 
and  digital  pillars  meet  the  targets.  The  balance  between  pillars  3  to  6  is  broadly  adequate, 
focusing  on:  (i)  strengthening  the  health  and  long-term  care  systems;  (ii)  providing  social  and 
affordable  housing;  (iii)  offering  innovative  integrated  social  services,  especially  in  deprived 
metropolitan  areas  of  Lisbon  and  Porto;  (iv)  strengthening  education  as  well  as  the  vocational 
education and training (VET) systems; (v) ensuring the digitalisation of primary and secondary 
education;  (vi)  implementing  measures  to  incentivise  innovation  and  support  entrepreneurship; 
(vii)  implementing  measures  to  digitalise  public  services,  make  public  administration  more 
efficient  and  improve  the  quality  of  public  finances;  and  (viii)  implementing  measures  to 
improve the business environment, including the modernisation of administrative and tax courts, 
and the streamlining of legal procedures. 

1st Pillar: green transition 
The plan extensively covers the ‘first pillar’, with about three quarters of all components 
directly  related  to  the  ‘green  transition’,  therefore  contributing  adequately  to  its  overall 
coherence. Measures in the plan are aligned with the Portuguese National Energy and Climate 
Plan (NECP) for 2021-2030 and the roadmap for carbon neutrality in 2050 (RNC2050), which 
aims to achieve the goals of energy transition and decarbonisation, including the objectives of a 
reduction in GHG emissions of between 45% to 55% (compared to 2005), an increase in energy 

43 

 
efficiency of 35% (reduction in primary energy consumption), and the reinforcement of the share 
of  renewable  sources  in  energy  generation  (47%  of  renewable  energy  in  gross  final  energy 
consumption). 

In  order  to  implement  climate-related  policy  measures  in  areas  such  as  energy  transition  and 
adaptation to climate change, the plan envisages a broad range of measures: 

1.  Component  8  –  Forests  intervenes  in  forest  management  to  protect  the  country’s  forests 

against rural fires, and to modernise the cadastral system, among others; 

2.  Component  9  –  Water  Management  contains  measures  to  address  water  scarcity  in  the 

worst affected regions and to adapt to climate change;  

3.  Component  10  –  Sea  focusses  on  the  blue  economy  and  contains  measures  to  protect 
marine  resources  and  to  foster  research  and  skills  in  the  sector,  together  with  the 
implementation of more efficient energy and resource use solutions for fisheries; 

4.  Component  11  –  Decarbonisation  of  Industry  provides  subsidies  for  the  adoption  of  low 

carbon processes and technologies; 

5.  Component  12  –  Bioeconomy  focuses  on  three  strategic  industrial  sectors  to  promote  a 

modern and circular bio-industry;  

6.  Component 13 – Energy Efficiency in Buildings aims to improve the energy efficiency of 
buildings,  for  example,  by  investing  in  the  renovation  of  buildings  and  handing  out 
vouchers  to  energy  poor  households.  Also  Component  1  –  National  Health  Service, 
Component 2 – Housing and Component 3 – Social Responses envisage the construction of 
new energy efficient buildings and the renovation of buildings; 

7.  Component  14  –  Hydrogen  and  Renewables  promotes  the  production  of  renewable 
hydrogen and other renewable gases and of renewable energy and storage capacity in the 
Autonomous Regions of the Azores and Madeira; 

8.  Component 15 – Sustainable Mobility strengthens sustainable mobility, including through 
the  use  of  public  transport.  Furthermore,  Component  1  –  National  Health  Service  and 
Component 3  – Social Responses envisage the renewal  of some of vehicles in  the health 
and social services’ fleets with electric cars. 

All  of  these  measures  contribute  to  the  green  transition,  favour  biodiversity  and 
environmental protection, and help to reduce energy poverty.  In addition, there are another 
eight  components  that  have  partial  contributions  to  the  green  transition.  Based  on  the 
methodology  for  climate  tracking  set  out  in  Annex  VI  to  Regulation  (EU)  2021/241,  the 
quantitative assessment of the plan in relation to the climate target finds a contribution of 37.9% 
of  the  total  allocation,  thereby  complying  with  the  minimum  threshold  of  37%,  with  a  direct 
contribution from 16 of the 20 components. 

44 

 
2nd Pillar: digital transition 
The plan extensively covers the ‘second pillar’, with about half of its components directly 
related  to  ‘digital  transformation’,  therefore  contributing  adequately  to  its  overall 
coherence.  Despite  positive  developments  in  recent  years,  Portugal  still  lags  behind  the  EU 
average on digital indicators, ranking 19th out of the EU Member States in the Digital Economy 
and Society Index (DESI) 2020.24 The country continues to perform weakly in human capital in 
dimensions such as basic digital skills, ICT specialists (including lack of female ICT specialists), 
use  of  internet  services,  and  online  sales.  However,  in  digital  public  services,  Portugal  ranks 
among the best performers in the EU. 

The plan directly addresses digital-related challenges in Components 16, 17, 18, 19 and 20 
and, indirectly, with the strong complementarities in Components 1, 4, 5 and 6. Component 
5 – Investment and Innovation aims, among others, to improve the specialisation profile of firms 
through  digitalisation,  knowledge  transfer  and  innovation.  This  includes  innovation  in 
agriculture,  where  proposed  investments  target  some  of  the  objectives  of  the  ‘Farm  to  Fork 
Strategy’ (such as reducing dependency on pesticides, supporting the shift to a sustainable diet, 
as  well  as  developing  and  promoting  innovative  agricultural  production  systems).  Within  the 
overall context of the digital transformation, Component 6 – Qualifications and Skills includes: 
(i) investments to reform and strengthen vocational education and training , including training in 
digital literacy and skills; (ii) lifelong learning for adults, raising the participation rates of adults 
in  courses  to  promote  basic  levels  of  literacy,  numeracy  and  digital  skills;  (iii)  furthering  the 
process of recognition, validation, and certification of competencies for low-qualified adults; (iv) 
fostering collaborative partnerships between higher education institutions, the public sector and 
firms to facilitate the transfer of knowledge; and, (v) post-graduate courses of short duration.  

is 

Component  16  –  Enterprises  4.0 
line  with  the  European  Commission’s 
in 
Communication ‘Shaping Europe’s Digital Future’ and with its objective of creating a ‘fair 
and  competitive  economy’.  It  achieves  this  by  developing,  marketing  and  using  digital 
technologies, products and services at a scale that boosts their productivity and competitiveness. 
It  is  expected  that  this  component  will  support  experimentation  with  new  digitally  based 
products  and  services,  the  digitisation  of  traditional  commerce  and  professions,  and  the 
internationalisation of businesses.  

A  number  of  components  aim  to  cut  the  costs  of  administrative  red  tape  through  the 
widespread  adoption  of  digital  channels  for  the  provision  of  public  services.  These  are 
Component  17  –  Quality  and  Sustainability  of  Public  Finances,  Component  18  –  Economic 
Justice  and  Business  Environment,  and  Component  19  –  Digital  Public  Administration. 
Dematerialisation,  automation  and  the  interoperability  of  procedures,  even  without  changing 
administrative  requirements,  should  bring  considerable  advantages  in  terms  of  reducing  the 
administrative  burden  for  individuals  and  businesses.  The  envisaged  move  towards  a  Single 
Digital  Portal  and  the  implementation  of  the  ‘once  only  principle’  are  expected  to  have  a 

24   DESI  2020  ranking  refers  to  2019  figures  and  includes  the  United  Kingdom.  Excluding  the  United  Kingdom, 

Portugal would rank 18th out of 27 Member States. 

45 

 
                                                           
significant  impact  in  this  area.  The  increased  digitalisation  of  public  services  requires 
simultaneous investments in the skills of civil servants.  

Component 20 – Digital School aims to adapt academic curricula and teaching methods to 
ICT developments, in order to face societal changes and the challenges of the future world 
of  work.  It  envisages  a  reform  of  teaching  methods  based  on  the  digitalisation  of  course 
materials,  the  dematerialisation  of  testing,  the  distribution  of  information  technology  (IT) 
personal equipment to teachers and students, and the improvement of connectivity and the setting 
up  of  a  schools’  network.  Component  20’s  objectives  are  in  line  with  the  European 
Commission’s  Communication  ‘Shaping  Europe’s  Digital  Future’  and  in  particular  with  its 
objective  of  promoting  a  ‘technology  that  works  for  people’,  through  among  others,  the 
development, and uptake of technology that makes a real difference to people’s lives. 

Based on the methodology for digital tagging set out in Annex VII to Regulation (EU) 2021/241, 
the  quantitative  assessment  of  the  plan  in  relation  to  the  digital  target  finds  a  contribution  of 
22.1% of the plan’s  total  allocation, therefore complying with  the minimum  threshold of 20%, 
with a contribution from 14 Components out of 20. 

3rd  Pillar:  smart,  sustainable  and  inclusive  growth,  including  economic  cohesion,  jobs, 
productivity,  competitiveness,  research,  development  and 
innovation,  and  a  well-
functioning internal market with strong SMEs 

The  plan  extensively  covers  the  ‘third  pillar’,  with  all  components  directly  involved, 
therefore  contributing  adequately  to  its  overall  coherence.  Given  the  complexity  of  the  3rd 
Pillar, in order to assess how well the Portuguese plan covers its multiple dimensions, it is useful 
to break it down into its constituent parts. 

Smart, sustainable and inclusive growth: 

  Components 4, 5, 6, 7, 12, 14 and 16 enhance the productive capacity of the economy; 

  Components  8,  9,  10,  11,  12,  13,  14  and  15  promote  sustainable  growth  and  climate 

adaptation; 

  Component 17 implements a broad set of coherent fiscal-structural reforms, among others 
to strengthen public expenditure control, which should contribute to enhance the quality of 
public  finances  by  shifting  resources  towards  areas  that  maximise  the  potential  for 
sustainable and inclusive economic growth. 

Economic cohesion, jobs, productivity, competitiveness: 

  Components 1, 2 and 3 relate to the universal provision of social services; 

  Components  3  and  6  contribute  to  sustainable  growth  and  inclusion,  gender  equality  and 

equal opportunities for all and the European Pillar of Social Rights. 

Research, development and innovation: 

46 

 
  Components  5,  10,  11,  12,  13,  14  and  15  directly  relate  to  research,  innovation,  new 

technologies and decarbonisation; 

  Components 6, 16 and 20 are linked to education and the digital transformation. 

A well-functioning internal market with strong SMEs: 

  Component  5  contributes  to  improve  access  to  finance  for  firms  and  the  development  of 

the capital market; 

  Components  18  and  19  promote  the  dematerialisation  of  public  services,  streamlining 

licensing procedures and improving the effectiveness of the justice system. 

4th Pillar: Social and territorial cohesion 
The  plan  extensively  covers  the  ‘fourth  pillar’,  with  more  than  half  of  all  components 
directly related to ‘social and territorial cohesion’, therefore contributing adequately to its 
overall coherence. Measures in the plan are set to be closely articulated with other EU Funds, 
such as those under the Partnership Agreement Portugal 2030 or other centrally-managed funds 
(e.g. Connecting Europe Facility, Horizon Europe).  

The promotion of economic, social and territorial cohesion in the next decade is expected to 
take into account the principles and guidelines set out in the recently adopted Territorial 
Agenda  2030.  This  is  the  EU  strategic  policy  document  for  spatial  planning  in  Europe  that 
provides  the  framework  for  conducting  territorial  cohesion  action  and  helping  to  achieve  the 
Sustainable Development Goals.  

Territorial  cohesion  is  predominantly  addressed  by  the  Resilience  dimension  of  the  plan 
and is strongly intertwined with social aspects. Component 1 – National Health Service has a 
strong  territorial  dimension,  given  that  primary  health  care,  mental  health  and  long-term  care 
services are set to become better anchored on local services and strive for community-based care, 
and wide-ranging investments in health services are also envisaged in the outermost Autonomous 
Regions  of  Madeira  and  the  Azores.  Social  housing  at  affordable  rents  (Component  2  – 
Housing),  whether  permanent  or  temporary,  is  set  to  largely  be  provided  through  the 
implementation of municipal housing programmes under the coordination of the national agency 
for housing and urban renewal (IHRU). Moreover, specific housing investments are planned in 
the  Autonomous  Regions  of  Azores  and  Madeira.  Component  4  –  Culture  also  has  a  strong 
territorial dimension. The renovation of buildings and national monuments and the protection of 
artisan techniques and professions increase the economic attractiveness of regions by developing 
cultural and social activities of high economic value, which helps to reinvigorate tourism. Under 
Component 15  – Sustainable mobility, investments  to  expand the underground networks  in  the 
two  large  metropolitan  areas  help  to  improve  accessibility  /  mobility  according  to  best  urban 
planning  practices  and  also  contribute  to  decarbonisation.  Having  both  social  and  territorial 
dimensions,  Component  3  –  Social  responses  plans  to  strengthen  social  facilities  and  social 
services,  such  as  the  national  networks  of  social  day  care  centres  and  residential  structures  for 
elderly people, ensuring broad territorial coverage. Significant investments targeting vulnerable 
groups are also planned in the Metropolitan Areas of Lisbon and Porto. 

47 

 
5th  Pillar:  Health  and  economic,  social  and  institutional  resilience,  with  the  aim  of 
increasing crisis preparedness and crisis response capacity, among others 

The  plan  extensively  covers  the  ‘fifth  pillar’,  with  about  half  of  all  components  directly 
related to it, therefore  contributing  adequately to its overall  coherence.  Despite the rise in 
total resources (such as through hiring of medical staff) and the reallocation of existing resources 
within  the  National  Health  Service  (for  instance,  hospital  wards  dedicated  to  COVID-19 
patients),  the  health  system  has  been  under  considerable  pressure  since  the  outbreak  of  the 
COVID-19 pandemic. At the same time, non-COVID-19 patients have been experiencing longer 
delays  in  diagnosis  and  treatment.  The  health  emergency  has  also  led  to  greater  inequality  in 
access to health care, particularly for low-income households or people living inland and in less 
populated areas, a situation worsened by the fact that on average about 30% of medical expenses 
in  Portugal  are  not  reimbursed.  This  is  one  of  the  highest  percentages  in  the  EU,  where  the 
aggregate average was about 21.7% in 2018. 

As for the priority of reducing social vulnerabilities, the main measures envisaged are to:  

i. 

ii. 

iii. 

strengthen  the  national  networks  of  primary,  palliative  and  integrated  continued  care 
services (Component 1 – National Health Service); 

increase  access  to  social  housing  at  affordable  rents  and  to  temporary  housing  in 
emergency situations (Component 2 – Housing); 

strengthen,  expand,  upgrade  and  reform  the  social  responses  network  (Component  3  – 
Social Responses).  

The plan also addresses strengthening the institutional capacity and resiliency of Portugal’s 
public  administration.  This  is  done  through  the  adoption  of  digital  technologies  and 
interoperability solutions, contributing to the reduction of administrative costs (Components 17, 
18  and  19).  In  particular,  measures  in  Component  17  –  Quality  and  Sustainability  of  Public 
Finances aim, among others, at modernising financial management in the general government in 
order to use resources more efficiently and improve the quality of public expenditure, as well as 
at making Social Security services more user-friendly. 

6th  Pillar:  Policies  for  the  next  generation,  children  and  young  people,  such  as  education 
and skills 

The  plan  extensively  covers  the  ‘sixth  pillar’,  with  nearly  one  third  of  all  components 
directly  related  to  it,  therefore  contributing  adequately  to  its  overall  coherence.  Although 
children  and  young  people  are  among  the  age  groups  less  affected  by  the  pandemic  on  health 
grounds,  they  have  been  among  those  most  impacted  by  social  distancing  rules,  which  led  to 
school  closures  and  changed  the  nature  of  work  in  many  (tertiary)  jobs  involving  face-to-face 
contacts.  There  is  evidence  suggesting  that  the  number  of  years  of  schooling  is  strongly 
correlated  with  life  earnings.  At  the  same  time,  long  periods  of  inactivity  and/or  difficult 
transitions  between  jobs  or  between  education/VET  activities  and  employment  tend  to  impact 
negatively on lifetime income earnings.  

48 

 
The  plan  presents  a  number  of  measures  with  a  direct  impact  on  children  and  young 
people, including: 

 

  an increase in the capacity of childcare facilities and subsidies to low-income households 
as  an  incentive  to  promote  the  pre-school  and  nursery  participation  (Component  3  – 
Social Responses); 
the creation of study support points for children and youths to combat early school drop 
outs  and  additional  support,  in  the  form  of  the  payment  of  higher  education  fees  to 
students from low-income families (Component 3 – Social Responses); 
the  award  of  temporary  wage  subsidies  for  sustainable  quality  employment  for  young 
people (Component 6 – Qualifications and Skills); 

 

  an increase in the offer of VET courses adapted to labour market needs, and of tertiary 
education posts, including for science, technology, engineering, the arts and mathematics 
(STEAM) courses (Component 6); 
Investments  in  student  accommodations  at  affordable  prices  for  tertiary  education,  to 
reduce  the  barrier  to  study  for  students  that  need  to  move  to  other  cities  for  tertiary 
education (Component 2); 

 

  systematic distribution of personal IT equipment to students and teaching staff, together 
with  the  widespread  use  of  digital  content  in  secondary  education  (Component  20  – 
Digital School). 

Conclusion on the assessment of criterion 2.1 of Annex V to the RRF Regulation 

Taking  into  consideration  all  reforms  and  investments  envisaged  by  Portugal,  its  recovery  and 
resilience plan represents, to a large extent a comprehensive and adequately balanced response to 
the economic and social situation, thereby contributing appropriately to all six pillars referred to 
in Article 3 of the RRF Regulation, taking the specific challenges and the financial allocation of 
Portugal  into  account.  This  would  warrant  a  rating  of  A  under  the  assessment  criterion  2.1  in 
Annex V to the RRF Regulation. 

49 

 
 
Table 4: Coverage of the six pillars of the Facility by the Portuguese recovery and resilience plan components 

Green 
transition 

Digital 
transition 

Smart, 
sustainable 
& inclusive 
growth 

Social and 
territorial 
cohesion 

1. National Health Service 

2. Housing 

3. Social Responses 

4. Culture 

5. Investment and Innovation 

6. Qualifications and Skills 

7. Infrastructure 

8. Forests 

9. Water Management 

10. Sea 

11 Decarbonisation of Industry 

12 Bioeconomy 

13 Energy Efficiency in Buildings 

14 Hydrogen and Renewables 

15 Sustainable Mobility 

16 Enterprises 4.0 

17 Quality and Sustainability of 
Public Finances 

18 Economic Justice and Business 
Environment  

19 Digital Public Administration  

20 Digital School 

○ 

○ 

○ 

○ 

○ 

○ 

○ 

● 

● 

● 

● 

● 

● 

● 

● 

 ○ 

● 

○  

○  

● 

○ 

● 

○ 

○ 

○ 

● 

● 

● 

● 

● 

○ 

○ 

○ 

○ 

● 

● 

○ 

○ 

○ 

○ 

○ 

○ 

○ 

● 

○ 

● 

● 

○ 

○ 

● 

● 

● 

● 

● 

● 

● 

○ 

○ 

○ 

○ 

● 

○  

● 

Key:  

‘●’ investments and reforms of the component significantly contribute to the pillar;  
‘○’ the component partially contributes to the pillar. 

50 

Health, and 
economic, 
social and 
institutional 
resilience 
● 

● 

● 

○ 

○ 

○ 

○ 

○ 

● 

● 

● 

Policies for 
the next 
generation 

○ 

○ 

● 

● 

● 

○  

● 

 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.2. Link with Country Specific Recommendations and the European Semester 

The plan is expected to contribute to addressing a large set of challenges for the Portuguese 
economy.  It  envisages  reforms  and  investments  in  the  areas  of  quality  and  sustainability  of 
public  finances,  accessibility  and  resilience  of  the  health  system,  employment,  education  and 
skills, climate and digital transition and in the area of the business environment and the justice 
system.  

The  Portuguese  plan  is  ambitious  in  addressing  a  significant  subset  of  the  challenges 
identified in the European Semester. It does so with a large set of reforms and investments that 
address  the  country-specific  recommendations  issued  in  the  framework  of  the  European 
Semester in 2019 and in 2020. The recovery and resilience plan is one of the key instruments for 
implementing  the  medium-term  Portugal  2030  strategy  for  the  country’s  social,  economic, 
regional  and  environmental  development.  The  Portugal  2030  strategy  addresses  the  main 
structural challenges of the Portuguese economy and society, in particular by promoting reforms 
and  investment  in  institutional  resilience,  reforms  in  the  business  environment,  significant 
investments and reforms in the twin transition, fiscal structural reforms and investment in skills 
and  competences.  The  strategy  also  has  a  strong  focus  on  reducing  social  and  territorial 
inequalities,  increasing  competitiveness  and  strengthening  internal  cohesion.  As  part  of  this 
longer-term  strategy, the recovery  and  resilience  plan introduces a  coherent  set  of  reforms and 
investments that complement and reinforce each other. The package of reforms presented in the 
plan aims to promote the transformation of Portugal’s economy and society to adapt to the trends 
of the upcoming decade. At the same time, the aim is to ensure, through a gradual and systematic 
approach, that the country is able to overcome structural bottlenecks to its economic, social and 
territorial  development.  The  investments  proposed  in  the  plan  are  intended  to  implement  the 
reforms by promoting the conditions for fairer, more sustainable economic, social and regional 
development, while ensuring the effectiveness and efficiency of these investments. The plan, as a 
significant  instrument  for promoting investment  in  the economy, is  a powerful  tool for driving 
relevant  factors  for  the  competitiveness  of  the  Portuguese  economy.  In  addition,  the  plan 
provides  a  significant  response  to  common  challenges,  notably  in  particular  the  flagships 
identified in the 2021 Annual Sustainable Growth Strategy. 

The  plan  provides  an  opportunity  to  address  imbalances  identified  by  the  2021  Alert 
Mechanism Report. These imbalances are also confirmed by the Commission’s in-depth review 
of 2 June 2021 with vulnerabilities related to large stocks of net external liabilities, private and 
government  debt,  and  non-performing  loans  (NPLs)  remain  high,  against  a  backdrop  of  low 
productivity growth.  

The  plan  is  built  around  the  main  objective  of  providing  an  appropriate  response  to  the 
effects of the COVID-19 pandemic, promoting the necessary steps to sustain the economy 
(CSR 1.1  2020).  Each  of  the  20  components  of  the  plan  contribute  to  this  objective.  The 
COVID-19 pandemic required immediate action on health, in parallel with a set of measures to 
mitigate its severe social and economic effects, which was extended over time in the face of the 

51 

 
 
upsurge of the pandemic in October and November 2020 (second wave) and January 2021 (third 
wave).  The  emergency  response  is  complemented  by  the  set  of  medium-term  responses 
embedded  across  the  plan  to  support  a  transformative,  sustained  and  fair  economic  and  social 
recovery, which underpins the plan’s 20 components. 

Improving  the  quality  of  public  finances  and  the  financial  sustainability  of  state-owned 
enterprises  (CSR 1.2  and  1.3  2019)  is  a  necessary  condition  to  strengthen  Portugal’s 
economic resilience, thus being central to the plan. The high public debt-to-GDP ratio – which 
increased further in view of the COVID-19 crisis – translates into high fiscal sustainability risks 
in the medium term. Thus, it is important for Portugal to enhance the quality of public finances, 
by prioritising growth-friendly spending, while strengthening expenditure control, cost efficiency 
and  appropriate  budgeting.  In  response  to  those  challenges,  Component  17  –  Quality  and 
Sustainability of Public Finances comprises an all-encompassing fiscal-structural that is expected 
to  contribute  to  improving  the  quality  of  public  finances  in  Portugal,  including  by:  (i)  gradual 
steps  conducive  to  the  implementation  of  the  2015  Budgetary  Framework  Law;  (ii)  improving 
the  planning  and  management  of  public  resources,  which  includes  making  spending  reviews  a 
structural  feature  of  Portugal’s  annual  budgetary  process,  ensuring  the  ex-post  evaluation  of 
efficiency  gains,  and  keeping  arrears  in  check  across  public  administration;  (iii)  strengthening 
the  financial  sustainability  of  state-owned  enterprises  through  a  more  timely,  transparent  and 
comprehensive  monitoring,  as  well  as 
through  performance-oriented 
management  practices;  and,  (iv)  upgrading  the  information  systems  for  rural  property  taxation 
(in  complementarity  with  component  8)  and  the  provision  of  Social  Security  services. 
Furthermore, the completion of the reform of the governance model of public hospitals, included 
in  Component  1  –  National  Health  Service,  is  expected  to  enhance  the  management  of  health 
resources,  thereby  contributing  to  enhance  overall  effectiveness  and  efficiency,  and  durably 
containing  the  accumulation  of  arrears  in  hospitals.  This  is  to  be  achieved,  among  other 
initiatives,  by:  i)  strengthening  the  implementation  of  planning  and  management  tools  that  is 
expected  to  allow  granting  hospitals  greater  autonomy  in  terms  of  investment  and  hiring 
decisions,  in  combination  with  enhanced  monitoring  and  stronger  accountability;  and,  ii) 
improving  the  use  of  performance  assessment  tools.  Parallel  projects  to  review  the  National 
Health Service’s network are also expected to support the implementation of reforms to promote 
its  efficiency  and  adequacy.  Overall,  the  reforms  of  Components  1  and  17  are  expected  to 
substantially  address  the  challenges  relating  to  the  quality  of  public  finances  and  the  financial 
sustainability of state-owned enterprises. 

their  governance 

The  plan  is  ambitious  in  strengthening  the  resilience  of  the  health  system  and  improving 
access  to  quality  health  care  and  long-term  care  (CSR 1.2  and  1.3  2020).  Component  1  – 
National Health Service aims to strengthen the National Health Service’s capacity to respond to 
the  country’s  demographic  and  epidemiological  challenges,  therapeutic  and  technological 
innovation,  as  well  as  the  rising  demand  for  health  care  and  the  ensuing  costs.  The  response 
provided  by  this  component  is  comprehensive  and  cross-cutting,  covering  primary,  hospital, 
long-term and mental health care. The governance concerns of these different levels of care are 
well  articulated  in  the  framework  of  reforms  under  the  component,  enhancing  the  services 
network, focusing on citizens and their health needs, and targeting improvements in access and 

52 

 
quality of services. This component also includes investments to ensure that the health system is 
able  to  provide  new  forms  of  health  services,  leveraging  the  use  of  digital  tools  to  improve 
access and increase equity in the provision of such services (for instance, telemedicine, telecare). 
It  also  incorporates  a  dedicated  programme  to  promote  the  digital  transformation  of  health,  by 
improving  and  strengthening  the  information  systems  of  the  National  Health  Service.  Finally, 
these investments and reforms are further boosted by the upgrade, expansion and reform of the 
social responses network under Component 3 – Social Responses, which is expected to influence 
the resilience of the health system by strengthening and innovating long-term care responses, in 
particular for the elderly.  

The  plan  aims  to  improve  the  population’s  overall  level  of  skills  including  digital  skills 
(CSR 2.2 and 2.3 2019) and  reinforces  the link between regional  and sectoral  skills  needs 
and vocational education and the training offer. The focus is also on increasing the relevance 
of adult learning in order to meet the needs of the labour market and on increasing the number of 
graduates,  in  particular  in  STEAMs.  These  challenges  are  addressed  to  a  large  extent  by 
Components  6  –  Qualifications  and  skills  and  Component  16  –  Enterprises  4.0  and  by 
Component  20  –  Digital  School.  Component  6  aims  to  increase  the  responsiveness  of  the 
Portuguese education and training system, especially for young people and low-skilled adults, in 
close connection with the country’s business needs. Component 16 aims to provide digital  and 
technical  skills  to  the  workforce.  In  addition,  Component  20  aims  to  create  conditions  for 
educational and pedagogical innovation with the aim to develop skills in digital technologies for 
the younger generations. To this end, emphasis is placed on the importance of the reforms to be 
implemented,  in  particular  the  reform  of  vocational  education  and  training  (reform  RE-r14), 
which aims to strengthen the Portuguese education and training systems’ responsiveness to the 
needs of the labour market, and the reform of cooperation between higher education and public 
administration  and  business  (reform  RE.r15),  which  aim  to  equip  students  not  only  with  the 
scientific skills appropriate to the course taught, but also with a set of transversal skills enabling 
them to  evolve in  a dynamic business  environment  where knowledge is  gradually progressing. 
Other reforms and investments in other components of the plan help to address the challenges on 
skills. For example, Component 10 – Sea foresees the creation of a Blue Hub School to promote 
a sustained increase at all levels of qualifications in the maritime sector. Component 2 – Housing 
provides for an investment to double the national supply of the number of beds for students at an 
affordable  price,  hence  helping  to  reduce  one  of  the  major  barriers  to  studying  and  with  a 
potential  impact  on  tertiary  education  enrolment.  Component  3  –  Social  responses  includes 
measures to combat early school drop outs through the creation of study support points, as well 
as  training  programmes  for  families  covered  by  the  Social  Inclusion  Income  to  provide  them 
with  complementary  basic  skills  and  enable  them  to  enter  the  labour  market.  Skills  are  also 
boosted by Component 16 – Enterprises 4.0, which includes an investment to improve the digital 
skills  of  employees,  and  Component  19  –  Digital  Public  Administration,  focusing  on  the 
objective of raising the level of skills and competences, in particular digital skills, of the public 
administration to make it more efficient and digital at the same time improve future public policy 
making. 

53 

 
The  plan  provides  a  significant  response  to  improve  the  effectiveness  and  adequacy  of 
social protection (CSR 2.3 2019 and 2.2 2020). In Portugal the effectiveness of social transfers, 
other than pensions, is low in an EU peer comparison. Component 3 – Social Responses aims to 
strengthen, expand, upgrade and reform social services that respond to the interlinked challenges 
of  childcare,  ageing,  long-term  care  and  disabilities.  Moreover,  Component  3  aims  to  promote 
integrated interventions in disadvantaged metropolitan areas and communities in order to combat 
poverty  and  strengthen  social  inclusion.  This  is  set  to  mainly  be  achieved  by  reinforcing  the 
network of social responses, developing innovative community-based solutions and investing in 
accessibility  and  participation  in  community  and  working  life  for  people  with  disabilities.  In 
addition, implementation of the public housing policy (Component 2  – Housing) is expected to 
make  an  essential  contribution  to  facilitate  access  to  affordable  and  social  housing,  as  well  as 
catering  for  urgent  and  temporary  housing  and  shelter  needs.  This  component  aims  to  provide 
adequate access to housing to at least 26 000 households and address housing needs for homeless 
people, refugees, migrants and asylum seekers, or victims of domestic violence (around 10 000 
people per year combined). Specific social and affordable housing investments are also planned 
in the Autonomous Regions of Madeira and the Azores.  

The  plan  introduces  relevant  measures  to  reduce  labour  market  segmentation,  support 
quality employment and the preservation of jobs (CSR 2.1, 2.3 2019 and 2.4 2020). Through 
the digitalisation efforts of Portuguese companies, the plan aims to promote the modernisation of 
work and production processes, the dematerialisation of workflows, the alleviation of skills gaps 
in the use of digital technologies, the incorporation of teleworking tools and methodologies, the 
creation  of  new  digital  channels  for  marketing  products  and  services  and  the  incorporation  of 
disruptive  technologies  (notably  through  Component  16  –  Digitalisation  of  Businesses).  In 
addition,  Component  6  –  Qualification  and  Skills  foresees  targeted  investments  for  those  in 
employment  through  upgrading  their  skills  to  meet  emerging  needs  in  view  of  the  digital  and 
environmental transition. The fight against segmentation and precariousness is also addressed by 
the  reform  of  the  Decent  Work  Agenda  (RE-r17),  included  in  Component  6,  which  aims  to 
promote collective bargaining, training and qualifications, and the protection of adequate wages 
and  decent  income,  ensured  through  social  dialogue.  Moreover,  the  reform  also  envisages 
discussions  on  the  future  of  work  and  regulating  new  forms  of  work  (notably  platform  work). 
This reform is set to be complemented by investments in sustainable job creation (RE-C06.i02), 
encouraging in particular the hiring of young people to enable a recovery from the crisis with a 
stable  and  permanent  framework  for  employment  relationships.  In  parallel,  the  fight  against 
gender  inequality  (RE-r18),  which  aims  to  combat  discriminatory  practices,  is  set  to  continue 
with  reforms,  while structural  action is  expected to  be taken to  combat gender stereotypes that 
limit the educational and professional  choices of women and girls and have an impact on their 
income and professional careers. To a lesser extent, Component 4 – Culture and Component 10 – 
Sea are also expected to help address this challenge in their respective sectors.  

The plan significantly aims  to support the use of digital technologies and promote digital 
skills for various population groups such students, teachers, the workforce, businesses and 
civil  servants  (CSR 2.2  2019  and  2.3  and  2.4  2020).  These  efforts  cut  across  various 
components, ranging from support for digital skills to investments in digital technologies. This is 

54 

 
covered in  Components  7, 16, 17, 18, 19  and 20, which together  correspond to  the structuring 
dimension of the digital transition and are complemented by Components 1, 3, 4, 5 and 6.  

The  plan  introduces  significant  measures  to  promote  access  to  finance,  in  particular  to 
SMEs,  and  promote  private  and  public  investment  for  the  country’s  economic  recovery 
(CSR 3  2020).  The  plan  is  based  on  two  complementary  approaches,  leveraging  private 
investment and increasing public investment (notably through Components 5, 11, 12, 13, 14 and 
16).  Component  5  –  Investment  and  Innovation  focuses  on  supporting  the  capitalisation  of 
businesses  and  minimising  market  failures  in  access  to  finance  by,  among  others,  creating  and 
developing  Banco  Português  de  Fomento  and  providing  it  with  the  financial  capacity  to  create 
the  financial  conditions  for  enabling  projects  of  national  strategic  interest.  In  parallel, 
Components  11  –  Decarbonisation  of  Industry  and  16  –  Enterprises  4.0  aim  to  leverage  the 
investments needed for Portuguese companies to adapt to the twin climate and digital transitions. 
The  support  provided  for  in  Component  11  to  decarbonise  industry  is  expected  to  ensure  the 
Portuguese  productive  system’s  timely  preparation  for  new  environmental  requirements. 
Component  16  should  help  with  the  digital  transformation  of  SMEs’  business  models  by 
enabling  them  to  reposition  their  business  in  a  digitally  advanced  ecosystem,  particularly 
relevant in the context of the pandemic. 

The plan introduces significant reforms and investments to promote investment in research 
and  innovation  and  make  these  more  efficient  and  effective  (CSR 3.3  2019  and  2020). 
Component  5  –  Investment  and  Innovation  introduces  reforms  and  investments  to  support 
ambitious research and innovation agendas, notably in areas relevant for the green transition. In 
addition, Component 12 – Bioeconomy promotes the development of high value added products 
using  biological  resources  in  the  key  sectors  of  textiles,  footwear  and  natural  resins.  Other 
components  contribute  to  research  and  innovation  in  specific  sectors  of  the  economy,  notably 
Components 4 and 10, but also 6, 7, 11, 14, 16, 17, 18, and 19. These incorporate elements of 
innovation  in  production  processes  often  associated  with  research  and  development  directly 
related  to  those  policy  areas.  Component  20  —  Digital  School  also  contributes.  The 
implementation  of  several  reforms,  in  particular  to  promote  R&I&D  and  innovative  business 
investment (RE.r09), aims to increase the weight of high value added products in the economy 
and  strengthen  the  network  of  interface  institutions  (RE-r11)  so  that  this  network  has  the 
necessary resources/capabilities to support knowledge and technology transfer. 

The plan promotes investment for the climate and green transition (CSR 3 2019 and 2020). 
Through Components 10 to 15, which together constitute the plan’s climate transition dimension, 
and  Components  4,  5,  8  and  9  which  also  incorporate  measures  directly  linked  to  the  climate 
transition,  the  plan  places  a  strong  emphasis  on  addressing  this  challenge.  The  reforms  and 
investments included in these components are aimed at decarbonising the economy, introducing 
actions  to  reduce  the  energy  intensity  of  the  economy  (for  example  Component  13  –  Energy 
Efficiency in Buildings and Component 11 – Decarbonisation of Industry, and Component 15 – 
Sustainable mobility) and introducing interventions that generate energy from renewable sources 
(for  example  Component  14  –  Hydrogen  and  Renewables  and  Component  9  -  Water 

55 

 
Management). Component 8 – Forests aims to protect the country’s forests, addressing climate 
change but also contributing to mitigation objectives.  

The plan is ambitious in tackling the challenges of the business environment and improving 
the  efficiency  of  the  justice  system  (CSR 4  2019  and  2020).  The  reforms  and  investments 
introduced in Component 18 – Economic Justice and Business Environment, 19 – Digital Public 
Administration, 6 – Qualifications and Skills, and 16 – Enterprises 4.0 by aiming to reduce the 
administrative and regulatory burden on businesses and citizens and strengthen their proximity to 
public  administration  through  the  use  of  technology,  represent  significant  steps  towards 
increased efficiency. Component 18 introduces reforms to modernise the justice system through 
the digitalisation of procedures and takes steps to reduce the backlog of pending cases (one of the 
highest  in  the  EU  at  present).  In  parallel,  this  component  also  introduces  a  reform  aimed  at 
streamlining  licensing  procedures  and  reducing  the  administrative  burden  for  businesses. 
Component 19 focuses on providing a better public service, using technology and strengthening 
proximity for simpler, effective and efficient access for citizens and businesses, reducing context 
costs. The strengthening of digital public services is taken as the stepping stone in improving the 
functions of the State and its relationship with economic actors, which is an essential condition 
for creating an environment conducive to the promotion of competitiveness, either by reducing 
perceptions or by enhancing the predictability, transparency, speed and efficiency of processes. 
The plan also introduces a reform to reduce restrictions on regulated professions (RE-r14) under 
Component  6,  which,  if  properly  implemented,  could  largely  address  the  recommendation  in 
CSR  4  of  2019  to  reduce  restrictions  in  highly  regulated  professions.  The  actual  impact  on 
professional services markets will depend on the list of professions which will eventually remain 
subject to high regulation for constitutional legal or other reasons and on the details surrounding 
the actual implementation of the reform. Given the degree of uncertainty, an ex-post evaluation 
should be timely carried out. Component 16 also includes important measures for helping SMEs 
to  strengthen  their  digital  capacities/integration,  and  to  provide  tailored  support  for  specific 
industrial sectors. It should also support the creation of a national Test Beds Network to create 
the  conditions  for  businesses  to  develop  and  test  new  products  and  services  using  advanced 
facilities. 

The  Portuguese  recovery  and  resilience  plan  makes  a  limited  contribution  towards 
addressing the recommendation to invest in railways and port infrastructure and does not 
address the recommendation on investments in energy interconnections (CSR 3 2019). The 
plan  provides  for  robust  investments  in  urban  transport,  but  it  does  not  cover  railways 
infrastructure  nor  investments  in  ports  (with  the  exception  of  improvements  in  the  port 
infrastructure planned under Component 10  – Sea). However, these investments are part of the 
medium-term  strategy  Portugal  2030  and  will  likely  be  financed  outside  the  recovery  and 
resilience  plan  using  other  sources  of  EU  and  national  funding.  The  plan  does  not  include 
investments  to  extend  energy  interconnections,  taking  into  account  regional  disparities. 
However, these investments are planned outside the recovery and resilience plan, with financing 
from other EU instruments, including the Connecting Europe Facility. 

56 

 
The  Portuguese  economy  faces  a  number  of  structural  challenges:  it  suffers  from  low 
investment, low productivity growth and low levels  of qualification among its population, 
all  of  them  substantially  below  the  EU  average.  Portugal’s  economic  structure  remains 
anchored in traditional services and largely low- or medium-low-tech manufacturing. Before the 
onset  of  the  crisis,  Portugal’s  economy  was  catching  up,  growing  above  the  EU  average  with 
unemployment  declining.  Its  economy  contracted  sharply  in  2020  due  to  the  COVID-19 
pandemic, with a particularly strong impact on the country’s large hospitality sector. Portugal’s 
GDP is estimated to have fallen by 7.6% in 2020 but is expected to rebound by 3.9% in 2021. 
Youth unemployment in particular remains an issue, with more than a fifth of people aged 15-24 
unemployed in 202025 and seeing an important increase as a result of the pandemic.  

The COVID-19 crisis has reinforced existing social challenges, such as regional inequality 
of  opportunity,  poverty,  social  exclusion  and  housing  affordability.  In  terms  of  regional 
inequality, the social and economic impact may be even bigger in the Autonomous Regions of 
Madeira  and  Azores,  with  reduced  mobility  and  few  alternative  sources  of  employment. 
Portugal’s social transfer system has struggled to reduce poverty effectively, with some 21.6% of 
the population still at risk of poverty or social exclusion in 2019. While this number has steadily 
fallen  in  recent  years,  specific  groups  remain  at  risk,  such  as  employees  with  short  term 
contracts, residents in rural areas, and children at risk of poverty.  

Overall,  the  plan  aims  to  comprehensively  address  the  economic  and  social  challenges  in 
the country, which run throughout the breadth of the components. For example, it aims to 
address  issues  of  social  and  territorial  cohesion  through  for  instance  the  provision  of  lifelong 
health services; housing policy; strengthening social responses to older people within the drive to 
deinstitutionalise care; provision of childcare and addressing child poverty; targeting people with 
disabilities and people living in poverty and exclusion in metropolitan areas; and, the upgrading 
of  the  skills  and  competences.  The  decarbonisation  of  public  transport,  while  increasing  its 
supply,  should  also  enhance  the  mobility  of  metropolitan  populations,  having  a  particularly 
positive effect on women, who are more dependent on public transport; improving accessibility 
to social and other services with a positive effect on quality of life, work-life balance and labour 
market  participation.  The  overall  set  of  investments  and  reforms  is  also  expected  to  address 
inequalities, notably by especially focusing on vulnerable groups.  

Low  skills  and  qualifications  are  another  central  constraint  of  the  Portuguese  economy. 
The plan aims  to address  this through measures to increase the skilled workforce and by 
promoting actions to support lifelong learning, reskilling and upskilling of the adult work 
force.  This  goes  hand  in  hand  with  a  focus  on  digital  skills  across  the  population,  including 
training of civil servants. This can help to reduce labour market segmentation, raise employment 
quality  and  improve  wages,  and  thus  to  strengthen  domestic  consumption  patterns.  It  can  also 
help to improve the productivity of businesses and the economy globally. In this vein, measures 
to create affordable student accommodation can also enhance equal access to higher education.  

25   Social scoreboard indicators - European Pillar of Social Rights - Eurostat (europa.eu). 

57 

 
                                                           
The measures in the plan could help to tackle the economic and social challenges described 
above  that  have  long  been  part  of  the  recommendations  addressed  to  Portugal  by  the 
Council.  They  could  remove  barriers  to  growth,  thereby  contributing  to  raise  productivity  and 
create jobs. In addition, included measures such as to decarbonise industry, to boost sustainable 
mobility  and  to  increase  the  energy  efficiency  in  buildings  can  help  to  make  this  growth 
sustainable in the long run. In particular, the focus on research and innovation is expected to help 
upgrade  the  Portuguese  economy  to  higher  value  added  sectors.  This  would  have  a  significant 
impact  on  the  value  of  exports  and  the  quality  of  employment.  In  addition,  the  focus  of  the 
research  on  green  agendas,  on  sustainable  agriculture  and  the  economy  of  the  sea  could 
significantly  contribute to the climate transition,  empowering Portugal research and innovation 
ecosystem in the areas of the twin transition.  

Conclusion on the assessment of criterion 2.2 of Annex V to the RRF Regulation 

Taking into consideration the reforms  and investments  envisaged by Portugal,  its recovery  and 
resilience  plan  is  expected  to  contribute  to  effectively  addressing  a  significant  subset  of 
challenges  identified  in  the  country-specific  recommendations,  or  challenges  in  other  relevant 
documents officially adopted by the Commission under the European Semester, and the recovery 
and  resilience  plan  represent  an  adequate  response  to  the  economic  and  social  situation  of 
Portugal. This would warrant a rating of A under the assessment criterion 2.2 in Annex V to the 
RRF Regulation. 

Table  5:  Mapping of  country  challenges  identified  in  2019-20  country-specific  recommendations and  Portugal’s  recovery  and 
resilience plan components 

n
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  ● 

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Associated CSR 
e
n
(2019-2020) and 
o
p
m
European Semester 
o
recommendations  C

2019.1.1; 2020.1.1; 
2020.3.2 

Country challenges 
(as identified in Section 2) 

Fiscal policy & fiscal governance 

Long-term sustainability of public 
finances 

2019.1.2; 2019.1.3; 
2020.1.2 

● 

  ○ 

  ● 

  ○ 

58 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sustainability of state-owned 
enterprises 

Strengthen the resilience and 
accessibility of the health and long-
term care systems 

2019.1.3 

● 

  ● 

2019.1.2; 2020.1.2; 
2020.1.3 

● 

  ● 

Employment protection legislation & 
framework for labour contracts 

2019.2.1; 2020.2.1; 
2020.2.2 

  ○ 

Effectiveness and adequacy of social 
protection 

2019.2.4; 2020 2.2 

  ●  ● 

Education, skills and life-long 
learning, particularly in science and 
information technology/digital 

2019.2.2; 2019.2.3; 
2020.2.3; 2020.2.4 

  ○  ○  ○ 

  ● 

  ○ 

  ○ 

  ○  ● 

Research and innovation 

 2019.3.1; 2020.3.6 

  ●  ○ 

  ○  ○  ○ 

Focus investment on the digital 
transition 

2019.2.3; 2020 2.3; 
2020 2.4; 2020.3.4 

Focus investment on the green 
transition, in particular clean and 
efficient production and use of energy  

2020.3.4; 
2019.3.3 

● 

  ○  ○  ●  ○  ○  ○ 

  ●  ●  ○  ●  ● 

○  ○  ○ 

  ● 

  ○  ●  ○  ●  ●  ●  ●  ●  ● 

Rail and port infrastructures 

2019.3.2; 2020.3.5 

  ○ 

Energy interconnections 

2019.3.3  

Front-load mature public investment 
projects; promote private investment 

2020.3.2; 2020.3.3 

  ● 

Address private indebtedness and 
improve the insolvency framework 

2019.4.1 

Improve competition and the 
regulatory framework  

2019.4.2; 2019.4.3 

  ● 

Improve the business environment, 
including by boosting the efficiency of 
tax and administrative courts  

2019.4.2; 2019.4.3; 
2019 4.4; 2020.4.1 

Key:   “●” investments and reforms of the component significantly address the challenge;  

“○” the component partially addresses the challenge 

  ● 

  ○  ○ 

  ●  ○ 

4.3. Growth  potential,  job  creation,  economic,  institutional  and  social  resilience, 
European  Pillar  of  Social  Rights,  mitigating  the  impact  of  the  crisis,  and  social 
territorial cohesion and convergence  

The plan aims  to accelerate the  economic recovery in Portugal and to improve long-term 
growth  prospects  through  investments  and  reforms.  The  main  objectives  of  the  plan  are  to 
improve  Portugal’s  growth  potential,  job  creation,  and  economic,  social  and  institutional 
resilience that should ultimately reduce the country’s vulnerability to shocks. The plan also aims 
to contribute to the implementation of the European Pillar of Social Rights, including through the 
promotion of policies for children and youth, and to mitigate the economic and social impact of 

59 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
the  COVID-19  crisis,  thereby  enhancing  the  economic,  social  and  territorial  cohesion  and 
convergence within the Union. The plan is also in line with the 2020 new industrial strategy.26 

Fostering economic growth and jobs  

The  plan  is  designed  to  support  economic  growth  and  job  creation  through  investments 
and reforms that are structured in nine main areas in the impact assessment presented by 
the Portuguese authorities. The impact of each area on growth and employment is assessed in 
the short term (two years), medium term (5 years), and long term (both over 10 and 20 years). 
The  main  contributions  to  both  economic  growth  and  employment,  as  presented  by  the 
authorities,  are  expected  to  come  from  investments  and  reforms  in  innovation,  education 
(including digital skills and vocational training), decarbonisation of the industry, and housing. In 
the  long  term,  these  four  areas  are  projected  to  generate  more  than  85%  of  the  overall 
contribution  to  the  increase  in  the  growth  potential  and  nearly  the  whole  contribution  to  the 
increase in employment. Investments and reforms in innovation are expected to have the biggest 
impact  on  growth  while  those  in  housing  are  expected  to  have  the  biggest  impact  on 
employment.  Other  main  areas  of  intervention  include  health  care,  culture,  transport 
infrastructure, forestry and water management, quality and suitability of the state administration 
(including  financial  management,  judicial  services  and  digitalisation  of  public  services).  While 
the interventions in some of these areas are estimated to have a relatively small impact on growth 
and employment, they are expected to play a substantial role on mitigating the social impact of 
the COVID-19 crisis. This is notably the case in health care and culture. 

increasing 

enterprises, 

innovation  are 

capitalisation  of 

largely  aimed  at  enhancing 
Investments  and  policies  related  to 
digitalisation, 
export  base  and 
reindustrialisation.  This  translates  into  a  reduction  in  the  financing  costs  of  R&D  intensive 
companies,  permanently  increasing  the  human  resources  and  the  physical  capital  allocated  to 
these activities. Key policy objectives include knowledge and technology transfers to businesses, 
diversification of product and services, and reaching R&D investments of 3% of GDP by 2030. 
Financial  instruments  for  the  capitalisation  of  companies  and  the  establishment  of  Banco 
Português  de  Fomento  are  also  expected  to  contribute  by  improving  access  to  finance  and  the 
financing conditions for viable companies. 

the 

Investments and policies related to education and training include structural measures for 
improving  the  skill  level  of  the  population,  with  a  focus  on  digital  skills.  The  vocational 
education  reform  includes  the  modernisation  of  vocational  education  institutions  and  digital 
schools with a permanent impact on skills.  

Investments  and  policies  to  decarbonise  industry  are  aimed  at  improving  its  energy 
efficiency  and  reducing  the  import  content  of  the  Portuguese  economy.  This  should 
ultimately improve the country’s  competitiveness  and growth potential and should also  help  to 
meet climate goals. Measures in this area include investments in the development of renewable 
hydrogen,  sustainable  mobility  and  the  energy  efficiency  of  buildings.  Apart  from  the 

26   See European Commission, Updating the 2020 New Industrial Strategy, COM(2021) 350 final, 05.05.2021. 

60 

 
                                                           
quantitative  gains  affecting  GDP  growth  and  employment,  it  is  assumed  that  measures  in  this 
area should also contribute to substantial benefits in the form of positive externalities that should 
not be fully captured in the official GDP statistics. 

Investments and policies related to housing are designed to increase spending in social and 
affordable  housing  construction  and  are  expected  to  have  a  significant  impact  on  growth 
and  employment  in  the  short  and  medium  term.  Over  the  longer  term,  the  impact  of  these 
measures should weaken but they are nevertheless expected to have permanent positive effects 
on  a  large  set  of  indicators,  by  reducing  inequalities  and  improving  living  conditions,  human 
dignity, education and the labour market. 

All investments in the plan financed through the RRF are expected to be fully additional to 
the  baseline  without  the  RRF.  According  to  the  data  presented  in  the  plan,  the  baseline  of 
growth enhancing public expenditures not financed by the RRF over the period of 2021-2026 is 
slightly above the average level in the three-year period before the pandemic (2017-2019). The 
projected RRF-financed growth enhancing expenditure is estimated at 1% of GDP in 2021-2026. 
The  plan  is  expected  to  substantially  contribute  to  the  government’s  capacity  to  support  the 
economy,  as  public  investment  has  been  subdued  for  a  prolonged  period.  Public  investment 
reached  an  average  of  about  2%  of  GDP  in  2017-2019,  substantially  below  the  EU  average. 
Importantly,  public  investment  in  Portugal  has  been  below  the  consumption  of  public  fixed 
capital since 2012, translating into continuously negative net public investment.  

The  plan  includes  estimates  for  the  impact  of  the  RRF-financed  investments  and  the 
reforms accompanying them on GDP over the short-, medium and long run. According to 
the estimates, these will result in an increase in GDP, relative to a scenario without the RRF, in 
the tune of 1.4% after a period of 2 years, 3.5% after 5 years, 2.2% after 10 years, and 3.1% after 
20 years. The corresponding impact on employment is estimated at 0.7%, 1.4%, 0.6% and 0.8%, 
respectively.  The  estimates  in  the  plan  are  broadly  in  line  with  the  Commission’s  stylised 
QUEST simulations (see Box 2) in the short term, whereas the Commission simulations show a 
lower  impact  in  the  medium  and  long  term.  The  difference  with  the  estimates  included  in  the 
plan can in particular be explained by the fact that the stylised QUEST simulations do not take 
into account structural reforms, which can have a significant impact on growth, in particular in 
the long term. 

61 

 
Box 2: Stylised NGEU impact simulations with QUEST – Portugal 

Model simulations conducted by the Commission using the QUEST model show that the 
economic impact of the NGEU in Portugal could lead to an increase of GDP of between 
1.5% and 2.4% by 2026.1 After 20 years, GDP could be 0.9% higher. Spillovers account 
for an important part of such impact. According to these simulations, this would translate 
into up to 50,000 additional jobs. Cross border (GDP) spillovers account for 0.5 pps in 2026, 
showing the value added of synchronised expenditure across Member States (line 2). Even in 
a scenario with a lower productivity of NGEU funds, it would still lead to a significant impact 
(line 3). 2 

Table: QUEST simulation results (%-deviation of real GDP level from non-NGEU case, linear 
disbursement assumption over 6 years) 

Scenario 
Baseline 
   of which 
spillover 
Low productivity 

2021  2022  2023  2024  2025  2026  2027  2028  2029  2030  2040 
0.9 
2.4 

1.5 

1.9 

2.0 

2.2 

1.5 

1.1 

1.9 

1.9 

1.4 

0.4 

0.4 

0.4 

0.5 

0.5 

0.5 

0.4 

0.3 

0.3 

0.2 

0.1 

0.9 

1.4 

1.4 

1.3 

1.4 

1.5 

0.9 

0.4 

0.5 

0.6 

0.4 

This  stylised  scenario  does  not  include  the  possible  positive  impact  of  structural 
reforms,  which  can  be  substantial.  A  model-based  benchmarking  exercise  shows  that 
undertaking structural reforms that would result in halving the gap vis-à-vis best performers 
in terms of indicators of structural reforms could raise Portuguese GDP by up to 10% in 20 
years’ time, in line with findings for the EU average. 3 

Due  to  the  differences  in  the  assumptions  and  methodology,  the  results  of  this  stylised 
assessment  cannot  be  directly  compared  to  the  numbers  reported  in  chapter  4  of 
Portugal’s recovery and resilience plan.  

1 RRF amounts to roughly 90% of NGEU, which also includes ReactEU, Horizon, InvestEU, JTF, Rural Development and RescEU. 
2 Technically, the low productivity scenario considers a significantly reduced output elasticity of public capital. 
3 Varga, J, in 't Veld J. (2014), “The potential growth impact of structural reforms in the EU: a benchmarking exercise ", European Economy 
Economic Papers no. 541. http://ec.europa.eu/economy_finance/publications/economic_paper/2014/pdf/ecp541_en.pdf. 

Strengthening social cohesion 

The reforms and investments in vocational education and training and adult learning (AL) 
are expected to address the persistent and significant skills gaps. The Portuguese population 
is  characterised  by  low  levels  of  educational  attainment  with  44.5%  of  individuals  having 
completed  only  lower  secondary  education  in  2020  versus  the  25.0%  EU  average  and  a 
considerable digital skills deficit with 48% of the population lacking basic digital skills in 2019 
versus a 44% EU average. To revert this situation, the recovery and resilience plan contains an 
important  component  on  Qualifications  and  Skills  (Component  6)  that  is  expected  to  deliver 
structural  and  enduring  changes  to  the  Portuguese  education  and  VET  systems.  Important 
reforms and investments are also foreseen in relation to business, public administration and the 
maritime economy sectors to further reduce skills deficits in these areas. The strengthened policy 

62 

 
 
 
dimension and strategic coordination of VET skills and qualifications resulting from the recovery 
and  resilience  plan  should  enhance  Portugal’s  effectiveness  and  efficiency  in  reform 
implementation.  Reinforcing  the  sectoral  training  network  of  the  VET  agency  (IEFP) 
establishing  closer  links  between  education,  training  institutions  and  other  stakeholders  should 
also help lay the foundations for new and improved joint working methods and help develop a 
cooperation  culture  over  the  long  term.  Enlarging  and  improving  the  offer  for  AL  through  the 
development  of  a  National  Adult  Literacy  Plan  to  complement  the  national  VET  Programme 
QUALIFICA  is  expected  to  ensure  a  harmonised  delivery  of  interventions.  The  reforms  and 
investments  in  the  recovery  and  resilience  plan  are  coherent  with  the  main  relevant  EU  policy 
agendas in the field of skills, VET and AL and should help deliver on the related principles of 
the European Pillar of Social Rights.  Finally, these actions  are also  expected to  support Youth 
Guarantee  schemes,  notably  by  increasing  the  skills  and  qualifications  of  young  people  and 
ultimately improving the creation of qualified employment. 

The  plan  is  expected  to  improve  the  overall  employment  status  of  the  population  (with  a 
special focus on youth) and to address gender inequalities for a more inclusive and resilient 
labour market. The proposed Agenda to Promote Decent Work presented in the recovery and 
resilience plan has the potential to bring substantial structural changes to address long standing 
challenges such as labour market segmentation (17.4% share of temporary contracts in Portugal 
compared  to  a  12.5%  EU  average  in  2020).  The  high  share  of  youth  unemployment  (22.6% 
compared with 16.8% for the EU in 2020) should also be reduced as a result of these measures 
and  accompanying  investments  through  the  shared  management  Funds  2021-27.  By  providing 
incentives  for  permanent  hiring  through  the  recovery  and  resilience  plan,  Portugal  seeks  to 
restore  confidence  among  employers  to  resume  recruitments  and  kick  start  job  creation  whilst 
also enabling more stable career prospects for youth. The increased caseload affecting the Public 
Employment Services as a result of the pandemic is expected to require reinforced investments in 
skills  intelligence  and  matching  systems  that  is  currently  not  foreseen  in  the  recovery  and 
resilience plan. The introduction of mechanisms to promote collective bargaining and the regular 
review  of  the  minimum  wage  should  further  complete  and  consolidate  the  measures  agreed 
through the 2018 national tripartite agreement. Further discussions and negotiations with relevant 
stakeholders and social partners are foreseen in order to regulate new forms of work, particularly 
platform  work  and  social  protection  coverage.  Considerable  attention  is  expected  to  also  be 
devoted to fighting inequalities between women and men and notably by introducing structural 
measures  to  combat  gender  stereotypes  limiting  the  educational  and  professional  choices  of 
women and girls.  

Investing in digital schooling through a dedicated component in the recovery and resilience 
plan is expected to build resilience of the country’s schooling system. The measures foreseen 
should  bring  about  important  changes  to  the  education  system.  Mainstreaming  the  digital 
dimension throughout all curricula and ensuring digital development programmes for pupils and 
teachers alike are expected to help transform and modernise the national education system over 
the  coming  years.  This  reform  is  expected  to  ensure  equal  access  to  education,  following  the 
unprecedented disruption caused by the COVID-19 crisis.  Building on recent  ESF investments 
through  the  Corona  Response  Investment  Initiative  (CRII  and  CRII+)  implemented  during  the 

63 

 
pandemic, socially and economically disadvantaged students facing greater difficulties in terms 
of  access  to  digital  learning  are  set  to  constitute  the  main  target  group  of  this  reform.  This 
approach  seeks  to  reduce  inequalities  and  strengthen  social  cohesion  whilst  also  ensuring 
intergenerational  solidarity  and  investment  in  the  future  generations  through  more  cohesive 
policies.  

Reducing vulnerability and increasing resilience 

In February 2020, over the previous annual cycle of surveillance under the Macroeconomic 
Imbalances Procedure, the Commission identified imbalances in Portugal. These imbalances 
related in  particular to  the large stock of net  external  liabilities, private sector and  government 
debt as well as a high share of non-performing loans in a context of low productivity growth. The 
Commission’s  2021  in-depth  review  of  2  June  2021  confirmed  these  imbalances,  also 
highlighting  that  the  economic  shock  caused  by  the  COVID-19  pandemic  resulted  in  a 
substantial increase in the country’s private and public debt ratios in 2020. The external position 
also weakened as a result of Portugal’s high exposure to tourism. With the projected economic 
recovery in 2021, Portugal is projected to return on a positive track of adjusting imbalances, but 
the evolution of the pandemic, the strength of the recovery, and possible structural implications 
of the crisis are all still surrounded by high uncertainty. 

The Portuguese plan includes an ambitious package of reforms and investments to address 
the  country’s  vulnerabilities  to  shocks  and  to  strengthen  its  economic,  institutional  and 
social resilience. The proposed measures target the root causes of the challenges identified and 
could  help  to  boost  the  country’s  competitiveness  and  productivity  by  improving  the  business 
environment,  enhancing  labour  skills  and  participation  and  promoting  R&D,  innovation  and 
digitalisation.  Furthermore,  several  measures  in  the  plan  are  expected  to  increase  institutional 
capacity  and  improve  the  resilience  of  social  policies,  including  measures  to  make  the  health 
sector  more  sustainable  and  improve  access  to  quality  health-care  and  to  tackle  poverty  and 
social exclusion. 

Public finances (and taxation) and digital public services  

An  effective  and  efficient  public  administration  provides  a  solid  platform  for  the 
development of businesses and ensures quality services to citizens and businesses. This, in 
turn, attracts the investments needed to support the country’s growth and economic development.  

Component  17  –  Quality  and  Sustainability  of  Public  Finances  includes  a  reform  and 
investments  to  enhance  public  financial  management  and  thereby  strengthen  the  quality 
and sustainability of public finances. To that end, the component covers initiatives that should 
contribute to fully and effectively implementing the 2015 Budgetary Framework Law, including 
the  introduction  of  programme  budgeting  and  of  ancillary  mechanisms  to  support  expenditure 
control, cost efficiency and appropriate budgeting. It also includes flanking measures for greater 
efficiency,  such  as  improvements  to  centralised  procurement  and  spending  reviews,  which  are 
planned  to  be  integrated  in  the  regular  budgetary  process  and  subject  to  systematic  ex-post 
evaluations. The framework conditions for the sustainability of state-owned enterprises are to be 
strengthened through more timely, transparent and comprehensive monitoring, as well as better 

64 

 
governance,  with  management  becoming  more  accountable  and  performance-oriented. 
Furthermore, this component also includes measures to modernise public services with the use of 
digital  technologies,  such  as  investments  in  the  information  systems  of  the  Tax  and  Customs 
Authority  for  rural  property  taxation,  as  well  as  in  the  digital  transition  of  Social  Security 
services. 

The  digital  transition  of  the  country’s  public  administration  is  the  most  efficient  way  to 
provide  faster,  cheaper  and  better  services.  It  has  the  potential  to  result  in  a  more  user 
friendly, accessible administration and to reduce the risks of corruption.  Implementation of the 
‘digital by definition’ and once-only principles in Portuguese public administration is at the core 
of Component 19 – Digital Public Administration. The necessary upskilling of the workforce is 
also part of it.  

Labour market, education and skills  

Despite the significant progress observed in the past decade, Portugal still faces significant 
skill gaps. Reforms and investments included in Component 6 – Qualifications and Skills have 
the  potential  to  bring  about  structural  and  enduring  changes  to  the  Portuguese  education  and 
training systems.  By strengthening the political  and strategic coordination of all  levels  of VET 
qualifications, Portugal is increasing the effectiveness and efficiency of policy implementation. 
Moreover, strengthening the sectoral training network of the Public Employment Services (IEFP) 
protocol  management  centres  and  establishing  closer  links  between  education,  training 
institutions and other stakeholders, including the business fabric, should also have positive long-
term  effects.  Strengthening  the  links  between  science,  higher  education  and  key  employment 
activities, at national and regional levels would be a welcome change, given that knowledge is 
evolving at an unprecedented pace. In addition, the Agenda to Promote Decent Work also has the 
potential to bring relevant structural changes, notably by streamlining active employment policy 
programmes geared towards permanent job creation. Finally, the reform Combating inequalities 
between women and men (RE-r18) could introduce positive and long-term changes, notably by 
acting  structurally  to  combat  gender  stereotypes  that  limit  the  educational  and  professional 
choices of girls and women, with an impact on income and professional careers.  

Furthermore, the proposed reform and investments under Component 20 – Digital School 
have  the  potential  to  implement  structural  and  enduring  changes  to  the  deployment  of 
education policies. By promoting the digitalisation of schools, the measures should help to bring 
significant changes to the education system, making the digital dimension a mainstream part of 
all  the  curricula  and  modernising  the  system  itself.  This  is  particularly  important  in  a  context 
where knowledge is evolving at an unprecedented pace, and where the challenges facing current 
and future professionals are increasingly complex. 

Social policies and health care 

Portugal  has  been  facing  challenging  demographic  and  socio-economic  challenges,  which 
have been amplified by the COVID-19 pandemic. The trend of demographic ageing as a result 
of  low  birth  rates,  rising  longevity  and  negative  migration  balances  observed  until  2016 
continues, with an increase in the median age of the resident population from 41.7 to 45.5 years 

65 

 
between 2011 and 2020. In 2020, the proportion of the population aged 65 and over in Portugal 
stood at 22.1%, above the EU average of 20.6%, having increased by 3.4 percentage points over 
the last decade. Furthermore, changes in the labour market and in working conditions in general 
have  significantly  affected  the  behaviour  of  women  and  men  and,  hence,  the  family  structure, 
resulting in the decline of birth and fertility rates.  

This demographic reality is compounded by continuous and acute situations of poverty and 
social  exclusion  over  the  past  years.  Despite  improvement  over  recent  years,  in  2019,  the 
percentage  of  people  at  risk  of  poverty  or  social  exclusion  in  Portugal  remains  above  the  EU 
average. Furthermore, people with disabilities are on average more exposed to the risk of poverty 
and social exclusion, in particular as regards necessary health care, quality education and access 
to employment. In 2019, the percentage of people with a disability who were exposed to the risk 
of poverty or social exclusion was almost 10 percentage points above that of people without any 
activity limitation.  

Managing  the  challenges  associated  with  increased  longevity,  declining  fertility  rates, 
poverty and social exclusion requires, first and foremost, the upgrade and expansion of the 
social  services  network.  To  this  end,  the  measures  proposed  under  Component  3  –  Social 
Responses are expected to significantly improve the resilience, accessibility and effectiveness of 
the social protection and care sector. The reforms put forward are conceived to be in place for the 
medium to long-term and are well aligned with the main reference agendas and strategies in the 
Charter  of  Fundamental  Rights  and  the  European  Strategy  for  the  Rights  of  Persons  with 
Disabilities  2021-2030.  Other  measures  such  as  the  first  National  Strategy  for  Combating 
Poverty  should  also  frame  future  actions  and  investments  in  a  coherent  and  comprehensive 
manner.  

The Portuguese plan is also taking action to address housing affordability. The continuous 
increase  in  house  prices  over  the  last  years  has  increased  the  financial  pressure  on  households 
and created issues of affordability, especially for the most vulnerable. In this context, Component 
2  –  Housing  aims  to  ensure  that  public  housing  policy  addresses  structural,  permanent  or 
temporary shortages by addressing market failures to provide access to housing both in mainland 
Portugal  and in the Autonomous Regions of Azores and Madeira. One of these responses is to 
increase  the  public  housing  stock,  which  only  addresses  the  needs  of  the  most  deprived  and 
vulnerable  social  groups,  and  still  insufficiently.  The  reform  of  public  housing  policies  and 
related  investments  will  require  lasting  coordination  between  central  and  local  levels  of 
government.  This  approach  can  contribute  to  structural/long-term  changes  through  a  new 
governance model, with  clear roles for the different  actors involved at  central  and local  levels, 
applying  the  necessary  methodologies  for  assessing  the  future  social  housing  needs  of  the 
population.  

The Portuguese health system continues to face major challenges linked to changing health 
needs,  rising  demand,  and  gaps  in  access  to  health  care.  Component  1  –  National  Health 
Service aims to strengthen the capacity of Portugal’s National Health Service to respond to and 
manage long-standing challenges that have been exacerbated by the COVID-19 pandemic. Such 
challenges  include  the  need  to  bridge  access  gaps  in  the  National  Health  Service,  including  in 

66 

 
primary  health  care,  mental  health  and  long-term  care  services.  The  component  also  includes 
measures to upgrade the governance model of public hospitals, as a means of addressing the root 
causes of arrears and promoting efficiency. 

Access to finance and capital markets  

Despite the significant deleveraging in recent years, Portuguese companies continue to face 
a structural problem of undercapitalisation. Against this background, the persistent difficulty 
in  accessing  finance  represents  a  case  of  market  failure  that  urgently  needs  repair,  as  the 
damaging  economic  and  social  effects  of  the  COVID-19  pandemic  have  heightened  the 
associated costs. 

With the threefold objective of significantly reducing complexity in the supply of corporate 
finance  products,  fostering  a  continued  effort  of  financial  empowerment  and  enabling 
projects  and  firms  of  national  strategic  interest,  Component  5  –  Investment  and  Innovation 
includes a set of reforms and investments that should make it easier for firms to access finance, 
promote  their  capitalisation  and  help  to  improve  the  functioning  of  the  Portuguese  capital 
market.  

R&D and innovation  

the  Mobilising  Agendas/Alliances 

Portugal’s R&D intensity remains below the EU average. Component 5 – Investment and 
Innovation aims to improve academia-business linkages and make R&D investments more 
efficient  and  impactful.  It  focuses  on  increasing  the  competitiveness  and  resilience  of  the 
Portuguese  economy  based  on  R&D,  innovation,  diversification  and  specialisation  of  the 
productive  structure,  exploiting  the  actual  potential  for  competitive  affirmation  of  established 
industrial  sectors  and  emerging  areas,  contributing  to  the  twin  transition.  Investment  choices 
under 
for  Green 
Reindustrialisation  (RE-C05-i01.01  and  RE-C05-i01.02)  are  expected  to  be  aligned  with  the 
research and innovation priorities of the national smart specialisation strategy to ensure a more 
effective  and  efficient  use  of  funds27.  In  particular,  this  component  should  effectively  increase 
R&D  investment  and  the  country’s  scientific  and  technological  performance,  reduce  CO2 
emissions and indirectly support the upgrade of the Portuguese economy towards higher value-
added activities. Furthermore, it is expected to ensure stability and predictability for R&I policies 
and funding via a multiannual programming framework for public R&D investment. In addition, 
research reforms and investments also focus on specific sectors, such as agriculture (RE-C05-i03 
and RE-C05-i05-RAA), bioeconomy (Component 12) and the blue economy (Component 10). 

Innovation  and 

for  Business 

27   For an assessment of the effectiveness of the R&D and innovation funds under Smart Specialisation framework 
see:  Marques  Santos,  A.;  Edwards,  J.  and  Neto,  P.  (2021).  Smart  Specialisation  Strategies  and  Regional 
Productivity: A preliminary assessment in Portugal, EUR 30623 EN, Publications Office of the European Union, 
Luxembourg, 2021, ISBN 978-92-76-31375-5, doi:10.2760/002330, JRC12438 

67 

 
                                                           
 
Infrastructure  

Transport  infrastructure  investments  have  a  positive  impact  on  economic  growth,  create 
wealth  and jobs  and increase  trade, geographical accessibility and the mobility of people. 
To  this  end,  it  has  to  be  planned  in  a  way  that  maximises  the  positive  impact  on  economic 
growth  and  minimises  the  negative  impact  on  the  environment.  In  2019,  transportation  and 
storage  activities  in  Portugal  represented  an  important  part  of  its  economy,  with  a  4.9%  value 
added share in GDP and a 3.8% employment share.  

Component  7  –  Infrastructure  aims  to  address  the  challenge  of  improving  resilience  and 
territorial cohesion, reduce context costs for businesses in inland regions, and advance the 
green transition in the transport sector. The measures proposed under this component should 
contribute to electric mobility, create a new generation of business reception areas and improve 
competitiveness.  They  include  the  extension  of  the  electric  vehicle  charging  network,  a 
modernisation programme of business reception areas as well as road infrastructure investments 
to address missing links, provide cross-border connections, improve the accessibility of business 
reception areas and extend the road network on the Autonomous Region of Azores. 

Administrative simplification, justice system and business environment 

The  Portuguese  justice  system  continues  to  make  progress  to  become  more  efficient, 
continuing a path initiated in recent years. Yet, the time needed to obtain a final decision in 
administrative  and  tax  litigation  and  the  length  of  insolvency  procedures  remains  a  concern. 
These shortcomings are expected to be exacerbated by the pandemic and the resulting recession, 
which  should  most  probably  result  in  a  higher  number  of  companies  and  households  facing 
difficulties  and,  hence,  a  higher  number  of  incoming  court  cases.  In  addition,  despite  a 
significant  effort  to  simplify  administrative  procedures  in  recent  years,  the  costs  and  time 
required to obtain business licences in some sectors are among the more persistent obstacles to 
economic activity.  

An  effective  justice  system  is  an  important  structural  element  for  an  investment  and 
business-friendly environment. To this end, the main objectives of Component 18 – Economic 
Justice  and  Business  Environment  are  to  strengthen  and  make  more  efficient  the  relations  of 
citizens  and  businesses  with  the  State  and  to  reduce  the  burdens  and  complexities  that  inhibit 
business activity and thus have an impact on productivity. The measures envisaged are expected 
to reduce the administrative burden and costs to firms, reduce disposition times, improve access 
to justice, and increase the effectiveness and the resilience of the justice system. In parallel, this 
component also addresses shortcomings in sectorial licencing requirements, by envisaging their 
simplification. 

Gender equality and equal opportunities for all 

Portugal’s  recovery  and  resilience  plan  contains  measures  to  address  the  challenges  of 
gender equality and equal opportunities for all. These include reforms to combat the gender 
pay  gap  and  occupational  segregation  as  well  as  measures  to  promote  work-life  balance  and 
attracting young women into STEAM studies. Gender equality considerations are also integrated 
in  other  measures  of  the  plan.  This  is  the  case  for  instance  for  housing  measures,  with  a 

68 

 
particular focus on victims of domestic violence, and for digital transformation measures, with a 
focus  on  combating  gender  stereotypes  and  ensuring  gender-balanced  participation  in  digital 
training.  The  part  of  the  plan  dealing  with  social  responses  includes  a  national  strategy  for 
persons  with  disabilities.  The  situation  of  vulnerable  groups  in  general  is  addressed  in  several 
parts of the plan, such as the parts dealing with health, housing and skills. However, the plan’s 
expected contribution to equal opportunities for specific groups, such as older persons or persons 
with a minority ethnic or racial background, could have been better specified.  

Cohesion and convergence  

The  Portuguese  plan  aims  to  reduce  territorial  and  economic  disparities  mainly  through 
the Resilience dimension of the plan, which is strongly intertwined with social aspects.  

Component 1 – National Health Service has a strong territorial dimension, Component 2 – Social 
Housing, Component 3 – Social Responses and Component 4 – Culture in particular, all have a 
relevant  territorial  and  local  dimension,  aiming  at  strengthening  essential  services  for  citizens 
and  ensuring  a  larger  coverage  of  the  territory.  Primary,  continuous  and  palliative  health  care 
services are set to be organised at the local level. Social housing at affordable rents are expected 
to largely be provided through the implementation of municipal housing programmes. Moreover, 
specific investments are planned in the Autonomous Regions of Azores and Madeira and in the 
disadvantaged Metropolitan areas of Lisbon and Porto. Additional territorial aspects are covered 
by investments in water and forest management, fire prevention, road infrastructure and missing 
links in particular in the rural areas in the regions of Alentejo, Algarve, Madeira and Azores.  

The  Portuguese  plan  includes  an  ambitious  package  of  reforms  and  investments  to  boost 
productivity. Several components target some of the root causes that have weakened Portugal’s 
external  competitiveness  and  slowed  its  convergence  path  towards  the  EU  average  in  terms  of 
GDP  per  capita  in  the  last  decade28.  In  particular,  components  4  to  7,  10  and  a  majority  of 
components of the climate and digital pillars could help to boost the country’s competitiveness 
and productivity towards the climate and digital transition, by promoting R&D and innovation, 
enhancing labour skills and strengthening the institutional capacity of the public administration. 

Conclusion on the assessment of criterion 2.3 of Annex V to the RRF Regulation 

Taking  into  consideration  all  reforms  and  investments  envisaged  by  Portugal,  its  recovery  and 
resilience  plan  is  expected  to  effectively  contribute  to  strengthen  the  growth  potential,  job 
creation,  and  economic,  social  and  institutional  resilience  of  the  Member  State,  to  the 
implementation  of  the  European  Pillar  of  Social  Rights,  including  through  the  promotion  of 
policies for children and youth, and to mitigate the economic and social impact of the COVID-19 
crisis,  thereby  enhancing  economic,  social  and  territorial  cohesion  and  convergence  within  the 
Union. This would warrant a rating of A under the assessment criterion  2.3 of Annex V to the 
RRF Regulation. 

28   Portugal's  per  capita  income  in  purchasing  power  standards  (PPS)  floated  around  77%  and  78%  of  the  EU 

average in the last decade. 

69 

 
                                                           
Box 3: Employment and social challenges in light of the Social Scoreboard accompanying 
the European Pillar of Social Rights 

The Social Scoreboard supporting the European Pillar of Social 
Rights  points  to  a  number  of  employment  and  social  policy 
improvements  in  Portugal,  although  some  challenges  remain. 
Portugal’s  economy  had  been  performing  strongly  up  until  the 
end  of  February  2020  (surpassing  the  2020  target  of  a  75% 
employment  rate  in  both  2018  and  2019),  but  the  COVID-19 
crisis  halted  these  positive  developments.  Job  losses  resulting 
from  the  pandemic  translated 
in  the 
unemployment rate, though not as acute  as initially forecasted 
(peaking at 8% in Q3-2020 and decreasing to 7.1% in Q4-2020). 
Portugal  ranks  better  than  average  in  terms  of  the  gender 
employment gap and long-term unemployment rate, as well as 
early  school  leaving  rate.  It  is  among  the  best  performers  in 
providing  access  to  childcare  services.  Nevertheless,  children 
and the elderly remain among the most vulnerable groups, and 
in  terms  of  territorial  distribution,  the  Autonomous  Regions 
continue to experience the highest risks of poverty. 

into  an 

increase 

The  recent  pandemic  outbreak  is  further  aggravating  the 
employment  situation  for  young  people  and  increasing  the 
need for investment in skills. Young people have been affected 
more than other cohorts, with youth unemployment peaking at 
26.8% in Q3-2020 and having slightly decreased to 24.0% in Q4-
2020. Skills levels for the workforce and the population at large 
remain  a  challenge,  including  digital  skills  that  are  key  to  the 
country’s competitiveness. 

While poverty gradually decreased in the run up to 2020, the 
pandemic  is  likely  to  reverse  this  trend.  Net  earnings  of 
workers  receiving  the  average  wage  remain  below  the  EU 
average. This merits close attention, in particular for vulnerable 
groups  with  a  view  to  a  possible  rise  of  in-work  poverty, 
including  among  temporary  workers.  In  2019,  the  capacity  of 
social transfers (other than pensions) to reduce poverty showed 
a  slight  improvement  (+0.4pps  year-on-year)  but  remained 

comparatively low (24.2% against 32.4% in the EU). 

Portugal’s  recovery  and  resilience  plan  addresses  numerous  employment  and  social  challenges.  To  foster  equal 
opportunities and access to the labour market, the plan envisages a new reform of the vocational education and training 
system  that  aims  to  adapt  the  skills  provision  to  the  current  and  future  needs  of  the  labour  market,  together  with  a 
significant offer of adult learning opportunities. Further upskilling and reskilling measures for the business environment, 
public  administration  and  formal  education  (teachers,  non-teaching  staff  and  pupils)  focus  particularly  on  the  digital 
dimension. Additionally, a reform to address gender pay inequality and occupational segregation is planned. To improve 
labour market dynamics and working conditions, Portugal’s proposed agenda to promote decent work includes measures 
to incentivise permanent  employment  (with a  special focus on youth), sustainable minimum wage increases and social 
protection for new forms of work (such as platform work).  

70 

Critical situationTo watchWeak but improvingGood but to monitorOn averageBest performersSocial Scoreboard for PORTUGALEqual opportunities and access to the labour marketEarly leavers from education and training (% of population aged 18-24) (2020)Youth NEET (% of total population aged 15-24) (2020)Gender employment gap (2020)Income quintile ratio (S80/S20) (2019)At risk of poverty or social exclusion (in %) (2019)Dynamic labour markets and fair working conditionsEmployment rate (% population aged 20-64) (2020)Unemployment rate (% population aged 15-74) (2020)Long term unemployment (% population aged 15-74) (2020)GDHI per capita growth (2019)Net earnings of a full-time single worker earning AW (2019)Update of 29 April 2021. Members States are classified on the Social Scoreboard according to a statistical methodology agreed with the EMCO and SPC Committees. It looks jointly at levels and changes of the indicators in comparison with the respective EU averages and classifies Member States in seven categories. For methodological details, please consult the Joint Employment Report 2021; NEET: neither in employment nor in education and training; GDHI: gross disposable household income.Social protection and inclusionImpact of social transfers (other than pensions) on poverty reduction (2019)Children aged less than 3 years in formal childcare (2019)Self-reported unmet need for medical care (2019)Individuals' level of digital skills (2019)Better than average 
With more people likely to fall back on the basic safety nets due to the  COVID-19 crisis, reforms on social protection 
and  inclusion  are  important  in  providing  much  needed  support,  in  synergy  with  ESF+  funding.  The  plan  includes  a 
multitude  of  social  interventions,  including  a  comprehensive  approach  on  social  and  affordable  housing,  population 
ageing, long-term care, support to vulnerable groups, disadvantaged communities and territories, and social safety nets. 
It  also  covers  social  services,  including  measures  to  expand  access  to  early  childhood  education  and  care  and  drive 
deinstitutionalisation,  and  establishes  a  new  national  disability  strategy,  as  well  as  a  national  poverty  strategy. 
Nevertheless, the plan lacks an overall framework for strengthening access to social services, as well as a comprehensive 
and ambitious reform of the  social protection  system that could improve the effectiveness of social benefits, including 
minimum income.  

4.4. The principle of ‘do no significant harm’ 

Portugal’s  recovery  and  resilience  plan  assesses  compliance  with  the  ‘do  no  significant 
harm’ (DNSH) principle. The assessment follows the methodology set out in the Commission’s 
technical  guidance  on  the  application  of  ‘do  no  significant  harm’  under  the  RRF  Regulation 
(2021/C 58/01). It covers the six environmental objectives within the meaning of Article 17 of 
Regulation  (EU)  No  2020/852,  namely  climate  change  mitigation,  climate  change  adaptation, 
sustainable  use  and  protection  of  water  and  marine  resources,  circular  economy,  pollution 
prevention  and  control,  and  protection  and  restoration  of  biodiversity  and  ecosystems.  The 
environmental  impact  is  assessed  per  reform  or  investment.  Hence,  the  32  reforms  and  83 
investments in Portugal’s recovery and resilience plan translate into 115 ‘do no significant harm’ 
assessments.  

Each  ‘do  no  significant  harm’  assessment  follows  a  two-step  approach.  The  first  step 
assesses whether there is a risk that a measure could do significant harm to one or more of the 
environmental  objectives.  In  some  cases,  the  assessment  concludes  that  there  is  no  risk  of 
significant harm, in  which case the measure is  assessed as compliant with this objective of the 
Regulation. In cases where the analysis identifies a risk, a more detailed assessment is performed 
in which Portugal demonstrates the absence of significant harm. 

Where needed, the requirements of the DNSH assessment are enshrined in the design of a 
measure and specified in a milestone or target related to this measure. This ensures that the 
fulfilment  of  the  respective  milestones  and  targets  can  only  be  positively  assessed  once 
compliance  with  the  DNSH  principle  is  ensured.  For  instance,  measure  RE-C05-i06  – 
Capitalisation of enterprises and financial resilience/Banco Português de Fomento in Component 
5 – Investment and Innovation includes the capitalisation of the National Promotional Bank. To 
ensure  that  only  activities  complying  with  the  DNSH  principle  receive  funding,  Portugal  is 
required to specify the investment policy for the bank, establishing a set of eligibility criteria in 
line with the RRF objectives, including compliance with the DNSH principle. The verification of 
the DNSH compliance of the investment  policy is made binding through  a milestone linked to 
the bank’s capitalisation. A similar approach is followed for other broad funding schemes, such 
as  in  Component  11  –  Decarbonisation  of  Industry,  Component  12  –  Bioeconomy  and 
Component 16 – Enterprises 4.0.  

Portugal’s  recovery  and  resilience  plan  puts  a  particular  focus  on  energy-efficiency 
renovations  (e.g.  in  Components  1,  2,  3,  6,  10,  11,  13  and  19).  While  these  have  a  positive 

71 

 
impact on emission reductions, they normally create significant amounts of construction waste. 
Portugal ensures no significant harm to the circular economy objective by detailing in the plan 
for  each  of  the  measures  that  at  least  70%  (by  weight)  of  the  non-hazardous  construction  and 
demolition waste generated on the construction sites are set to be prepared for reuse, recycling 
and other material recovery.  

Another  focus  area  in  Portugal’s  recovery  and  resilience  plan  is  digitalisation  (e.g. 
Components 16 to 20). Particularly relevant from an environmental perspective is IT equipment, 
whose operation may cause significant greenhouse gas emissions. Significant harm to the climate 
change  mitigation  objective  is  avoided  in  Portugal’s  recovery  and  resilience  plan  through  a 
commitment to the use of the best available technology of IT infrastructure. To this end, Portugal 
has confirmed that it will comply with the Ecodesign Directive for ICT equipment and that data 
centres will implement the relevant practices listed as ‘expected practices’ in the European Code 
of Conduct on Data Centre Energy Efficiency.  

The  plan  also  includes  a  number  of  regulatory  reforms  (e.g.  Components  1,  8,  18)  or 
measures  related  to  education  (Component  6)  or  culture  (Component  4).  The  DNSH 
assessment  has  confirmed  that  their  environmental  impacts  are  rather  negligible,  ensuring  that 
they do no significant harm to any of the six environmental objectives.  

Particular  attention  is  paid  to  measures  whose  impact  on  environmental  objectives 
warrants close scrutiny. Component 7 – Infrastructure contains four measures that involve the 
construction  or  upgrade  of  road  transport  infrastructure  (RE-C7-I2,  I3,  I4,  I5).  The  DNSH 
assessment in Portugal’s recovery and resilience plan follows closely the DNSH Guidance and in 
particular  Example  4  –  Road  infrastructure  in  the  Guidance.  To  avoid  significant  harm  to  the 
climate  change  mitigation  and  pollution  prevention  and  control  objectives,  Portugal’s  recovery 
and  resilience  plan  includes  as  a  flanking  measure  investment  RE-C7-I0  –  Expansion  of  the 
electric  vehicle  charging  network.  It  specifies  that  15 000  publicly  accessible  electric  vehicle 
charging stations should be available by the fourth quarter of 2025, which is monitored by two 
binding intermediate targets. This measure is expected to offset the additional emissions caused 
by  the  road  infrastructure  investments,  avoiding  significant  harm  to  the  climate  change 
mitigation  and  pollution  prevention  and  control  objectives.  Moreover,  any  condition  resulting 
from  the  environmental  impact  assessment  (EIA)  needed  for  these  projects  is  expected  to  be 
implemented. 

Likewise, the water management measures in Component 9 – Water Management (I1, I2), 
which  include  the  construction  of  a  dam,  irrigation  schemes,  a  desalination  plant  and  a 
water  abstraction  measure,  imply  taking  specific  precautions  from  a  climate  adaptation 
and environmental point of view. Portugal is committed to conduct full environmental impact 
assessments relevant to these measures, which is expected to assess the potential for significant 
harm  and  the  scope  for  avoiding  it,  and  to  ensure  compliance  with  EU  environmental  law, 
including  the  Water  Framework  Directive  (2000/60/EC).  This  aims  in  particular  to  avoid 
significant impact  on the relevant  water bodies  that  would jeopardise or  delay the objective of 
reaching  good  status  or  potential.  It  also  aims  to  ensure  that  protected  habitats  and  species 
directly dependent on the concerned water are not impacted negatively by the measures. The EIA 

72 

 
for these measures is expected to also take into account projected impacts from climate change 
based on the best available science. Should the EIA suggest conditions through which significant 
harm  can  be  avoided,  Portugal  undertakes  to  implement  the  recommended  conditions  and 
measures. The commitments are included in two milestones, ensuring no payment request linked 
to the fulfilment of these milestones can be approved without DNSH compliance.  

Some components comprise horizontal schemes that promote a wide range of activities (e.g. 
Component  5  –  Investment  and  Innovation  and  Component  11  –  Decarbonisation  of 
Industry).  To  ensure  compliance  with  the  ‘do  no  significant  harm’  principle,  the  eligibility 
criteria for upcoming calls for projects is set to exclude harmful activities and require that only 
activities that comply with relevant EU and national environmental legislation can be selected. 

Conclusion on the assessment of criterion 2.4 of Annex V to the RRF Regulation 

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged,  no  measure  for  the 
implementation  of  reforms  and  investments  projects  included  in  Portugal’s  recovery  and 
resilience plan is expected to do significant harm to environmental objectives within the meaning 
of Article 17 of Regulation (EU) No 2020/852 (the principle of ‘do no significant harm’). This 
would  warrant  a  rating  of  A  under  the  assessment  criterion  2.4  of  Annex  V  to  the  RRF 
Regulation. 

4.5. Green transition 

Portugal’s  recovery  and  resilience  plan  correctly  follows  the  methodology  for  climate 
tracking set out in Annex VI to the RRF regulation by identifying intervention fields and 
corresponding coefficients for the calculation of support to the climate objectives, for each 
measure. It should be noted that: 

 

 

the  proposed  reform  measures  for  the  climate  contribution  do  not  have  any  associated 
cost  in  the  recovery  and  resilience  plan.  In  this  context,  the  plan  does  not  identify 
intervention fields for these measures, and they do not help to reach the climate target. 

the measures of the recovery and resilience plan often consist of several sub-measures – 
for  these  measures,  the  plan  indicates  an  intervention  field  for  each  sub-measure  and 
computes the climate contribution at sub-measure level.  

  where  relevant,  milestones  and  targets  include  specifications  that  ensure  that  the 
requirements  of  an  intervention  field  are  met  (for  instance,  where  intervention  field 
025ter  –  Construction  of  new  energy-efficient  buildings  is  used,  a  milestone/target 
specifies  that  the  buildings  need  to  have  a  primary  energy  demand  at  least  20%  lower 
than the NZEB requirement (nearly zero-energy building, national directives). 

 

 

the choice of intervention fields for the climate transition is well justified and reflects the 
nature, focus, objective or expected outcome of the investments.  

the recovery and resilience plan does not propose to increase the climate coefficients for 
any measure. 

73 

 
Measures supporting climate change objectives in Portugal’s recovery and resilience plan 
account for EUR 6.291 billion, which represents 37.9% of the plan’s total  allocation.29 Of 
the 20 components in the plan, 16 components include expenditure that contributes to the climate 
objectives  

Table 6: Climate contribution and cost per component 

Component 

Cost 

(EUR million) 

Climate 
contribution 
(EUR million) 

C1 National Health Service 
C2 Housing 
C3 Social responses 
C4 Culture 
C5 Investment and innovation 
C6 Qualifications and skills 
C7 Infrastructure 
C8 Forests 
C9 Water management 
C10 Sea 
C11 Decarbonisation of industry 
C12 Bioeconomy 
C13 Energy efficiency in buildings 
C14 Hydrogen and renewables 
C15 Sustainable mobility 
C16 Enterprises 4.0 
C17 Quality of public finances 
C18  Economic 
environment 
C19 Digital public administration 
C20 Digital school 
Overall contribution 

justice  and  business 

1 383 
2 733 
833 
243 
2 914 
1 324 
690 
615 
390 
252 
715 
145 
610 
370 
967 
650 
406 

267 

578 
559 

Climate 
contribution 
(percentage of 
plan’s total 
allocation) 
1.9% 
7.3% 
1.3% 
0.4% 
3.1% 
1.1% 
0.5% 
3.7% 
0.9% 
0.7% 
4.3% 
0.8% 
3.7% 
2.2% 
5.8% 

315 
1 220 
211 
60 
521 
182 
91 
615 
157 
110 
715 
139 
610 
370 
967 

9 

0.1% 

6 291 

37.9% 

Note: the plan’s total allocation is EUR 16 606 294 284. This corresponds to the financial allocation after deduction 
of  Portugal’s  proportional  share  of  the  expenses  of  Article  6(2)  of  Regulation  (EU)  2021/241,  calculated  in 
accordance with the methodology of Article 11 of that Regulation, plus the loan support requested by Portugal under 
the Facility. The amount of the estimated total costs of the recovery and resilience plan is higher than the plan’s total 
allocation. 

Energy-efficiency interventions (in Components 1, 2, 3, 4, 6, 7, 10, 11, 13, and 19) account 
for  a  large  part  of  the  climate  contribution.  These  are  achieved  through  renovations  of 

29   Table 8 in the Annex presents the detailed application of the climate tracking methodology for all measures and 

sub-measures with a climate contribution. 

74 

 
 
 
 
 
 
 
 
 
 
 
                                                           
existing buildings,  the construction of new  energy-efficient  buildings, or more  energy  efficient 
industrial  processes.  Measures  or  sub-measures  tagged  with  corresponding  intervention  fields 
contribute EUR 3.233 billion to climate objectives. This corresponds to around half of the plan’s 
total climate contribution. Where applicable, Portugal ensures through a milestone or target that 
the  required  level  of  energy-efficiency  shall  be  achieved.  It  has  also  been  ensured  that  the 
necessary budget is attributed to these measures to ensure that the energy-savings can actually be 
achieved.  

Sustainable  transport  measures  also  provide  a  significant  contribution  to  the  climate 
objectives.  Component  15  –  Sustainable  mobility  is  expected  to  contribute  to  reducing 
greenhouse gas and pollutant emissions from transport through metro expansions as well as new 
light rail and bus rapid transit systems in Lisbon and Porto. The purchase of zero-emission buses 
and  related  charging  infrastructure  contributes  to  modernising  the  public  transport  fleet. 
Capacitation measures for transport management authorities should ensure a long-term impact on 
transport planning and reinforce its contribution towards decarbonising the sector. Together with 
the  purchase  of  zero  emission  (road)  vehicles  (C1  –  National  Health  Service,  Component  3  – 
Social  Responses)  and  the  roll-out  of  electric  vehicles  charging  infrastructure  (Component  7  – 
Infrastructure),  measures  towards  sustainable  transport  account  for  EUR  1.061  billion  of  the 
climate  contribution  of  Portugal’s  recovery  and  resilience  plan.  Notably  this  figure  does  not 
include  the  investment  amount  for  the  expansion  of  the  electric  vehicle  recharging  network 
(measure  RE-C7-I0;  EUR  360  million),  which  is  part  of  the  recovery  and  resilience  plan  but 
financed by non-RRF sources. This includes private financing, which, where necessary, is set to 
be backed by non-RRF public funding.  

Measures for  the adaptation to climate change and prevention  (Components 7 to 10, and 
12) support the Portuguese plan’s climate ambition to a major extent. They consist of forest 
management  and  fire  prevention  (Component  7  –  Infrastructure,  Component  8  –  Forests, 
Component  12  –  Bioeconomy)  and  other  climate  adaptation  measures  (Component  10  –  Sea). 
Together with broader water management measures in Component 9, they account for EUR 795 
million of the plan’s climate contribution.  

Likewise,  expenditure  for  research  and  innovation  processes  contribute  to  the  climate 
target. These research activities and the technology transfer and cooperation between enterprises 
focuses  specifically  on  the  low  carbon  economy,  resilience  and  adaptation  to  climate  change 
(Components  5  and  12).  This  results,  in  addition  to  other  socio-economic  and  environmental 
benefits, in an important climate contribution. These measures account for a climate contribution 
of  EUR  619  million.  Dispersed  contributions  also  come  from  forest-related  measures 
(Component 8), water management  (Component  9), and measures related to  the blue  economy 
(Component 10).  

The measures in Portugal’s recovery and resilience plan effectively contribute to the green 
transition,  including  biodiversity,  and  to  address  the  challenges  resulting  therefrom.  The 
plan  supports  Portugal’s  decarbonisation  and  energy  transition  objectives,  as  set  out  in  the 
National Energy and Climate Plan 2030 (NECP 2030). In the NECP 2030, Portugal commits to 
reducing GHG emissions (-45% to -55% compared to 2005), increasing energy efficiency (35% 

75 

 
reduction in primary energy consumption), and increasing renewable energy (47% renewables in 
gross  final  energy  consumption).  Objectives  also  include  improved  water  management,  risk 
prevention and preparedness to anticipate the adverse effects of climate change, such as floods, 
coastal erosion, droughts, heat waves and forest fires. The regional dimension of risk assessment 
and  governance  could  be  strengthened.  Together  with  the  NECP  2030,  the  Carbon  Neutrality 
Roadmap 2050 (RNC 2050) ensures coherence between the energy and climate areas, as well as 
the interconnection with the green and energy transition dimension of the investments envisaged 
in the recovery and resilience plan.  

Various  components  of  the  recovery  and  resilience  plan  contribute  to  the  commitments 
made in the NECP 2030:  

  Several  components  improve  the  energy  efficiency  of  the  existing  building  stock 
(Components 1 to 4, 6, 7, 10, 13). The investments are expected to address the challenge 
of the rather low level of energy-efficiency renovations in Portugal, leading to a notable 
increase  in  energy-efficient  building  infrastructure.  This  should  lead  to  lower  levels  of 
greenhouse gas emissions, improve living conditions and climate change adaptation. 

  Components  7  –  Infrastructure  and  14  –  Hydrogen  and  Renewables  include 
measures  to  promote  the  production  of  renewable  energy  and  in  particular 
renewable  hydrogen  and  other  renewable  gases,  to  increase  the  production  and 
storage  capacity  of  energy  produced  from  renewable  sources,  and  to  establish  a 
local energy community. These measures should accelerate the transition of the energy-
sector,  increase  the  already  high  share  of  renewables  in  Portugal,  and  help  use  the 
country’s very favourable conditions to produce renewable hydrogen. Portugal intends to 
to  expand  energy 
complement 
interconnections. 

through  cohesion 

investments 

funding 

these 

  Component  11  –  Decarbonisation  of  Industry  provides  financial  support  to 
innovation projects in industries, targeting SMEs and large companies. The support 
for low carbon processes and technologies, energy efficiency measures, the incorporation 
of  renewable  energy  and  storage,  the  development  of  decarbonisation  roadmaps  and 
capacity building initiatives are expected to help decarbonise industry. 

  Component  12  –  Bioeconomy  aims  to  promote  the  development  of  products  from 
biological  resources.  This  is  designed  to  strengthen  the  role  of  these  high  value-added 
products  from  biological  resources  as  alternatives  to  fossil-based  materials.  The 
component  contributes  to  the  development  of  a  national  bio-based  industry  and 
environmentally  friendly  production  processes,  advancing  the  green  transition  of  the 
economy. 

  Component 15 – Sustainable Mobility contains investments in public transport and 
a  reform  to  capacitate  public  transport  authorities.  The  measures  is  expected  to 
improve  the  public  transport  offer,  leading  to  encouraging  emissions  reductions  of  the 
transport sector and help address the challenge of low air quality and traffic congestion in 
the  major  metropolitan  areas  of  Lisbon  and  Porto.  The  deployment  of  electric  vehicle 

76 

 
charging  stations  are  set  to  address  to  a  large  extent  investment  needs  in  charging 
infrastructure  and  make  road  transport  more  sustainable.  Portugal  has  also  declared  its 
intention to expand the railway network with other EU funding sources.  

  Component  8  –  Forests  contributes  to  preventing  and  combating  rural  fires  and 
improve  the  rural  land  management.  The  measures  promote  greater  resilience  of 
national  forest  territories  against  forest  fires  and  thus  contribute  to  their  increased 
importance  for  carbon  sequestration.  The  measures  proposed  under  this  component  are 
expected to address the fragmentation of land ownership in Portugal, enable sustainable 
land management, preserve biodiversity and reduce the risk of forest fires.  

  Component  9  –  Water  Management  consists  of  water  management  measures  that 
are  set  to  mitigate  water  scarcity  in  Algarve,  Alentejo  and  Madeira.  These  regions 
are  most  at  risk  of  drought.  The  measures  reduce  water  losses  in  the  urban  and 
agricultural  sectors,  promote  the  use  of  treated  wastewater,  and  ensure  the  security  of 
drinking  water  supply.  The  component  helps  address  Portugal’s  water  management 
challenges.  

  Component 10 – Sea implements more resource and energy efficient solutions in the 
blue  economy  and  the  protection  of  the  marine  environment.  Investments  aim  at 
improving  energy  and  environmental  efficiency  and  support  the  financing  of  projects 
aimed  at  innovation,  process  modernisation,  carbon  footprint  reduction  and  the  circular 
economy of the fish industry and organisations. These measures are expected to promote 
a more decarbonised and sustainable sea economy.  

These  measures  are  expected  to  contribute  to  the  green  transition  and  environmental 
protection.  Importantly,  they  also  ensure  a  just  transition  by  providing  support  to  vulnerable 
groups of the population (e.g. in the case of building renovations, which are set to help to reduce 
energy  poverty).  The  recovery  and  resilience  plan  supports  Portugal  in  meeting  the  national 
energy and climate targets set out in the NECP 2030 and RNC 2050 and thus in achieving carbon 
neutrality in 2050. 

The plan contains limited measures to enhance biodiversity. Components 8 – Forests and 10 
–  Sea  are  designed  to  promote  biodiversity  to  some  extent  through  measures  on  forest 
management  and  the  sea  economy.  A  broader  approach  on  biodiversity  conservation  will  be 
needed to address the challenges that Portugal is facing in this field, for instance related to the 
Natura  2000  network,  including  the  marine  environment.  Portugal  should  consider  addressing 
the environmental challenges and investment needs in these areas with the support of other EU 
funds.  

Conclusion on the assessment of criterion 2.5 of Annex V to the RRF Regulation 

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged,  the  recovery  and 
resilience  plan  is  expected,  to  a  large  extent,  to  make  a  significant  contribution  to  the  green 
transition or to address the related challenges and ensures that at least 37% of its total allocation 

77 

 
contribute to the climate target. This would warrant a rating of A under criterion 2.5 of Annex V 
to the RRF Regulation. 

4.6. Digital transition 

Digital tagging 

Portugal’s  recovery  and  resilience  plan  correctly  follows  the  methodology  for  digital 
tracking set out in Annex VII to the RRF regulation, by identifying intervention fields and 
corresponding  coefficients  for  the  calculation  of  each  measure’s  support  to  the  digital 
objectives. It should be noted that: 

 

 

 

 

 

the  proposed  reform  measures  relevant  for  the  digital  contribution  do  not  have  any 
associated cost in the plan. In this context, the plan does not identify intervention fields 
for them, and they do not help to reach the digital target 
the measures of the plan often consist of several sub-measures; for measures where that is 
the case, the plan indicates an intervention field for each sub-measure, and digital tagging 
is computed at sub-measure level 
the choice of intervention fields for the digital transition is well-justified and reflects the 
nature,  focus,  objective  or  expected  outcome  of  the  investments  included  in  the 
component 
the  digital  tagging  applied  by  Portugal  is  conservative  as  there  are  a  number  of 
investments  with  a  digital  dimension  that  have  not  been  tagged,  although  the  plan 
describes their digital contribution. In these cases the digital contribution constitute a part 
of a larger measure and separate cost data have not been provided to compute the digital 
contribution30  
the plan does not propose to increase the digital coefficients for any measure 

Overall,  the  plan’s  contribution  toward  the  digital  objectives  amounts  to  22.1%  of  the 
plan’s allocation, and as such, the digital target of 20% is considered met. Table 7 presents 
the  contribution  toward  the  digital  objective  for  each  component.31  The  most  important 
contribution relate to Component 6 – Qualification and Skills. Particularly prominent within this 
component  is  the  measure  to  modernise  the  offer  of  the  professional  training  institutes.  In  this 
measure,  more  than  EUR 500  million  are  devoted  to  the  purchase  of  digital  and  technical 
equipment  to  modernise  the  offer  of  technical  schools  and  vocational  education  and  training 
centres. Component 16 – Enterprises 4.0 is the second largest contributor to the digital objective 
with EUR 650 million. Other components that contribute significantly to the digital objective are 

30   This  is  the  case  for  a  number  of  component  such  as  Component  9  –  Water  Management,  Component  12  – 
Bioeconomy and Component 11 – Decarbonisation of Industry, in which there are digital related investments in 
monitoring  systems,  tracking  devices,  data  platforms  and  data  management  tools.  At  the  same  time  also 
Component 14 - Hydrogen and Renewables include investments in smart meters and smart grids that have not 
been tagged for digital contribution. 

31   Table 8 in Annex presents the detailed application of the digital tagging  methodology for all measures and sub-

measures with a digital contribution. 

78 

 
                                                           
Components 20 – Digital school, Component 1 – National Health Service and the components on 
the modernisation of public administration (Components 17 to 19). 

Table 7: Digital contribution and cost per component 

Component 

Cost 
(EUR million) 

Digital 
contribution 
(EUR million) 

C1 National Health Service 
C2 Housing 
C3 Social Responses 
C4 Culture 
C5 Investment and Innovation 
C6 Qualifications and Skills 
C7 Infrastructure 
C8 Forests 
C9 Water Management 
C10 Sea 
C11 Decarbonisation of Industry 
C12 Bioeconomy 
C13 Energy Efficiency in Buildings 
C14 Hydrogen and Renewables 
C15 Sustainable Mobility 
C16 Enterprises 4.0 
C17  Quality  and  Sustainability  of  Public 
Finances 
C18  Economic  Justice  and  Business 
Environment 
C19 Digital Public Administration 
C20 Digital School 
Overall contribution 

1 383 
2 733 
833 
243 
2 914 
1 324 
690 
615 
390 
252 
715 
145 
610 
370 
967 
650 

406 

267 

578 
559 

351 
2 
12 
93 
54 
666 
26 
86 

1 

650 

406 

267 

502 
559 
3 674 

Digital 
contribution 
(percentage of plan’s 
total allocation) 
2.1% 
0.0% 
0.1% 
0.6% 
0.3% 
4.0% 
0.2% 
0.5% 

0.0% 

3.9% 

2.4% 

1.6% 
3.0% 
3.4% 
22.1% 

Note: the plan’s total allocation is EUR 16 606 294 284. This corresponds to the financial allocation after deduction 
of  Portugal’s  proportional  share  of  the  expenses  of  Article  6(2)  of  Regulation  (EU)  2021/241,  calculated  in 
accordance with the methodology of Article 11 of that Regulation, plus the loan support requested by Portugal under 
the Facility. The amount of the estimated total costs of the recovery and resilience plan is higher than the plan’s total 
allocation. 

Digital transition 

The  Portuguese  recovery  and  resilience  plan  dedicates  four  components  entirely  to  the 
digital transition. These four components are Component 16 – Enterprises 4.0, Component 20 – 
Digital School, Component 17 – Quality and Sustainability of Public Finances and Component 
18  –  Economic  Justice  and  Business  Environment.  Component  19  –  Digital  Public 
Administration also contributes more than 90% of its resources to the digital transition. Overall, 
14  out  of  20  components  contain  some  measures  that  contribute  to  the  digital  transition.  This 

79 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
reflects Portugal’s objective to support the digital transition and to address the related challenges 
with a broad, cross-cutting approach. The plan includes digital related reforms and investments 
in  areas  like  professional  qualifications  and  competences,  modernisation  of  the  health  system, 
culture,  forest  preservation  and  protection,  R&D,  social  responses  and  infrastructures.  Other 
reforms and investments are in the areas of training programmes on digital skills and advanced 
technologies for the business sector, the digitalisation of the education system, modernisation of 
the public administration (including the justice system), support and coaching provided to firms 
so as to help them adopt advanced technologies, actions to dematerialise the business processes 
with  e-invoices  and  actions  to  increase  trust  on  the  use  of  new  technologies,  connectivity 
investments in school and business areas. 

The  measures  in  the  Portuguese  plan  contributing  to  the  digital  transition  or  helping  to 
address  the  related  challenges  are  aligned,  at  national  level,  with  the  Portugal  2030 
strategy. They are also consistent with the broad lines of other documents of a strategic nature, 
namely the National Programme for Spatial Planning Policy (PNPOT), the National Energy and 
Climate  Plan  2030  (NECP  2030),  the  National  Investment  Plan  2030  (PNI  2030),  the  Digital 
Transition Action Plan (Portugal Digital), the Internal Development Programme and the National 
Health  Service  (SNS)  Response  Improvement  Plan.  These  measures  are  also  aligned  with 
various  European  initiatives  like  the  EU  digital  strategy32,  the  EU  skills  agenda,  the  European 
Pillar of Social Rights, the European Education Area and the digital education action plan. These 
measures  are  also  aligned  with  the  two  flagships  Modernise  and  Reskilling  and  upskilling 
included in the Commission’s Annual Sustainable Growth Strategy (COM/2020/575).  

For  human  capital  and  skills,  the  recovery  and  resilience  plan  includes  significant 
lifelong  education  and 
investment  to  support  primary  and  secondary  education, 
employment with specific interventions for digital skills development. Under Component 20 
–  Digital  School,  a  comprehensive  strategy  is  planned  for  the  digitalisation  of  education,  in 
particular for primary and secondary schools, including an enhanced use of platforms and digital 
technologies  for  teaching  purposes,  the  creation  of  the  conditions  for  the  educational, 
pedagogical  and  managerial  innovation  of  the  Portuguese  education  system.  This  means 
developing  teachers’  digital  skills  (with  specific  investments  in  Madeira  and  Azores,  whereas 
training for teachers on the mainland, albeit  part  of the reform,  is  set  to  be supported by other 
complementary funding). It also means improving the digital skills of students and school staff, 
which  is  expected  to  be  achieved  by  integrating  digital  technologies  in  the  different  curricular 
areas,  modernising  the  curriculum,  and  providing  the  appropriate  equipment.  In  particular,  the 
equipment provided is set to consist of personal computers and tablets (more than 600 000) for 
more  disadvantaged  students  and  computers  for  teachers  and  school  management,  projectors, 
digital  educational  environments  for  class  learning,  and  advanced  laboratories  for  the 
development  of  digital  skills  and  other  advanced  technologies,  including  educational  robotics. 
Significant  investments  are  set  to  also  be  devoted  to  school  connectivity  and  the  creation  of 
digital  educational  resources  and  the  digitalisation  of  the  evaluation  process.  Component  20  – 

32   See in particular: ‘Shaping Europe’s Digital Future’, COM(2020)67. 

80 

 
                                                           
Digital  School  includes  specific  investments  aimed  at  improving  the  connectivity  of  schools, 
including their internal network. Lastly, there are specific investments to raise enrolment rates in 
science,  technology,  engineering,  the  arts  and  mathematics  (STEAM)  courses,  support  Higher 
Education  Institutions  in  the  modernisation  of  their  facilities  and  accommodate  the  expected 
increase  in  the  number  of  students.  All  these  measures  will  be  essential  in  addressing  the 
challenges Portugal faces with the development of digital skills, digital inclusion, the adoption of 
advanced technologies and ensuring access to quality education. 

The recovery and resilience plan also includes significant investment for the digital skills of 
the  adult  population.  Component  6  –  Qualification  and  Skills  includes  investments  for  the 
modernisation  of  vocational  education  and  training  institutions,  with  a  focus  on  equipping 
training  institutions  with  advanced  digital  equipment  and  technologies.  In  addition,  there  are 
specific  investments  to  support  digital  skills  for  adults.  These  investments  are  central  to 
modernising the vocational education and training infrastructure and renewing its course offering 
to address the impact of the pandemic and the impact of societal and technological changes. The 
investments contribute to the digital transition and help to address the related challenges.  

Other  investments  relevant  for  the  development  of  human  capital  and  for  the  specific 
development of digital skills are also included in sector-specific initiatives. The recovery and 
resilience plan includes significant measures to train the workforce (Component 16) in basic and 
more advanced digital skills (more than 800 000 workers) with both a universal approach using 
online tools (for basic digital skills) to more tailored face-to-face training with a sectorial focus. 
Specific  training  on  digital  skills  for  the  workforce  are  also  envisaged  in  the  investments 
targeting the public administration (Components 18 and 19), and the sea sector (Component 10). 

The  plan’s  measures  on  human  capital  help  to  improve  the  digital  literacy  of  the 
population,  increase  the  resilience  of  the  education  and  lifelong  training  systems  and 
improve social and territorial cohesion, with an expected long-lasting impact on society and 
the economy. In 2019 Portugal had values below European averages in terms of daily use of the 
internet  (65%),  use  of  online  public  services  (41%)  and  ICT  specialists  in  the  labour  market 
(2.4%) (Eurostat data/Digital Skills Observatory). It set ambitious targets for these indicators to 
be  reached  by  2025  (80%,  75%  and  5%  respectively).  Among  ICT  specialists  in  the  labour 
market,  women  accounted  for  18.3%  and  men  for  81.7%  (Eurostat  data/Digital  Skills 
Observatory). Portugal  has presented an ambitious  and comprehensive package of reforms  and 
investments in human capital and digital skills that are expected to address these challenges and 
produce long-lasting effects. The plan is  also expected to increase the share of STEM students 
and raise the share of students enrolled in science and digital fields. The upskilling and reskilling 
opportunities  that  are  provided  are  also  expected  to  meet  the  growing  demand  for  the  skills 
needed for the digital transition  

The  recovery  and  resilience  plan  includes  significant  investments  in  the  digitalisation  of 
businesses,  with  a  full  component  dedicated  to  supporting  firms  in  the  digital  transition. 
Component 16 (Enterprises 4.0) includes significant investments in the following dimensions: 

81 

 
  Modernise  the  business  model  of  companies  as  well  as  their  production  processes, 

including the dematerialisation of workflows (e-invoices),  

  Create new digital  marketing channels  for products  and services (e-commerce), support 
and coach firms to incorporate advanced technologies and processes into their business, 
  Stimulate  digitally  based  entrepreneurship  with  particular  attention  to  start-ups  and 

incubators and accelerators that supports them.  

Overall,  more  than  30 000  enterprises  are  expected  to  benefit  from  general  and  more 
tailored  support.  These  investments  are  expected  to  boost  the  competitiveness  of  firms  and 
address  significantly  the  challenges  Portugal  faces  with  the  adoption  of  digital  technologies. 
These  investments  are  expected  to  have  long-lasting  effects  contributing  to  the  economy’s 
resilience and growth.  

Component  16  also  includes  investments 
in  cybersecurity,  privacy,  usability  and 
sustainability  certification  platforms.  Further,  campaigns  to  disseminate  and  empower 
conformity assessment bodies or technical assessment laboratories and design certification seals 
in  those  areas  aims  to  increase  the  trust  of  digital  technologies  and  support  their  adoption.  By 
increasing  the  level  of  trust,  these  investments  are  expected  to  positively  contribute  to  the 
adoption of digital technologies, boosting their use and availability. 

transparent,  and  replicable 

Investments are also planned to develop a national network of test-beds, or platforms for 
conducting  rigorous, 
theories, 
computational  tools,  and  new  technologies  (30  new  test-beds).  This  should  help  firms  to 
develop  and  bring  new  products  to  the  market,  with  particular  attention  paid  to  digital 
technologies. In addition, investments are envisaged to expand the Digital Innovation Hubs with 
16 additional hubs planned. These investments are expected to have a lasting impact and boost 
firms’ competitiveness, accelerating the transfer of technology and diffusion of innovation. 

testing  of  scientific 

Other investments in digitalisation are specifically planned for the cultural sector (EUR 93 
million).  This  includes  steps  to  modernise  the  technological  infrastructure  of  cultural 
installations, digitalise outstanding works of art and cultural heritage (for their preservation), and 
support the internationalisation and digitalisation of the book publishing industry. The sea sector 
is expected to also benefit from digitalisation investments (IT equipment and digital skills) with a 
sectorial focus. These investments are expected to have a lasting impact and to contribute to the 
digital transition of these sectors. 

The latest DESI results in 2020 show that Portugal ranks 16th for the integration of digital 
technologies in companies, with an overall score just below the EU average. In addition, the 
proportion  of  SMEs  with  at  least  a  basic  level  of  digital  intensity  (51%)  is  lower  than  the  EU 
average  (60%),  which  shows  that  Portuguese  SMEs  are  less  digitally  active  than  their 
counterparts.33  This  is  particularly  relevant  in  view  of  the  fact  that  the  Portuguese  economy  is 
dominated  mainly  by  micro-enterprises.  Overall,  the  investments  in  the  digitalisation  of 
businesses  set  out  in  the  plan  are  expected  to  structurally  transform  the  business  model  of  the 

33   Eurostat - Community survey on ICT usage and eCommerce in Enterprises. 

82 

 
                                                           
Portuguese  economy  and  have  a  lasting  impact  on  the  digital  transition,  competitiveness  and 
resilience of firms.  

The  recovery  and  resilience  plan  dedicates  significant  investments  to  e-government  and 
digital public services. The investments in digital public administration, included in Component 
19, amount to EUR 527 million, and include measures to (i) modernise the consular services by 
putting  in  place  an  omnichannel  response  capacity  (single  digital  gateway,  call  centre  and  in-
person services), (ii)  foster adoption of cloud  and 5G services,  and (iii) reduce  asymmetries in 
the provision of public services. Actions are also envisaged to reinforce the use of data by public 
services,  strengthening  interoperability  and  data  sharing  and  interoperability  with  external 
entities  and  cross-border  connections  (e.g.  with  the  European  Open  data  portal).  Other 
investments are set to target the government’s IT network, improve the coverage and capacity of 
the  State  Emergency  Communications  network  and  the  national  internal  security  network  and 
review the architecture of the information systems and processes of the country’s security forces. 
These  investments  are  set  to  also  implement  the  once-only  principle  in  order  to  reduce  the 
administrative burden on citizens and businesses. 

These investments are expected to have a long-lasting impact on the digital transition of the 
public administration and will be essential for strengthening the interoperability capacities 
of  its  digital  services.  They  are  set  to  equally  strengthen  the  capacity  of  the  public 
administration  to  exploit  data  for  decision-making,  to  expand  the  availability  of  electronic 
identification solutions and data access control mechanisms and to enhance interoperability and 
transition to cloud; this is expected to lead to a greater functional integration of services. In turn, 
these investments are set to also be key to ensuring that the public administration service uses all 
available  channels  and  is  uniform  and  close  to  citizens  and  businesses,  eliminating  persistent 
disparities  in  the  usability,  accessibility,  dematerialisation  and  digitalisation  of  public  services. 
Cloud  computing  measures,  for  example,  are  foreseen 
to  support  different  sectoral 
transformations (schools, public administration, economic justice, business transformation).  

For  e-justice  and  business  environment  (Component  18),  the  plan  includes  significant 
investments  (EUR 267  million)  to  tackle  two  long-standing  issues  in  the  Portuguese 
framework. These are the obstacles in obtaining business licences and  the inefficiencies in the 
justice system (such as lengthy judicial proceedings). Furthermore, this investment are designed 
to  boost  the  adoption  of  the  ‘digital  by  default’  paradigm  in  both  processes  and  procedures 
relating to the functioning of courts and interaction with stakeholders. Digital investments in this 
area include investment  in  platforms for the justice system  and  for the interaction between the 
justice  system  and  citizens  and  businesses  to  make  new  services  available  online.  These 
investments  are  also  complemented  by  the  enhancement  of  technology  infrastructure  and 
equipment,  including  datacentres,  disaster  recovery  and  the  creation  of  a  multichannel  contact 
centre in the field of justice. Investments in this area also have a cross-border dimension as they 
are expected to develop the interoperability of national records with those of other EU Member 

83 

 
States  under  EU  initiatives34.  These  investments  are  expected  to  contribute  to  the  digital 
transition and to structurally change the business environment and the justice system.  

The digital investments in public administration in Component 17 is expected to also have 
a  lasting  impact  insofar  as  they  are  set  to  improve  public  financial  management  in 
Portugal, thereby increasing the sustainability of public finances. These investments include 
measures such as: (i) the digitalisation of processes, as well as the automation of accounting and 
its integration in central information systems at the Ministry of Finance, which are set to benefit 
budgetary planning, monitoring and accountability;  (ii) the upgrade of the information  systems 
of  the  Tax  and  Customs  Authority  for  rural  property  taxation;  and,  (iii)  the  digitalisation  of 
Social  Security  services  in  order  to  simplify  the  granting  of  social  benefits,  and  make  services 
more user-friendly. Machine-learning and artificial intelligence is set to also be employed in new 
surveillance tools to curb fraud and evasion. 

Other  digital  investments  are  planned  in  Component  2  -  Housing,  Component  3  –  Social 
Responses  and  Component  8  -  Forests.  These  include  investments  in  the  digitalisation  of 
housing services and specific investments in social services, which are set to involve investing in 
digital information tools to nurture the inclusion of people with disabilities. Digital investments 
in forestry are also included. These are measures to develop the Digital Services Platform for the 
Territorial Cadastre (BUPi) and a digital model of land use through the Land Cover Monitoring 
System  (SMOS),  as  part  of  a  plan  for  the  active  planning  and  management  of  vulnerable 
agricultural  and  forestry  land  of  high  environmental  value.  These  investments  are  expected  to 
have a lasting impact on the digital transition of these sectors, making them also more efficient 
and bringing them closer to citizens. 

Related  to  public  administration,  significant  investments  in  the  digitalisation  of  health 
services  (Component  1  with  EUR 351  million)  are  also  included.  Investments  cover 
telemedicine,  the  upgrade  of  the  IT  systems  and  equipment  of  hospitals,  improvement  of  the 
health  data  network  and  of  interoperability  between  different  information  systems.  These 
measures  are  also  complemented  by  specific  training  on  digital  skills  and  support  for  the 
digitalisation of health records. It is expected that these investments have a lasting impact on the 
digitalisation of the health sector and help make access to online services more user-friendly for 
patients.  

All investments in Components 1, 2, 3, 8 and 17-19 are expected to have a lasting impact on 
the digital transition of the Portuguese public administration, on social services and on the 
health  system.  They  are  expected  to  also  have  a  lasting  impact  on  the  accessibility  of  these 
public services and on the way in which citizens and businesses are able to interact with them. 

34   Criminal  record  information  in  the  European  Criminal  Records  Information  System  (ECRIS),  to  enable  the 
publication and search of interoperable judicial decisions through the European Case Law Identifier (ECLI), to 
facilitate the exchange of information between judicial entities on the basis of E-Codex and to cooperate within 
the  framework  of  the  European  Car  and  Driving  Licence  Information  System  (EUCARIS),  the  use  of  cross-
border identification resources (e.g.:eIDAS). 

84 

 
                                                           
The  investments  are  set  to  also  improve  the  efficiency  of  public  service  provision  andincrease 
their resilience, while also ensuring social and territorial cohesion.  

The  recovery  and  resilience  plan  also  includes  some  limited  investment  in  connectivity35. 
These  investments  are  focused  on  connecting  schools  (Component  20)  to  the  publicly-owned 
Enlarged Education Network, and on improving the coverage of local 5G networks, targeting in 
particular the public administration of the Autonomous Region of Madeira (Component 19) and 
business parks (Component 7). The investments in connectivity in schools are expected to have a 
lasting impact on the digital transition of the education system and on the development of digital 
skills. 

Conclusion on the assessment of criterion 2.6 of Annex V to the RRF Regulation 

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged,  the  recovery  and 
resilience  plan  is  expected,  to  a  large  extent,  to  make  a  significant  contribution  to  the  digital 
transition and to address the related challenges. It ensures that at least 20% of its total allocation 
contribute to support digital objectives. This would warrant a rating of A under criterion 2.6 of 
Annex V to the RRF Regulation. 

4.7. Lasting impact of the plan  

The  recovery  and  resilience  plan  includes  an  ambitious  package  of  measures  aimed  at 
addressing challenges identified in the context of the European Semester.  The measures in 
the  plan  facilitate  the  green  and  digital  transitions  and  strengthen  the  growth  potential,  job 
creation and economic and social resilience of Portugal. The proposed reforms and investments 
are thus expected to have a lasting, positive impact on the Portuguese economy and society. 

Most of the components of the plan are expected to have a lasting impact on Portugal. The 
measures presented in this respect comprise structural changes to the administration or relevant 
institutions and policies. The lasting impact refers to policy areas where the estimated long-term 
impact on growth potential and employment is significant, as specified in Chapter 4.3, but also in 
areas  where structural  changes are expected to  improve social  and  cultural  aspects  that are not 
necessarily quantifiable.  

Structural change in administration and institutions  

The  plan  presents  structural  changes  in  the  country’s  public  administration  or  related 
institutions. This is particularly the case in health and long-term care (Component 1 – National 
Health  Service),  housing  (Component  2  –  Housing),  business  capitalisation  and  innovation 
(Component  5  –  Investment  and  Innovation),  public  financial  management  (Component  17  – 
Quality  and  Sustainability  of  Public  Finances),  the  justice  system  (Component  18  –  Economic 

35   Portugal explains that the plan does not include a nationwide 5G coverage initiative, as these investments are set 
to in principle be carried out by private operators as part of the coverage obligations. Further, Portugal explains 
that if the final result of the auctions does not ensure adequate coverage of the national territory, in particular in 
areas  of  lower  demand  density,  the  investment  are  set  to  be  subsidised,  where  necessary  and  in  a  manner 
compatible with State aid rules, by the cohesion funds for the period 2021-2027. 

85 

 
                                                           
Justice  and  Business  Environment),  and  digitalisation  of  the  country’s  public  administration 
(Component 19). In many cases, the measures in various components of the plan are designed to 
increase the level of digitalisation of relevant institutions, and this is expected to have a lasting 
impact on the quality of services and the business environment.  

The reform of the governance model of public hospitals should support cost efficiency and 
quality  of  service.  It  is  expected  to  introduce  an  enhanced  governance  model  for  public 
hospitals,  to  grant  them  greater  autonomy  regarding  investment  and  hiring  decisions,  in 
combination  with  enhanced  monitoring  and  stronger  accountability  of  public  managers.  This 
strategy crucially hinges upon making best use of the planning and management tools foreseen in 
the  current  legal  framework,  such  as  revamping  management  contracts  to  strengthen 
performance-based  practices,  and  ensuring  the  wide-spread  approval  of  hospitals’  budget  and 
activity  plans  based  on  compliance  with  tailor-made  verifiable  objectives  that  are  set  to  foster 
sustainability and quality of service. 

The establishment, capitalisation and mission expansion of Banco Português de Fomento, 
are expected to result in a lasting structural change for investment. The proposed increase of 
the  bank’s  capital  to  more  robust  levels  is  expected  to  support  the  bank  in  the  process  of 
becoming  InvestEU implementing partner and, thus, to  facilitate  access  to finance, particularly 
for SMEs affected by the crisis. In addition, the creation of a special purpose vehicle, which is 
expected  to  invest  in  viable  Portuguese  firms  in  the  form  of  equity  and  quasi-equity,  should 
address the structural problem of firms’ undercapitalisation. Both measures are expected to boost 
private investment, productivity growth and job creation potential on a long-term basis. 

The  reform  to  modernise  and  simplify  public  financial  management  are  expected  to 
strengthen  Portugal’s  budgetary  framework.  The  full  and  effective  implementation  of  the 
2015  Budgetary  Framework  Law  – which  has  experienced  systematic  delays –  is  expected  to 
support  overall  budgetary  planning  and  monitoring  through  a  stronger  medium-term  focus  and 
enhanced  transparency.  It  should  also  help  strengthen  expenditure  control,  cost  efficiency  and 
appropriate  budgeting,  which  would  facilitate  rechannelling  public  resources  to  new  strategic 
priorities and assessing the effectiveness of public policies. The reform is expected to go hand in 
hand with a significant upgrade of the information systems for public financial management, as 
well as full adherence to the new accrual-based accounting system, which are expected to take 
effect gradually across government sectors and bodies. In addition, spending reviews are planned 
to become a structural feature of Portugal’s budgetary process, through their better integration in 
the annual budgetary cycle and the ex-post evaluation of possible efficiency gains.  Finally, the 
financial sustainability of state-owned enterprises is planned to benefit from measures to ensure 
timely,  transparent  and  comprehensive  monitoring,  while  enhancing  governance  through 
strengthening performance-based managerial practices. 

The digitalisation of public administration builds on the ‘digital by definition’ paradigm to 
facilitate and simplify the interactions with businesses and citizens. It is complemented by a 
strategy to bring public services closer to the public by implementing a multichannel approach 
(online,  in-person  and  call-centre).  A  significant  build-up  of  public  administration’s  digital 
capacity  and  the  adoption  of  the  once-only  principle  in  public  services  pave  the  way  for  a 

86 

 
significant  reduction 
administration more effective in the long term.  

in 

the  complexity  of  processes  and  procedures,  making  public 

Structural changes in policies  

Structural changes in policies are envisaged in all components of the plan and most of them 
are expected to have a lasting impact. Many of these changes refer to a new energy model for 
the  transition  to  climate  neutrality.  The  transition  is  seen  as  an  opportunity  to  leverage  the 
national  economy  in  a  spirit  of  sustainable  development  by  promoting  technological 
advancement,  job  creation  and  the  preservation  of  natural  resources.  This  entails  measures 
related  to  the  decarbonisation  of  industry,  the  reduction  of  energy  dependency,  sustainable 
mobility, the energy efficiency of buildings, the deployment of new technologies for renewable 
hydrogen and other renewable gases. 

Several  policy  changes  are  envisaged  to  improve  the  business  environment  with  a  lasting 
impact  on  the  country’s  competitiveness  and  potential  for  attracting  foreign  investors. 
These  cover  measures  to  reduce  the  administrative  burden  on  businesses,  including  the 
implementation  of  the  once-only  principle  in  public  services  and  the  elimination  of  barriers  to 
investment linked to burdensome licencing requirements. The measures to increase the efficiency 
of administrative and tax courts (with an expected reduction of the length of court proceedings) 
and  revamp  the  insolvency  framework  are  expected  to  improve  the  business  environment  and 
help reduce the backlog of cases, enabling a more efficient disposition of bad assets. 

Conclusion on the assessment of criterion 2.7 of Annex V to the RRF Regulation 

Taking into consideration the reforms  and investments  envisaged by Portugal,  its recovery  and 
resilience  plan  is  expected  to  bring  about  a  structural  change  to  a  large  extent  in  the 
administration  or  in  relevant  institutions  and  in  relevant  policies  and  to  have  a  lasting  impact. 
This would warrant a rating of A under criterion 2.7 of Annex V to the RRF Regulation. 

4.8.  Milestones, targets, monitoring and implementation  

The task force Recuperar Portugal (see Section 3.2) has clearly assigned responsibilities and 
constitutes  an  adequate  structure  for  implementing  the  plan,  monitoring  progress  and 
reporting.  The  task  force  is  a  body  of  the  Portuguese  administration  that  reports  to  an  Inter-
Ministerial  Commission  (see  above).  The  task  force  is  of  a  temporary  nature  and  is  to  operate 
until the implementation of the recovery and resilience plan has been completed. Staffing needs 
have  been  assessed  by  referring  to  similar,  permanent  structures  in  charge  of  other  European 
Funds,  such  as  the  managing  authorities.  The  task  force’s  operational  capacity  is  set  to  be 
assessed  in  the  course  of  the  first  audit.  This  ad  hoc  centralised  structure  has  clearly  defined 
responsibilities  enshrined  by  law,  which  ensures  a  priori  a  sound  coordination  and  reporting 
mechanism between this structure and other bodies responsible for implementing the investments 
and  reforms  under  the  various  components.  The  task  force  is  expected  to  monitor  the 
implementation of the reforms and investments of the recovery and resilience plan, ensuring that 
its  strategic  objectives  are  achieved  and  that  milestones  and  targets  serve  for  monitoring  and 
achieving the operational objectives of the recovery and resilience plan. It is set to sign contracts 
with  direct  and intermediate beneficiaries  with  the respective  conditions  for the use of funding 

87 

 
and  is  expected  to  prepare  and  submit  to  the  European  Commission  the  requests  for  payment, 
gathering  the  necessary  information  from  the  competent  authorities.  It  is  expected  to  also 
promote the dissemination of the recovery and resilience plans outputs and results at national and 
European  level  and  respond  to  the  European  Commission’s  information  needs.  Moreover,  the 
task  force  is  expected  to  set  up  an  internal  management  and  control  system,  supported  by 
appropriate monitoring and reporting models, intended to prevent and detect irregularities and to 
allow for timely and appropriate corrective actions if needed. In the same vein, the task force is 
set to put in place effective and proportionate anti-fraud measures, taking into account the risks 
identified.  In  addition  to  the  task  force  coordinating  the  plan’s  overall  actions,  the  actors 
responsible  for  implementation  have  been  identified  in  each  component  for  the  corresponding 
reforms and investments, ensuring clarity and accountability. 

The  intended  monitoring  and  reporting  mechanisms  described  in  the  plan  appear 
appropriate.  An  information  system  should  be  operational  before  the  first  payment  request 
(excluding the pre-financing). This system is set to collect the necessary information to monitor 
the  whole  life  cycle  of  the  reforms  and  investments,  including  milestones,  targets  and  results. 
The  operationalisation  of  this  information  system  and  interoperability  with  the  other  systems, 
including  the  European  Commission  system,  are  set  to  be  ensured  before  the  first  audit  of  the 
management and control system, to be carried out by the General Inspectorate of Finance (IGF) 
prior  to  the  submission  of  the  first  (excluding  pre-financing)  payment  request  to  the  European 
Commission.  This  information  system  should  ensure  the  dematerialisation  of  processes  in  a 
secure manner and an architecture for monitoring the entire lifecycle of investments and reforms, 
including  information  on  milestones  and  targets,  as  well  as  information  supporting  the 
monitoring  of  their  financial  implementation.  The  information  system  is  set  to  ensure  the 
collection, storage and availability of information related to the investments and reforms of the 
recovery and resilience plan, including data on the final recipients of the measures of the plan, 
including the standard categories of data provided for in the Regulation. 

Appropriate  tools  are  envisaged  to  ensure  transparency.  An  information  and  transparency 
mechanism (the Transparency Portal) was launched on 28 April 2021 to  centralise information 
on European funds. It is expected to integrate all systems and schemes implemented in Portugal 
and covers, as one of the central priorities, the recovery and resilience plan. The Portal identifies, 
in  real  time,  the  measures  and  projects  financed  by  European  funds.  The  measures  are 
categorised by instrument, programme and economic activity for each project. The system is thus 
set  to  provide  information  on  investments  throughout  the  implementation  phase  until  their 
closure,  including  the  results  of  the  controls  carried  out.  This  mechanism  is  set  to  use 
information from the current programming period and is expected to  allow access on the same 
platform  to  information  from  the  recovery  and  resilience  plan  as  well  as  information  from 
Portugal 2020 and the future Portugal 2030. 

The  milestones  and  targets  of  the  Portuguese  plan  constitute  an  appropriate  system  for 
monitoring  the  plan’s  implementation.  The  monitoring  indicators  are  sufficiently  clear  and 
comprehensive  to  ensure  that  their  completion  can  be  traced  and  verified.  The  milestones  and 
targets chosen represent key steps of the measures and concrete achievements directly linked to 

88 

 
the  implementation  of  the  measures  and  under  the  control  of  the  Portuguese  authorities.  The 
milestones  and  targets  are  considered  relevant  for  the  implementation  of  the  Portuguese  plan. 
They  reflect  adequately  the  overall  level  of  ambition  of  the  plan  and  appear  realistic.  The 
verification  mechanisms,  data  collection  and  responsibilities  described  by  the  Portuguese 
authorities appear sufficiently robust to justify in an adequate manner the payment requests once 
the milestones and targets are completed.  

The measures  in  the plan are nevertheless  highly  fragmented. This  results  in  a high number of 
milestones  and  targets.  This  could  lead  to  a  relatively  burdensome  monitoring  and  pose  some 
risks as to the timely implementation of the plan. The specific timing of numerous investments is 
set to lead to finalisation at the end of the period. 

Portugal also provided a broad range of detailed indicators, which it is expected to use to 
monitor informally the progress of the implementation of individual measures between the 
payment  requests.  These  indicators,  some  of  which  are  set  to  be  included  in  the  Operational 
Agreement, provide an adequate early warning system to ensure that Portugal can take corrective 
actions in time if necessary to avoid missing the objective set up in the relevant milestone/target. 
In  addition,  milestones  and  targets  comprehensively  cover  the  various  (sub)elements  of  the 
measures so that the plan can be monitored in its entirety.  

An  Inter-Ministerial  Commission  is  set  to  ensure  the  overall  political  steering  of  the 
recovery and resilience plan. This commission will be chaired by the Prime Minister. It also 
includes  the  members  of  the  government  responsible  for  the  economy  and  digital  transition, 
foreign  affairs,  the  presidency,  finance,  planning,  the  environment  and  climate  action.  The 
Inter-Ministerial Commission’s role is expected to be the strategic political management of the 
recovery  and  resilience  plan,  ensuring  that  its  implementation is  consistent  with  national  and 
European  strategic  guidelines,  and  the  articulation  and  deepening  of  synergies  with  other 
public policies, as well as its alignment with the national budgetary resources laid down in the 
budgetary  programming  instruments.  The  Inter-Ministerial  Commission  is  expected  to  give 
direct policy impulse to the management/technical level.  

Close  technical  cooperation  between  the  task  force  Recuperar  Portugal,  the  Agency  of 
Development  and  Cohesion  and  the  Ministry  of  Finance  will  be  critical  for  the  plan’s 
implementation. The Agency of Development and Cohesion, in charge of the overall mix of EU 
funds, is directly responsible for the systematic analysis of double funding and payments to the 
direct or intermediate beneficiaries of the recovery and resilience plan. The Agency is expected 
to also ensure that the recovery and resilience plan is complementary to and consistent with other 
initiatives.  The  Ministry  of  Finance  is  set  to  be  in  charge  of  formal  interactions  with  the 
Economic and Financial Committee and the Economic and Financial Affairs Council (ECOFIN). 
The division of responsibilities between the three entities operating at the management level is 
clearly explained.  

A  National  Monitoring  Commission  is  expected  to  ensure  the  effective  and  impactful 
participation  of  key institutional,  economic  and  social  representatives  in  the  monitoring 
and implementation of the recovery and resilience plan.  The commission’s membership is 

89 

 
set  to  be  composed  by  a  large  number  of  stakeholders  of  recognised  standing  (including 
academia,  civil  society,  etc.)  and  is  expected  to  provide  recommendations  on  improving  the 
implementation and give feedback on the implementation reports submitted by the task force 
Recuperar Portugal. 

The  plan  describes  the  institutional  actors  that  are  responsible  for  implementation  the 
individual reforms and investments at component level.  The various actors in  charge of the 
measures  are  clearly  indicated  in  the  description  of  the  20  components  of  the  plan.  The 
responsible ministries or actors involved in the execution of each reform and investment are set 
to liaise on a regular basis with the task force. 

Conclusion on the assessment of criterion 2.8 of Annex V to the RRF Regulation 

The  arrangements  Portugal  proposes  in  its  recovery  and  resilience  plan  are  expected  to  be 
adequate to ensure effective monitoring and implementation of the recovery and resilience plan, 
including the envisaged timetable, milestones and targets, and the related indicators. This would 
warrant a rating of A under the assessment criterion 2.8 of Annex V to the RRF Regulation.  

4.9. Costing    

Portugal  has  provided  individual  estimated  costs  for  all  investments  and  reforms  with 
associated costs in the recovery and resilience plan. In most cases, no costs were associated 
with the reforms in the plan. 

Evidence  was  provided  establishing  the  eligibility  of  the  costs.  All  costs  are  incurred  after 
February  2020  and  do  not  substitute  recurring  national  budgetary  expenditure,  with  few  duly 
justified exceptions, meeting the requirements of article 5 of the Regulation. The share of these 
costs  in  the  overall  plan  is  limited  while  these  recurrent  investments  are  expected  to  have  a 
demonstrable long-term positive impact on the economic and social resilience of Portugal. 

The  cost  breakdown is  generally  detailed  and  well-substantiated.  The  estimates  are  for  the 
most  part  based  on  comparisons  with  procurement  contracts  for  similar  services  or  past 
investments  of  similar  nature.  While  the  tables  proposed  in  the  standard  template  were  duly 
completed and presented, Portugal did not provide an independent validation for any of the cost 
estimates proposed. The assessment of the cost estimates and supporting documents shows that 
most of the costs are reasonable and plausible.  

Reasonable costs 

To support the cost estimates,  Portugal provided an extensive list of documents to justify 
and  explain  the  amounts  proposed,  and  gave  explanations  on  how  those  amounts  were 
computed.  For  the  most  part,  older  projects  or  procurement  contracts  linked  to  the  proposed 
investments were presented to serve as a benchmark for the cost estimates. The analysis of the 
supporting  evidence  is  not  fully  consistent  throughout  the  plan.  While  for  the  most  part  the 
calculations were clearly spelt out and it is possible to clearly identify the methodology used, in 
some sub-investments the information provided did not allow to fully establish the reasonability 
of the cost estimates.  

90 

 
Cost  estimates  have  been  deemed  to  a  large  extent  reasonable.  The  amounts  proposed  for 
financing have been deemed appropriate for most of the measures, whilst taking into account the 
limits of an ex-ante based assessment of cost estimates.  

Plausible costs  

The amount of the estimated total  costs of the recovery and resilience plan is in line with 
the  nature  and  type  of  the  envisaged  reforms  and  investments.  Portugal  provided  an 
extensive  collection  of  documents  to  substantiate  the  cost  estimates.  However,  for  several 
investments, clear explanations were missing as to how the past projects presented as the basis 
for the estimates were used or adjusted to provide for the cost estimates presented. Without these 
explanations,  it  is  difficult  to  verify  how  some  of  the  documentation  provided  was  used  to 
estimate the costs. 

Considering the limitations of an ex ante assessment of cost estimates, the amounts proposed for 
financing were deemed appropriate and seen as establishing the plausibility of the cost estimates 
to a medium extent.  

No double EU financing 

While  the  individual  components  do  not,  as  a  rule,  provide  clear  information  about 
additional  investments  from  other  EU  funds,  a  strong  coordination  mechanism  has  been 
put  in  place  to  ensure  that  double  funding  is  avoided.  In  general  terms,  the  Portuguese 
recovery  and  resilience  plan  mentions  the  complementarity  with  other  Union  financing 
instruments, namely the Partnership Agreement 2021-2027, currently under discussion. The plan 
also  mentions  its  alignment  with  the  mission  and  the  objectives  of  the  Portugal  2030  Strategy 
and  its  contribution  to  implement  the  thematic  agendas  identified  in  the  Strategy.  However, 
given the state of play of the negotiations of the different EU programmes, detailed and assertive 
delineation is not possible at this early stage.  

Not  only  the  audit  and  control  systems  described  in  Section  4.10  have  been  designed  to 
prevent double Union financing, but a specific audit process was also put in place to ensure 
that the risk of double funding is mitigated and prevented. Checks are set to be carried out by 
Recuperar  Portugal,  complemented  by  systematic  analysis  carried  out  by  the  Agency  for 
Cohesion on the financing allocated by other EU funds, and of the information to be provided by 
the beneficiaries. This agency has a centralising  role in the management of information on EU 
funding,  and  is  set  to  therefore  be  in  a  position  to  cross-analyse  data  the  mitigate  the  risk  of 
double funding, by confirming that the same investments or reforms have not been financed by 
other EU sources. This systematic analysis by the agency is set to take place every six months, 
and to be based on a double-checking of the information.  

The  recovery  and  resilience  plan  also  provides  information  on  the  criteria  to  be  used  to 
establish  a  clear  demarcation  between  the  actions  to  be financed  by  each  Fund  to  ensure 
that the same cost is not covered twice by Union financing. The lack of detailed information 
at component level as regards the delineation with other possible EU funding is compensated by 
strong  governance and control systems,  as described in  the following section, and an approach 
based on i) different timing/stages of large investments, ii) different timetables, or iii) different 

91 

 
investment typology to ensure no overlap between the different EU funds. The implementation 
process is expected to include measures to prevent the risk of double funding. 

The complementary typology  ‘different stages of large investments’  refers  to cases where 
the process of implementing an investment plan, in particular large-scale public works, can 
be  split  into  different  complementary  independent  projects,  including  over  several 
programming cycles. For example, the expansion of a metro line envisaged under Component 
15  –  Sustainable  Mobility  does  not  impede  other  further  expansions  or  interventions  at  a  later 
date using other EU funds.  

In  turn,  the  typology  of  ‘separate  timetables’  frames  cases  where  the  recovery  and 
resilience plan is expected to be used to launch an initiative, but there is from then onset a 
foreseeable  need  to  continue  to  support  a  transformation  process  beyond  the 
implementation period of plan.  A clear example can be found in  Component 14  –  Hydrogen 
and  Renewables,  where  it  is  expected  that  at  some  point  in  the  future  the  implementation 
processes  initiated  under  the  recovery  and  resilience  plan  will  need  to  be  consolidated.  The 
recovery and resilience plan is expected to be used to trigger the development of this technology 
but its further development and consolidation is expected to continue in the future. 

Lastly, the complementarity ‘different typologies’ applies where the recovery and resilience 
plan  will  finance  a  clear  sub-set  of  needed  investments  while  the  rest  is  expected  to  be 
covered by other funding sources. An example can be found in Component 19 – Digital Public 
Administration, where the focus is the digitalisation of central public administration, whereas the 
digital transition of local public administration is to be financed under cohesion policy. 

Commensurate and cost-efficient costs  

Taking into account the economic and social impact of the plan, as well as the reasonability 
and  plausibility  of  the  cost  assessment,  it  is  considered  that  the  plan  is  in  line  with  the 
principle  of  cost  efficiency.  At  the  same  time,  the  output  targets  provided  in  the  plan  for  the 
investments are commensurate with the costing justifications and assumptions provided. 

Conclusion on the assessment of criterion 2.9 of Annex V 

The justifications provided by Portugal on the amount of the estimated total costs of the recovery 
and  resilience  plan  are  to  a  medium  extent,  reasonable,  plausible,  in  line  with  the  principle  of 
cost  efficiency  and  commensurate  to  the  expected  national  economic  and  social  impact  on  the 
economy.  Portugal  has  provided  sufficient  information  and  evidence  that  the  amount  of  the 
estimated cost of the reforms and investments of the recovery and resilience plan to be financed 
under the Facility is not covered by existing or planned Union financing. This would warrant a 
rating of B under the assessment criterion 2.9 in Annex V to the RRF Regulation. 

4.10. 

Controls and audit  

To implement the RRF and to contract physical and financial results based on milestones 
and  targets,  Portugal  has  been  looking  for  close  links  with  policy  implementers  and  the 
managing  structures  used  for  implementing  cohesion  policy.  Based  on  the  experience 

92 

 
acquired over time in  managing European cohesion  funds, a model of centralised management 
and decentralised implementation has been chosen, using intermediary entities where necessary. 

The  governance  model  for  the  Portuguese  RRF  was  established  in  the  Decree  Law  No.  29-
B/2021. It has four levels of coordination:  

  Strategic  and  policy  coordination  level,  provided  by  the  recovery  and  resilience  plan 

Inter-Ministerial Commission,  

  The level of monitoring provided by the National Monitoring Commission, chaired by an 
independent person and persons of recognised merit, comprising a wide range of entities 
from the business sector, science and knowledge, the social and cooperative sector, and 
territories;  

  Level  of  technical  coordination  and  monitoring,  ensured  by  the  task  force  Recuperar 
Portugal,  the  Agency  for  Development  and  Cohesion,  I.P.  (Agency,  I.P.)  and  the 
Planning,  Strategy,  Evaluation  and  International  Relations  Office  of  the  Ministry  of 
Finance (GPEARI);  

  The  level  of  audit  and  control  carried  out  by  an  Audit  and  Control  Committee  (CAC), 

chaired by the Inspectorate-General for Finance (IGF). 

The  task  force  Recuperar  Portugal  is  expected  to  carry  out  technical  and  management 
coordination,  ensuring  operationalisation  of  the  various  components  of  the  recovery  and 
resilience  plan,  and  is  set  to  assume  the  functions  of  monitoring,  evaluation,  interaction 
with  the  European  Commission,  audit  and  control.  This  is  expected  to  always  be  done  in 
application  of  the  principle  of  segregation  of  functions  and  in  close  coordination  with  the 
Agency, I.P. and the GPEARI and with the IGF for the audit function. 

The national management of the recovery and resilience plan is set to be centralised in the 
Recuperar Portugal task force. Implementation of the plan, its reforms and its investments are 
set  to  be  contracted  out  by  the  task  force  to  public  agencies  or  bodies,  which  are  expected 
themselves  to  be  the  implementers  (direct  beneficiaries,  i.e.  responsible  for  the  physical  and 
financial implementation and execution of an investment included in the recovery and resilience 
plan and allowing it to benefit from financing) or intermediaries (intermediate beneficiaries, i.e. 
responsible  overall  for  the  physical  and  financial  implementation  of  an  investment  included  in 
the  recovery  and  resilience  plan  but  whose  implementation  is  carried  out  by  third  parties  the 
intermediaries  have  selected  and  which  constitute  final  beneficiaries).  In  this  way,  the 
operational implementation of the 32 reforms and 83 investments underpinning the recovery and 
resilience  plan  is  set  to  be  decentralised  at  the  appropriate  level  to  ensure  the  plan’s  full 
implementation,  both  financially  and  in  particular  in  meeting  milestones  and  targets  for 
achievement and outcome. 

The Audit and Control Committee (CAC) is responsible for overseeing the internal control 
system of the task force Recuperar Portugal, for giving a prior opinion on the requests for 
payment  of  recovery  and  resilience  plan  funding  every  6  months  and  for  carrying  out 
audits  on  the  functioning  of  the  recovery  and  resilience  plan  management  and  control 
system. The Public Prosecutor’s Office follows-up the activities of the CAC, within the scope of 

93 

 
 
the  powers  conferred  on  it  in  relation  to  criminal  prevention.  To  make  this  governance  model 
more efficient, there are also plans to boost capacity-building activities for entities with relevant 
responsibilities  in  the  management,  control,  monitoring  and  evaluation  of  the  recovery  and 
resilience plan, with  a view to  strengthening technical  and management  capacity, with  training 
on  regulations,  standards  and  procedures,  including  the  dissemination  and  sharing  of  good 
practices  and  benchmarking  exercises.  A  Transparency  Portal  is  expected  to  be  set  up  to 
centralise information on European funds by integrating all systems and schemes implemented in 
Portugal and covering, as one of the core priorities, the recovery and resilience plan. The system 
is expected to provide information on investments throughout the implementation phase and until 
their closure in the recovery and resilience plan. 

Management  and  control  provisions  are  part  of  the  contracts  concluded  with  the 
intermediate  beneficiaries.  Next  to  that  there  is  a  central  body  acting  as  audit  committee 
using mainly the IGF as executive audit body. This body establishes the audit strategy. Audits 
are planned to assess the functioning of the management and control systems of the recovery and 
resilience plan (systems audit, IT system audit) at the start-up stage of the recovery and resilience 
plan implementation, including also the institutional, technical and administrative capacity of the 
intermediate  beneficiaries  and  in  any  case  by  the  time  of  the  first  payment  request,  as  well  as 
supervisory and (risk-) targeted audits during implementation of the recovery and resilience plan 
and covering legality, financial and performance data (e.g. milestones and targets). 

In  their  plan  the  Portuguese  authorities  have  described  adequate  policies,  systems  and 
procedures to prevent, detect and correct corruption, fraud and conflicts of interests when 
using  the  funds  provided  under  the  RRF,  including  how  they  will  avoid  double  funding 
from the RRF and other European Union programmes. 

These include: 

  Prescribed minimum standards for internal control system intermediate beneficiaries; 
  Code of Ethics and Conduct; 
  Declaration of anti-fraud policy; 
  Risk management plan for corruption and related infringements; 
  Declaration of absence of impediments and incompatibilities; 
  Risk management manual; 
  Handling of complaints; 
  Use of the ARACHNE IT tool (or similar); 
  IT tool ‘Transparency Portal’; 
  Integrated reporting tool (financial and performance data including control and audits); 
  IT tool for the electronic transmission of data on final beneficiaries; and, 
  Use of existing tool for the follow-up of irregularities. 

The internal control system describes processes and structures and identifies the actors and 
their roles and responsibilities for the performance of the internal control tasks; it notably 
ensures appropriate segregation of functions. 

94 

 
 
The  plan  contains  32  reforms  and  83  investments  spread  over  20  components  for  which 
contracts  are  expected  to  be  concluded  between  Recuperar  Portugal  and  direct  or 
intermediate  beneficiaries  and  between  the  latter  and  their  final  beneficiaries.  These 
contracts contain provisions to mitigate double funding, risk of fraud, corruption and conflict of 
interest (e.g. internal control, verification and control procedures (incl. in respect of targets and 
milestones), progress  reporting, use of  IT systems). The development  of a Transparency Portal 
contributes  to  a  source  of  centralised  information  for  all  past,  present  and  future  EU-funded 
measures and projects. Audits are also expected to be carried out by the IGF (which is also Audit 
Authority  for  all  other  EU  funds)  that  include  system  audits  and  on-the-spot  checks  of  bodies 
receiving  public  funds.  Finally,  the  Portuguese  Court  of  Auditors,  as  the  Supreme  Audit 
Institution  is  responsible  for  supervising,  at  national  level,  the  implementation  of  financial 
resources  from  the  European  Union,  in  accordance  with  the  applicable  law,  and  may  act  in 
cooperation with the competent Community bodies. Its tasks also include to the control of public 
procurement and to the clearance and sanctioning of financial infringements detected during the 
implementation of programmes. 

The  control  system  and  related  arrangements  are  adequate.  The  control  system  and  other 
relevant arrangements described in the plan, including for the collection and making available of 
data on final recipients, in particular to prevent, detect and correct corruption, fraud and conflicts 
of  interest  when  using  the  funds  provided  under  the  Facility  as  well  as  the  arrangements 
described  to  avoid  double  funding  from  the  Facility  and  other  Union  programmes,  are  rated 
adequate. The actors (bodies/entities) responsible for controls have the legal empowerment and 
administrative capacity to exercise their envisaged roles and tasks (Decree  Law No 29-B/2021 
and Resolution of Council of Ministers No 46-B/2021). 

Portugal’s recovery and resilience plan was sent to the Commission on 22 April 2021, and 
the  plan  indicates  that  existing  IT  tools  require  some  changes  or  developments  (e.g.  to 
facilitate reporting on specific milestones and targets). These IT developments were ongoing, 
and are to be finalized in the first months of the implementation of the recovery and resilience 
plan and in advance of the first audit of the management and control system to be carried out by 
the  General  Inspectorate  of  Finance  (IGF)  prior  to  the  submission  of  the  first  (excluding  pre-
financing) payment request to the European Commission.  

Conclusion on the assessment of criterion 2.10 of Annex V 

The arrangements proposed by Portugal in the recovery and resilience plan to prevent, detect and 
correct  corruption,  fraud  and  conflicts  of  interest  when  using  the  funds  provided  under  the 
Facility, including the arrangements aimed to avoid double funding from the Facility and other 
Union  programmes,  are  assessed  to  be  sufficient.  This  would  warrant  a  rating  of  A  under  the 
assessment criterion 2.10 of Annex V to the RRF Regulation. 

4.11. 

Coherence 

The  Portuguese  recovery  and  resilience  plan builds  on  the  national  development  strategy 
(Portugal 2030) and is recognised as one of the key instruments for its implementation. It 
reveals  a  strategic  and  consistent  vision  throughout  the  plan,  displaying  coherence  at  different 

95 

 
levels:  within  each  component,  between  the  objectives  of  different  components  and  amidst 
individual reforms and investments in different components.  

Mutually-reinforcing measures  

The  reforms  and  investments  in  each  component  included  in  the  Portuguese  plan  are 
consistent  and  mutually  reinforcing.  Reforms  included  in  the  plan  enable  and  underpin  the 
planned investments, while investments aim at operationalising the reforms. A clear example can 
be found in Component 18 – Economic Justice and Business Environment, where the proposed 
reform  with  the  same  title  provides  the  legal  basis  for  the  digitalisation  of  processes  and 
procedures,  without  which  the  investment  proposed  in  digital  platforms  and  software,  and  in 
particular the procedures to be digitalised, would be ineffective. Similarly, the objectives of the 
reform in Component 15 – Sustainable mobility are intrinsically linked with the five investments 
in sustainable transport proposed in this component. The reform empowers transport authorities, 
which  is  expected  to  help  future  investments  to  be  fully  effective.  The  investments  are  set  to 
contribute towards  achieving these targets  by improving  connectivity and decarbonising public 
transport  in  the  main  urban  centres.  In  a  similar  vein,  the  provision  of  social  housing  at 
affordable  rents  included  in  Component  2,  whether  permanent  or  temporary,  is  set  to  largely 
result from the implementation of municipal housing programmes under the coordination of the 
national agency for housing and urban renewal. 

No cases have been observed of areas where the measures proposed within any component 
(be it reforms or investments) contradict or undermine each other’s effectiveness.  

Complementarity of measures  

There  is  a  consistent  vision  throughout  the  plan  as  regards  the  proposed  reforms  and 
investments.  Synergies  can  be  found  between  different  components  and  also  between  the 
individual measures. For example, the sustainable urban transport investments in Component 15 
–  Sustainable  Mobility  are  expected  to  strengthen  the  social  measures  in  metropolitan  areas 
included  in  Component  3  –  Social  Responses,  as  improved  and  affordable  public  transport  in 
metropolitan areas is set to reduce the mobility costs of low income families and ensure broader 
access to services and employment opportunities. The strategy for the  move to the cloud in the 
public  administration,  governed  by  the  investments  in  Component  19  –  Digital  Public 
Administration, is referred to and built upon in the other areas where this cloud strategy is set to 
also  be  adopted,  such  as  in  Component  18  –  Economic  Justice  and  Business  Environment. 
Another example is the fact that elements of investments included in Component 14 – Hydrogen 
and renewables depend on additional water inflows that are set to result from the implementation 
of the investment plans under Component 9 – Water Management. 

the 

intrinsic  complementarity  between  different 
Individual  measures  also  show 
components.  For  example,  improvement  of  the  population’s  skills  level  is  addressed  through 
different  components, which complement each other.  While Component 6 – Qualifications and 
Skills is the anchor for skills and competencies in the plan, it is complemented with investments 
of a more sector-specific nature in Components 10, 16, 19 and 20, showing a strong consistency 
in the approach and tailoring the responses to the target groups, increasing their efficiency. The 

96 

 
overall strategy and structure to tackle the digital skills and qualifications challenge is structured 
in four strategic pillars: citizens in general (C6), workers (C16), civil servants (C19) and students 
(C20),  with  a  specialised  approach  to  areas  linked  to  the  sea  included  in  C10.  By  ensuring 
coordination  and  complementarity,  the  effectiveness  of  the  measures  is  expected  to  be 
strengthened.  Another  clear  example  of  how  the  different  components  work  together  is  the 
envisaged rural properties cadastre. The objective of having a modern single digital gateway for 
rural  properties  is  shared  by  the  reforms  and  investments  in  Components  8,  17  and  18: 
Component 8 is set to focus on the collection of the information from a land management point 
of  view,  Component  17  is  set  to  ensure  the  update  of  the  land  cadastre  by  Tax  and  Customs 
Authority,  while  Component  18  is  designed  to  ensure  that  the  property  registry  is  fully 
digitalised  and  available  online.  Together,  these  investments  are  set  to  ensure  that  BUPi  (the 
Balcão Único do Prédio) interface will be the single digital gateway for the different sources of 
information on rural properties. These strong connections maximise the potential benefits of the 
investments and reforms proposed, in line with the objectives of the RRF.  

Important reforms and investments are also included that are expected to address existing 
cross-cutting bottlenecks and therefore reinforce the impact of investments throughout the 
plan. The increased efficiency of the justice system envisaged in Component 18 is expected to 
bring benefits to all stakeholders, from citizens to businesses, while the latter are set to also see 
the  administrative  burden  associated  with  the  launch  and  other  stages  in  the  life  cycle  of  a 
business reduced due to the streamlining of licencing requirements and the digitalisation of the 
different procedures. Similarly, structural measures in Components 17, 18 and 19 (such as fiscal 
reforms,  the  single  digital  gateway  and  the  implementation  of  the  ‘once-only  principle’  in  the 
interactions  with  the  administration),  are  expected  to  increase  the  efficiency  of  public 
investment, reduce red tape and make interactions with the public administration more efficient. 
Likewise, the concerted effort for upskilling and digitalisation and the focus on STEAM areas, 
combined  with  the  impetus  given  to  research  and  innovation,  are  expected  to  provide  the 
necessary know-how for growth and strengthen the country’s productive capacity (Components 
5, 6, 10, 11, 12, 14, 16 and 20). 

The  plan  does  not  present  inconsistencies  or  contradictions  between  the  different 
components.  Due  care  was  given  to  ensure  that  implementation  timelines  and  reforms  and 
investments were aligned to ensure successful delivery of the measures.  

In  view  of  the  challenges  to  be  addressed,  the  Portuguese  recovery  and  resilience  plan 
presents a balanced approach between reforms and investments. As noted in Section 4.2, the 
plan aims to address most of the challenges identified in the country-specific recommendations, 
making the proposed combination of reforms  and investments appropriate. In order to promote 
wider  coherence  across  instruments,  notably  with  the  European  cohesion  policy  funds,  a 
balanced territorial allocation of resources is encouraged. 

Conclusion on the assessment of criterion 2.11 of Annex V to the RRF Regulation 

Taking into consideration the qualitative assessment of all the components of Portugal’s recovery 
and  resilience  plan,  their  individual  weight  (size,  relevance,  financial  allocation)  and  their 
interactions,  the  plan  contains  measures  for  the  implementation  of  reforms  and  public 

97 

 
investments which, to a high extent, represent coherent actions. This would warrant a rating of A 
under the assessment criterion 2.11 of Annex V to the RRF Regulation. 

5.  ANNEX 

Table 8 Climate and Digital Tagging Table  

Measure/ 
Sub-
Measure ID 

RE-C01-i01 

RE-C01-i01 

RE-C01-i01 

RE-C01-i01 

RE-C01-i01 

RE-C01-i02 

Measure/Sub-Measure Name 

Primary health care services with 
more answers — Building new 
health units 

Primary health care services with 
more answers — Refurbishment of 
health facilities and equipment to 
ensure accessibility, quality and 
safety conditions in primary health 
centres (i) 
Primary health care services with 
more answers — Refurbishment of 
health facilities and equipment to 
ensure accessibility, quality and 
safety conditions in primary health 
centres (ii) 
Primary health care services with 
more answers — Purchase of electric 
cars associated with the provision of 
health care 

Primary health care services with 
more answers — Tele-medicine/tele-
healthcare 

National Network of Integrated 
Continued Care and National 
Network of Palliative Care — 
Strengthening the response capacity 
of the national networks of integrated 
continued care and palliative care 

Climate 

Digital 

Budget 
(EUR m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

155  

025ter 

40% 

11  

026bis 

100% 

134  

026 

40% 

23  

n/a36 

100% 

6  

095 

100% 

198  

025ter 

40% 

36   The ‘Methodology for climate tracking’ annexed to the Recovery and Resilience Facility Regulation does not set 
out  intervention  fields  that  would  allow  for  climate  or  environmental  tracking  of  electric  vehicles  or  plug-in 
hybrid vehicles, except for vehicles for urban transport falling under intervention field 074. According to Article 
18(4)(e) of the Regulation, the methodology should however ‘be used accordingly for measures that cannot be 
directly  assigned  to  an  intervention  field  listed  in  Annex  VI’.  In  this  context,  the  Commission  has  applied  a 
100% climate contribution coefficient for zero-emission vehicles of all categories (this includes battery electric 
and fuel cell/hydrogen-powered vehicles). 

98 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
                                                           
Measure/ 
Sub-
Measure ID 

RE-C01-i03 

RE-C01-i05-
RAM 

RE-C01-i05-
RAM 

Measure/Sub-Measure Name 

services in inpatient and outpatient 
care 

Completion of the mental health 
reform and implementation of the 
dementia strategy — Completion of 
the strengthening of the mental 
health care network 
Strengthening Madeira’s Regional 
Health Service — Increase in the 
number of places in integrated 
continued care services in Madeira’s 
Regional Health Service 
Strengthening Madeira’s Regional 
Health Service — Energy renovation 
of health facilities in Madeira’s 
Regional Health Service 

Climate 

Digital 

Budget 
(EUR m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

59  

026bis 

100% 

45  

025ter 

40% 

23  

026 

40% 

RE-C01-i06  Digital Health Transition 

300  

095 

100% 

RE-C01-i07-
RAM 

Digitalisation of Madeira’s Regional 
Health Service 

RE-C01-i08-
RAA 

Digital Hospital in the Azores 

15  

30  

095 

100% 

095 

100% 

RE-C02-i01 

Support programme for access to 
housing — Renovations 

466  

025 

40% 

RE-C02-i01 

Support programme for access to 
housing — New construction (i) 

670  

025ter 

40% 

RE-C02-i02 

National emergency and temporary 
accommodation grant — New 
construction (i) 

140  

025ter 

40% 

RE-C02-i02 

National emergency and temporary 
housing grant — Renovations 

21  

025 

40% 

RE-C02-i03-
RAM 

Strengthening of the supply of social 
housing in the Autonomous Region 
of Madeira — New construction 

129  

025ter 

40% 

99 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Measure/ 
Sub-
Measure ID 

RE-C02-i03-
RAM 

RE-C02-i03-
RAM 

RE-C02-i04-
RAA 

RE-C02-i04-
RAA 

Measure/Sub-Measure Name 

Strengthening of the supply of social  
housing in the Autonomous Region 
of Madeira — Renovations 

Strengthening of the supply of social  
housing in the Autonomous Region 
of Madeira — Information 
technologies 
Increasing housing conditions in the 
housing stock of the Autonomous 
Region of the Azores — New 
construction 

Increasing housing conditions in the 
housing stock of the Autonomous 
Region of the Azores — Renovations 

Climate 

Digital 

Budget 
(EUR m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

6  

025 

40% 

2  

011 

100% 

37  

025ter 

40% 

23  

025bis 

100% 

RE-C02-i05 

Affordable Public housing stock   
(loan) — Renovations 

256  

025 

40% 

RE-C02-i05 

Affordable Public housing stock  
(loan) — New construction 

519  

025ter 

40% 

RE-C02-i06 

Student accommodation at affordable 
prices (loan) — Renovations 

249  

025bis 

100% 

RE-C02-i06 

Student accommodation at affordable 
prices (loan) — New construction 

126  

025ter 

40% 

RE-R1-C03-
i1 

New Generation of Equipment and 
Social Responses: Construction of 
social equipment 

RE-R1-C03-
i1 

New Generation of Equipment and 
Social Responses: Renewal of social 
equipment 

183  

025ter 

40% 

86  

026 

40% 

100 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Measure/ 
Sub-
Measure ID 

RE-R1-C03-
i1:  

RE-R1-C03-
i1 

RE-R1-C03-
i3-RAM 

RE-R1-C03-
i3-RAM 

RE-R1-C03-
i4-RAA 

RE-R1-C03-
i4-RAA 

RE-R1-C03-
i4-RAA  

Measure/Sub-Measure Name 

New Generation of Equipment and 
Social Answers: Electric Cars to 
provide social community support 
services 
New Generation of Equipment and 
Social Responses: IT equipment 
needed to provide social community 
support services 
Strengthening social responses in the 
Autonomous Region of Madeira 
(ARM): Construction of social 
facilities 
Strengthening social responses in the 
Autonomous Region of Madeira 
(ARM): Renovation of social 
facilities 
Implementing the Regional Strategy 
for Combating Poverty and Social 
Exclusion: Social Support Networks 
(ARA) — Electric Cars for the 
provision of community support 
social services 
Implementing the Regional Strategy 
for Combating Poverty and Social 
Exclusion: Social Support Networks 
(ARA) — Construction of social 
facilities 
Implementing the Regional Strategy 
for Combating Poverty and Social 
Exclusion: Social Support Networks 
(ARA) — Renewal of social 

Climate 

Digital 

Budget 
(EUR m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

62  

n/a37 

100% 

9  

013 

100% 

36  

025ter 

40% 

43  

026 

40% 

3  

n/a38 

100% 

9  

025ter 

40% 

5  

026 

40% 

37   The ‘Methodology for climate tracking’ annexed to the Recovery and Resilience Facility Regulation does not set 
out  intervention  fields  that  would  allow  for  climate  or  environmental  tracking  of  electric  vehicles  or  plug-in 
hybrid vehicles, except for vehicles for urban transport falling under intervention field 074. According to Article 
18(4)(e) of the Regulation, the methodology should however ‘be used accordingly for measures that cannot be 
directly  assigned  to  an  intervention  field  listed  in  Annex  VI’.  In  this  context,  the  Commission  has  applied  a 
100% climate contribution coefficient for zero-emission vehicles of all categories (this includes battery electric 
and fuel cell/hydrogen-powered vehicles). 

38   The ‘Methodology for climate tracking’ annexed to the Recovery and Resilience Facility Regulation does not set 
out  intervention  fields  that  would  allow  for  climate  or  environmental  tracking  of  electric  vehicles  or  plug-in 
hybrid vehicles, except for vehicles for urban transport falling under intervention field 074. According to Article 
18(4)(e) of the Regulation, the methodology should however ‘be used accordingly for measures that cannot be 
directly  assigned  to  an  intervention  field  listed  in  Annex  VI’.  In  this  context,  the  Commission  has  applied  a 
100% climate contribution coefficient for zero-emission vehicles of all categories (this includes battery electric 
and fuel cell/hydrogen-powered vehicles). 

101 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                                           
Measure/ 
Sub-
Measure ID 

Measure/Sub-Measure Name 

Climate 

Digital 

Budget 
(EUR m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

facilities 

RE-C03-i05 

Platform + Access (digital 
information tools and services for 
inclusion of people with disabilities) 

RE-C04-i01 

Cultural Networks and Digital 
Transition  

RE-C04-i02 

RE-C04-i02 

Cultural Heritage — The renovation 
of cultural installations classified as 
cultural heritage 

Cultural Heritage — Saber Fazer: 
protection of artisan techniques and 
the creation of a catalogue of 
activities 

3  

93  

011 

100% 

011 

100% 

148  

026 

40% 

2  

047 

40% 

RE-C05-
i01.02 

Green Agendas/ Alliances for 
business innovation  

372  

022 

100% 

RE-C05-i02 

RE-C05-i02 

RE-C05-i03 

RE-C05-i03 

RE-C05-i03 

Interface mission — Renewal of the 
scientific and technological support 
network and guidance for productive 
fabric — Green 
Interface mission — Renewal of the 
scientific and technological support 
network and guidance for productive 
fabric — Other areas 
Research and innovation agenda for 
sustainable agriculture, food and 
agro-industry (Innovation Agenda for 
Agriculture 20 30) — Green 
dimension (i) 
Research and innovation agenda for 
sustainable agriculture, food and 
agro-industry (Innovation Agenda for 
Agriculture 20 30) — Green 
dimension (ii) 
Research and innovation agenda for 
sustainable agriculture, food and 
agro-industry [Innovation Agenda for 
Agriculture 20 30] — Digital 
Dimension 

102 

82  

022 

100% 

104  

021 

40% 

45  

022 

100% 

36  

050 

40% 

12  

009bis 

100% 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Measure/ 
Sub-
Measure ID 

Measure/Sub-Measure Name 

Climate 

Digital 

Budget 
(EUR m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

RE-C05-i05-
RAA 

Economic recovery of Azorean –
Agriculture — Other measures 

20  

047 

40% 

RE-C06-i01 

RE-C06-i01 

RE-C06-i01 

RE-C06-i01 

RE-C06-i04 

Modernisation of vocational 
education and training institutions — 
Construction of vocational training 
centres 
Modernisation of vocational 
education and training institutions — 
Renewal of vocational training 
centres 

Modernisation of vocational 
education and training institutions — 
Equipment for digital skills 

Modernisation of vocational 
education and training institutions — 
Skills for the green economy 

Youth impulse STEAM — Support 
enrolment in STEAM courses and 
enlarge the network of science clubs 
(“Ciência Viva”) 

RE-C06-i05-
RAA 

Adult qualification and lifelong 
learning (ARA) — Support for 
digital skills 

RE-C06-i05-
RAA 

Adult qualification and lifelong 
learning (ARA) — Modernisation of 
professional schools  

RE-C07-i01 

RE-C07-i01 

RE-C07-i01 

Business Reception Areas — 
Renewable energy production and 
storage systems (solar energy) 

Business Reception Areas — 
Renewable energy production and 
smart storage (energy systems); 

Business Reception Areas — Pilot 
interventions to improve energy 
stability 

26  

025ter 

40% 

127  

026bis 

100% 

521  

108 

100% 

36  

01 

100% 

130  

14  

108 

100% 

108 

100% 

8  

026bis 

100% 

36  

029 

100% 

38  

033 

100% 

033 

40% 

15  

024 

40% 

RE-C07-i01 

Business Reception Areas — 
Sustainable mobility  

7  

077 

100% 

103 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Measure/ 
Sub-
Measure ID 

Measure/Sub-Measure Name 

Climate 

Digital 

Budget 
(EUR m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

RE-C07-i01 

Business Reception Areas — 
Strengthening coverage with 5G 

10  

051 

100% 

RE-C07-i01 

Business Reception Areas — Active 
fire prevention and protection 

3  

036 

100% 

RE-C08-i01 

Landscape transformation of the 
Vulnerable Forest Territories 

270  

036 

100% 

RE-C08-i02 

Digital Rural Property Registry and 
Land Cover Monitoring System 

86  

036 

100% 

011 

100% 

RE-C08-i03 

Fuel breaks management— Primary 
grid 

120  

036 

100% 

RE-C08-i04 

Means for preventing and combating 
rural fires 

89  

036 

100% 

RE-C08-i05 

More Forest Programme (fire 
prevention and firefighting system) 

50  

036 

100% 

RE-C09-i01 

Algarve Water Efficiency Regional 
Plan 

200 

040 

40% 

RE-C09-i02 

Hydraulic multi-purpose enterprise 
of Crato - Dam construction work  

43  

040 

40% 

RE-C09-i02 

Hydraulic multi-purpose enterprise 
of Crato- Construction of mini hydro 

2  

032 

100% 

RE-C09-i02 

RE-C09-i02 

Hydraulic multi-purpose enterprise 
of Crato – Dam inflow enhancement 
system 

Hydraulic multi-purpose enterprise 
of Crato – Irrigation block 
infrastructure and monitoring  

14  

040 

40% 

47  

040 

40% 

104 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Measure/ 
Sub-
Measure ID 

RE-C09-i02 

RE-C09-i02 

Measure/Sub-Measure Name 

Hydraulic multi-purpose enterprise 
of Crato- Strengthening supply of 
Povoa and Meadas dam 

Hydraulic multi-purpose enterprise 
of Crato – Environmental 
expropriation and compensation 

Climate 

Digital 

Budget 
(EUR m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

5  

040 

40% 

8  

040 

40% 

RE-C09-i03-
RAM 

Plan for water efficiency and 
strengthening of supply and irrigation 
systems of Madeira 

70  

040 

40% 

TC-C10-i01 

TC-C10-i01 

TC-C10-i01 

TC-C10-i01 

TC-C10-i01 

TC-C10-i01 

TC-C10-i02 

TC-C10-i03 

TC-C10-i03 

Blue Hub, Network of Infrastructure 
for the Blue Economy — Digital 
infrastructure and equipment 

Blue Hub, Network of Infrastructure 
for the Blue Economy — Skills for 
the Green Transition 

Blue Hub, Network of Infrastructure 
for the Blue Economy — Protection 
of nature and biodiversity 

Blue Hub, Network of Infrastructure 
for the Blue Economy — 
Construction of buildings 

Blue Hub, Network of Infrastructure 
for the Blue Economy — Building 
renovation 

Blue Hub, Network of Infrastructure 
for the Blue Economy — Adaptation 
measures to climate change (e.g. 
occurrence of floods) 

Green and Digital Transition and 
Safety in Fisheries — Energy 
efficiency in enterprises 

Atlantic Defence Operations Centre 
and naval platform — Nature and 
biodiversity protection 

Atlantic Defence Operations Centre 
and naval platform — Skills for the 
green transition 

105 

1  

055 

100% 

4  

01 

100% 

35  

050 

40% 

37  

025ter 

40% 

3  

026bis 

100% 

6  

037 

100% 

21  

024 

40% 

110  

050 

40% 

2  

01 

100% 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Measure/ 
Sub-
Measure ID 

Measure/Sub-Measure Name 

Climate 

Digital 

Budget 
(EUR m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

TC-C10-i04-
RAA 

Development of the ‘Cluster do Mar 
dos Açores’ — Protection of nature 
and biodiversity 

TC-C10-i04-
RAA 

Development of the ‘Cluster do Mar 
dos Açores’ — Construction of 
buildings 

18  

050 

40% 

14  

025ter 

40% 

TC-C11-i01  Decarbonisation of industry 

715  

024ter 

100% 

TC-C12-i01 

Bioeconomy — Research and 
Innovation 

120  

022 

100% 

TC-C12-i01 

Bioeconomy — Training and 
Awareness Raising 

3  

01 

100% 

TC-C12-i01  Bioeconomy — Forest management 

16  

036 

100% 

TC-C13-i01 

Energy efficiency in residential 
buildings 

300  

025bis 

100% 

TC-C13-i02 

Energy efficiency in central 
government buildings 

240  

026bis 

100% 

TC-C13-i03 

Energy efficiency in buildings used 
by the services sector 

70  

024ter 

100% 

TC-C14-i01  Renewable Hydrogen and Gas 

185  

032 

100% 

TC-C14-i02-
RAM 

Renewable electricity in the Madeira 
Archipelago 

69  

032 

100% 

TC-C14-i03-
RAA 

Energy transition in the Azores 

116  

032 

100% 

106 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Measure/ 
Sub-
Measure ID 

Measure/Sub-Measure Name 

Climate 

Digital 

Budget 
(EUR m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

TC-C15-i01 

Expansion of the Lisbon Metro 
Network — Red Line to Alcântara 

304  

073 

100% 

TC-C15-i02 

Expansion of the Porto Metro 
Network — Casa da Música-Santo 
Ovídio 

299  

073 

100% 

TC-C15-i03  Light Rail Transit Odivelas-Loures 

250  

073 

100% 

TC-C15-i04 

Bus Rapid Transit Boavista — 
Império  

66  

073 

100% 

TC-C15-i05  Decarbonisation of public transport 

48  

074 

100% 

TD-C16-i01 

Digital Empowerment of Enterprises 
(Training) 

100  

108 

100% 

TD-C16-i02  Digital Transition of Enterprises 

450  

010 

100% 

TD-C16-i03 

Catalyst for the digital transition of 
enterprises 

TD-C17-i01 

Public Financial Management 
Information Systems 

TD-C17-i02 

Modernisation of the information 
systems of the Tax and Customs 
Authority for rural property taxation 

TD-C17-i03 

Digital transition of Social Security 
services 

TD-C18-i01 

Economic justice and business 
environment (digital transition and 
resilience of the Portuguese justice 
IT systems) 

100  

163  

43  

200  

267  

107 

010 

100% 

011 

100% 

011 

100% 

011 

100% 

011quat
er 

100% 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Measure/ 
Sub-
Measure ID 

TD-C19-i01 

TD-C19-i01 

TD-C19-i02 

Measure/Sub-Measure Name 

Redesign of public and consular 
service— (digitalisation actions to 
implement the digital by definition 
paradigm)  

Redesign of public and consular 
service— Construction of ”Lojas do 
Cidadão” and “Espaços Cidadão” 

Sustainable electronic services 
(reinforcement of data valorisation 
and exploitation by public services, 
strengthening interoperability and 
data sharing) 

TD-C19-i03 

Strengthening the overall 
cybersecurity framework  

TD-C19-i04 

Efficient, secure and shared digital 
critical infrastructures 

TD-C19-i05-
RAM 

Digital transition of Madeira’s public 
administration 

TD-C19-i06-
RAA 

Digital transition of the public 
administration in Azores 

TD-C19-i07 

Public administration empowered to 
create public value (training actions 
for public officials with digital skills 
elements) 

Climate 

Digital 

Budget 
(EUR m) 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

165  

011 

100% 

23  

025ter 

40% 

70  

47  

83  

78  

25  

88  

011 

100% 

021quin
quies 

100% 

011 

100% 

011 

100% 

011 

100% 

016 

40% 

TD-C20-i01  Digital Transition in Education 

500  

012 

100% 

TD-C20-i02-
RAA 

Digital Education (Azores) 

TD-C20-i03-
RAM 

Programme to accelerate the 
digitalisation of education (Madeira) 

38  

21  

012 

100% 

012 

100% 

Int. Field = intervention field 
Coeff. = Coefficient for the calculation of support to climate change objectives and to digital transition, 
on the basis of Annex VI and Annex VII to the RRF Regulation 

108