COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Portugal Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Portugal
Date: 2024-06-19
Institutions: European Commission, Secretariat-General
Subjects: Portugal, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, fiscal policy, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 19.6.2024  SWD(2024) 622 final  COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Portugal Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Portugal {COM(2024) 622 final} - {SWD(2024) 600 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

increased  migration  inflows  as  evidenced  the 
labour force survey. 

Graph 1.1: Real GDP growth and selected 
labour market indicators 

(1) Estimates for 2024 and 2025 are from the European 
Commission's Spring 2024 forecast. 
Source: European Commission 

Youth  unemployment  remains  high.  Youth 
unemployment  edged  up  to  20.3%  in  2023 
compared  to  19.1%  a  year  earlier.  The  rate 
remained  above  the  EU  average  of  14.5%.  In 
addition,  a  significant  share  of  young  people 
are  employed  on  temporary  contracts  (41.9% 
vs  34.8%  in  the  EU).  Against  this  backdrop, 
young  people  are  still  facing  persistent 
obstacles  to  entering  the  labour  market  and 
finding permanent jobs. 

Portugal’s  vulnerabilities  related  to  high 
private,  government  and  external  debt 
continued  to  decrease.  An  in-depth  review 
undertaken  earlier  this  year  as  part  of  the 
macroeconomic  imbalance  procedure  found 
improved 
that  the  foreign  trade  balance 
to  a 
substantially 
reduction of the associated vulnerabilities in  

in  2023,  contributing 

Growth is slowing down while the 
labour market remains strong 

The  Portuguese  economy  continues  to 
grow,  although  at  a  slower  pace (1). 
Portugal’s  GDP  growth  slowed  down  from 
6.8%  in  2022  to  2.3%  in  2023  (Graph  1.1). 
This  reflects  weaker  external  demand  caused 
by  the  economic  slowdown  in  other  European 
countries  and  the  moderation  following  the 
tourism  sector’s 
positive  effect  of 
recovery. Taking into account the recent surge 
in  households’  income  and  the  stabilisation  in 
interest rates, economic growth is projected to 
move  towards  a  more  domestic  driven  model 
over  the  forecast  horizon.  In  full-year  terms, 
growth  is  forecast  to  moderate  to  1.7%  in 
2024 and to rebound to 1.9% in 2025. Private 
consumption and investment are set to be the 
main growth drivers.  

the 

regional 
There  are  still  substantial 
disparities.  The  metropolitan  area  of  Lisbon 
is  the  only  region  in  Portugal  with  GDP  per 
capita above the EU average, while in 4 of the 
7 regions GDP per capita is less than 75% of 
the EU average (see Annex 17).  

increased  but 

Unemployment 
labour 
indicators remained strong. Unemployment 
rose  from  6.2%  in  2022  to  6.5%  in  2023. 
However, both labour supply and employment 
continued to rise at a rapid rate, supported by 
net  migration.  The  employment  rate  for  the 
20-64  age  group  reached  a  historic  high  of 
75.3%  in  2023  (compared  to  the  EU  average 
of  75.4%),  following  record  high  rates  in  the 
previous 2 years. The size of the labour force 
increased by 2.4% in 2023 on the account of 

(1)  The  cut-off  date  for  the  data  used  to  prepare  the  27 

Country Reports was 15 May 2024. 

2 

-20-15-10-505101520-10-8-6-4-20246810GDP growthEmployment growthUnemployment rate (rhs)y-o-y growth, %% of active population 
 
 
     
Box 1: 

Portugal’s competitiveness in brief  

Portugal’s  competitiveness  is  still  impaired  by  low  productivity  levels  and  heavy 
business  regulation,  despite  recent  improvements.  In  the  context  of  the  EU’s  long-term 
competitiveness strategy, Portugal performs well in several areas, including the share of energy 
from  renewable  sources  (over  60%),  electricity  prices  and  the  employment  rate  (78.2%).  In 
parallel,  the  Portuguese  recovery  and  resilience  plan  (RRP)  and  cohesion  policy  programmes 
address several challenges in areas such as access to venture capital, R&D intensity, education 
and skills, and digitalisation. 

However, competitiveness challenges remain: 

•  skills  mismatches  and  labour  shortages  in  several  sectors  reduce  productivity, 

compounded by an ageing workforce and a growing difficulty in retaining staff; 

•  excessive  and  complex  administrative  and  regulatory  burdens  on  companies, 
including those resulting from the corporate tax system, hamper investment and the creation 
of  new  economic  activities,  preventing  the  shift  towards  a  more  competitive  business 
environment;  

•  R&D  intensity  in  Portugal  remains  below  the  EU  average.  Additional  investments  in 
research, as well as policies to boost the innovation capacity of companies, especially beyond 
the timeframe of the RRP, would improve the country’s productivity. 

increase  during 

the external  sector (2).  The public debt-to-GDP 
ratio  has  been  decreasing  at  a  rapid  pace, 
after  an 
the  COVID-19 
pandemic.  Corporate  and  household  debt 
ratios have also been declining substantially in 
recent  years.  Risks  related  to  the  corporate 
debt  structure  appear  relatively  low,  in  part 
reflecting  a  substantial  reduction  in  non-
performing  loans.  The  increase  in  interest 
rates  on  mortgage  loans  puts  pressure  on 
households,  while  house  prices  continue  to 
increase, but mortgage arrears remain low. 

Public finances are improving amid 
high but falling inflation 

finances 

Portugal’s  public 
improved 
markedly  in  2023.  The  budget  balance 
recorded  a  surplus  of  1.2%  of  GDP  in  2023. 
This  is  explained  by  growing  government 
revenue,  particularly  from  direct  taxation, 
alongside  limited  expenditure  growth,  thanks 
to  the  complete  phase-out  of  temporary 
COVID-19  emergency  measures.  The  budget 
balance  is  projected  to  decrease  somewhat 

(2)  SWD(2024)105 final.  

this 

ratio 

continued 

levels,  and 
trend 

but  remaining  at  a  slight  surplus.  The  public 
to  decline 
debt-to-GDP 
markedly in 2023, reaching 99.1%, well-below 
is  expected  to 
pre-pandemic 
maintain 
(see  Annex  19). 
Nonetheless,  fiscal  sustainability  risks  are 
expected  to  remain  high  in  the  medium-term 
(see  Annex  21),  with  the  projected  rise  in 
spending on pensions being a key factor. Fiscal 
sustainability could be enhanced by improving 
the  efficiency  and  effectiveness  of  the  tax 
system (see section 3). 

Inflation  is  receding  from  high  levels. 
Inflation  fell  from  8.1%  in  2022  to  5.3%  in 
2023, 
reflecting  a  significant  downward 
correction  in  energy  prices  as  well  as  a 
slowdown in the increase in prices of food and 
non-energy industrial goods. In the last quarter 
of  2023,  inflation  dropped  substantially  to 
2.4% (y-o-y) and is forecast to subside further 
in  2025. 
in  2024  and  1.9% 
to  2.3% 
Nevertheless, 
projected 
the 
considering 
continuous  increase  in  household  incomes, 
core inflation is projected to remain somewhat 
above  headline  inflation,  and  broadly  in  line 
with  the  euro  area.  Nominal  wages  are 
projected  to  grow  somewhat  faster  than 
inflation,  resulting  in  a  slight  increase  in  real 
wages amid relatively stable unit labour costs. 

3 

 
 
 
Box 2: 

UN Sustainable Development Goals (SDGs) 

Portugal  is  making  progress  in  all  the  SDGs  related  to  competitiveness  and 
productivity (SDGs 4, 8, 9). However, it needs to step up efforts to close the gap with the EU 
average  on  some  of  them.  Progress  on  SDG  9,  on  innovation,  sustainable  industry  and 
infrastructure,  is  further  behind  the  EU  average,  mostly  due  to  low  R&D  expenditure,  the  low 
number of patent applications, low share of sustainable freight transport infrastructure and the 
high  levels  of  air  pollution  from  industry.  The  sustainable  economic  growth  and  employment 
indicator  (SDG  8)  is  still  slightly  below  the  EU  average,  with  a  lower  investment  share  of  GDP 
than the EU average, however the employment rate is above the EU average (see Annex 1). 

Out of the 17 indicators, progress on 7 SDGs is below the EU average. Besides the ones 
just mentioned, this concerns environmental stability (SDGs 11, 12, 13, 14), fairness (SDGs 3 and 
8) and macroeconomic stability (SDG 16). 

(see  Annex  17).  Venture  capital 
regions 
in  net-zero  technologies  also 
investments 
show  a  positive trend  over  the  last  few  years 
(see Annex 7).  

Despite real improvements and 
performance above the EU 
average on gender and disability 
employment gaps, there are still 
some social and environmental 
concerns  

Portugal  has  made  real  improvements  in 
the 
implementation  of  the  European 
Pillar  of  Social  Rights,  even  if  there  are 
still  some  challenges.  Portugal  performs 
better  than  the  EU  average  on  gender  and 
disability  employment  gaps,  and  on  the 
proportion of young people leaving l education 
and  training  early.  While  the  poverty  rate  has 
been declining, the efficacy of social transfers 
on reducing poverty is still limited. Poverty and 
social  inclusion disproportionately impacts the 
outermost  regions,  with  Madeira  and  the 
Azores  reporting  poverty  rates  above  30%, 
compared to the national average of 20.1%. In 
Azores,  for  instance,  the  proportion  of  the 
is 
receiving  minimum 
population 
almost  three  times  the  national  average.  The 
region  also  faces  a  significant  challenge  with 
early  leaving  from  education  and  training 
in 
rates, 
opportunities  for  young  people.  The  lack  of 
affordable housing continues to be a problem, 
aggravated  by  increased  purchase  and  rental 

regional  disparities 

revealing 

income 

Low labour productivity and 
insufficient R&D intensity could 
hinder competitiveness 

Labour  productivity  is  still  below  the  EU 
average.  Despite  a  strong  increase  in  real 
labour  productivity  between  2021  and  2023 
(+10.4%), Portugal remains well below the EU 
average,  with  significant  labour  productivity 
gaps  at  regional  level  (see  Annex  12  and 
Annex  17).  Part  of  the  productivity  shortfall 
appears  to  be  driven  by  Portugal’s  relatively 
strong  reliance  on  labour-intensive  sectors. 
Moreover,  the  low  levels  of  research  and 
innovation  in  recent  years,  coupled  with  skills 
mismatches and low levels of investment and 
digitalisation, 
to 
productivity  growth  in  Portugal.  The  recent 
progress  made  by  Portugal  on  these  issues, 
which  was  fostered,  among  other  things,  by 
the  implementation  of  the  RRP  and  cohesion 
policy  programmes,  are  expected  to  improve 
productivity  and  competitiveness 
the 
medium term. 

obstacles 

likely 

are 

in 

R&D  intensity  is  increasing  but  remains 
below  the  EU  average.  Portugal  has 
recorded an increase in R&D intensity over the 
past decade, up from 1.2% of GDP in 2015 to 
1.7% of GDP in 2022, but this is still below the 
EU average. The increase was driven mainly by 
the  private  sector,  as  over  the  same  period 
public  expenditure  on  R&D  decreased  slightly 
to  0.6%  of  GDP  (see  Annex  11).  R&D  is  also 
rather  concentrated  in  the  capital  and  Norte 

4 

 
 
prices.  As  Portugal's  population  is  ageing 
rapidly,  with  an  estimated  26.5%  of  people 
aged  65  years  or  older  by  2030,  long-term 
care  facilities  are  severely  underfunded,  at 
less  than  a  quarter  of  the  EU  average.  The 
ageing  of  the  population  also  has  an  impact 
on 
to  healthcare 
services  and  education.  The  declining  level  of 
educational  outcomes,  although  broad-based 
across  EU  countries,  as  shown  in  the  latest 
results  of  the  Programme  for  International 
Student  Assessment 
further 
hamper competitiveness.  

long-term  accessibility 

(PISA),  may 

Portugal  is  particularly  vulnerable  to 
climate  change.  Climate  change  threatens 
biodiversity  and  the  availability  of  water.  The 
green  transition  in  the  country  is  hindered  by 
weaknesses in the electricity grid.  

5 

 
 
IMPLEMENTATION OF KEY REFORMS AND 
INVESTMENTS USING EU INSTRUMENTS 

Funding from the Recovery and Resilience 
Facility  (RRF)  and  cohesion  policy  is 
mutually reinforcing Portugal's efforts to 
boost 
its  competitiveness  and  foster 
In  addition  to  the 
sustainable  growth. 
EUR 22.2  billion  of  RRF  funding  described  in 
Annex  3,  cohesion  policy  provides  Portugal 
with EUR 22.6 billion between 2021 and 2027. 
Support from these two instruments combined 
represents  around  16.88%  of  the  country’s 
2023  GDP,  compared  to  the  EU  average  of 
5.38% of GDP (see Annex 4).  

Under  its  recovery  and  resilience  plan 
(RRP),  Portugal  has  launched  important 
policy  measures  that  are  expected  to 
improve the country’s competitiveness. In 
particular, the RRP envisages major reforms in 
the  areas  of  the  business  environment, public 
procurement  and  capitalisation  of  non-
financial  companies.  Portugal  has  also  made 
substantial 
research  and 
innovation, education, skills, energy renovation 
of  buildings,  and  the  digital  transition  of 
businesses and public services. 

investments 

in 

of 

implementation 

The 
Portugal’s 
recovery and resilience plan is underway, 
however 
requires 
timely  completion 
increased  efforts.  Portugal  has  submitted 
three payment requests, corresponding to 102 
milestones  and  targets 
in  the  plan  and 
resulting in an overall disbursement of EUR 7.8 
billion  on  28  December  2023  (see  Annex  3). 
The  size  and  complexity  of  the  plan,  and 
challenges  linked  to  absorption  capacity,  call 
for  accelerating  investments  and  addressing 
strengthening 
emerging 
that 
administrative  capacities 
reforms and investments can be completed on 
time.  Investments,  in  particular,  are  highly 
concentrated  towards  the  end  of  the  RRP 
implementation  and  merit  special  attention. 
While  Portugal  is  taking  some  measures  to 
address  the  lack  of  administrative  capacity, 

to  ensure 

delays 

while 

challenges  remain  in  particular  in  terms  of 
finishing 
infrastructural 
largest 
investments, within the lifetime of the RRF. 

the 

Cohesion  policy  funding  helps  tackle 
Portugal’s  growth  and  competitiveness 
challenges  and  reduce  the  country’s 
territorial and social disparities. Under the 
2014-2020  cohesion  programming  period, 
support focused on the areas of research and 
innovation, water supply, skills, social cohesion 
and  workers’  adaptation  to  change.  For  the 
2021-2027  programming  period,  support  is 
aimed at fostering SMEs’ competitiveness and 
ability  to  innovate,  the  green  transition  and 
social  cohesion,  and  improving  living  and 
working conditions (see Annex 4). Around 15% 
of  the  2021-2027  cohesion  policy  financial 
package  will  support  territorial  development 
strategies.  The  Technical  Support  Instrument 
also  funds  projects  in  Portugal  to  design  and 
implement  public  administration  and  growth-
enhancing  reforms.  The  support  provided  in 
2023  included,  for  instance,  assistance  to 
implement  the  smart  cities/territory  strategy 
and to boost capacities for climate adaptation, 
in  full  alignment  with  the  objectives  of  the 
RRP. 

Improving the business 
environment to foster innovation 
and competitiveness 

Under  the  RRP,  Portugal  continues  its 
significant  efforts  through  reforms  and 
improve  the  business 
investments  to 
environment.  Portugal  is  implementing  the 
reform  on  self-regulated  professions,  which 
helps  to  reduce  restrictions  to  access  and 
exercise  the  profession  in  highly  regulated 
professions,  such  as  lawyers,  doctors,  nurses, 
engineers  and  architects.  These  professionals 

6 

 
 
play  a  pivotal  role  in  improving  the  business 
environment by providing essential services to 
both businesses and people. These professions 
will  now  operate  in  a  more  competitive  and 
open  environment.  Portugal  also  carried  out 
two  key  reforms  to  increase  the  efficiency  of 
the  administrative  and  tax  courts.  A  more 
efficient  judicial  system  provides  a  more 
predictable environment for businesses.  

to  address 

The  access  to  finance  for  businesses  is 
being improved. Portugal has made progress 
in allocating RRF-funded financial instruments 
through  its  national  development  bank,  which 
was  recapitalised  by  EUR  250  million  under 
the RRP to become an InvestEU implementing 
partner.  Moreover,  it  adopted  six  investment 
its  capitalisation  funds, 
programmes  for 
totalling  EUR  1.43  billion.  From 
these 
programmes,  over  EUR  700  million  of  equity 
and quasi-equity support is being allocated to 
companies  or  financial  intermediaries.  These 
instruments  aim 
the  under-
capitalisation of companies in Portugal, as well 
as  to  improve  access  to  finance,  in  particular 
for  SMEs  and  new  firms.  These  programmes 
include over EUR 400 million of investments in 
new  ventures  and  young  firms.  Portugal  also 
revised  its  Securities  Code  and  the  legal 
investment 
framework 
undertakings, 
several 
the  national 
simplifications  and  aligning 
frameworks  more  closely  to  EU  law.  The 
changes  aim  to  make  the  Portuguese  capital 
market more competitive by improving access 
to equity finance. Portugal is also expected to 
facilitate  direct  financing  for  companies  in 
both  capital  and  debt  markets,  reducing 
dependence  on  bank  loans.  Under  the  2021-
2027  cohesion  policy  programmes,  around 
EUR  417  million  has  also  been  allocated  for 
financial 
improve  SMEs’ 
competitiveness and energy efficiency. 

collective 
introducing 

instruments 

for 

to 

Several measures are in place to promote 
research  and  development.  In  2023,  38 
large 
innovation  and  green  agendas  (i.e., 
research  consortia  between  enterprises  and 
research/academic 
institutions)  had  been 
contracted  under  the  RRP,  with  the  remaining 
ones  expected  to  follow  by  the  end  of  2024. 
These  agendas  will  develop  over  800  new 
innovative  products,  processes  or  services  in 

7 

importance  and  which 
areas  of  strategic 
contribute  to  the  green  transition.  In  addition, 
over  60  contracts  have  been  concluded  with 
technological  centres  to  develop  and  provide 
innovative  services  to  businesses,  and  to 
further  expand  public-private  partnerships  in 
research.  Other  ambitious  R&D  investments 
(e.g.  in  marine  science,  agriculture  and  digital 
science)  are  in  progress.  The  cohesion  policy 
investments, 
funds 
contributing 
the 
digitalisation of businesses by supporting over 
16 000 companies until 2027 (see Annex 4).  

these 
innovation 

complement 

and 

to 

Portugal  has  taken  appropriate  steps  to 
improve  the  quality  and  sustainability of 
its public finances. Measures in the RRP will 
provide the country with a stronger budgetary 
framework,  by  ensuring  the  full  and  effective 
implementation  of 
the  2015  Budgetary 
Framework Law, and will improve the country’s 
fiscal  sustainability  over  the  medium-term.  In 
2023,  new  procurement  models  for  the 
national  central  public  procurement  system 
entered into force, a new conceptual model to 
monitor  the  budgetary  and  financial  activities 
of  general  government  was  approved,  and  a 
the 
reporting  model  was 
disclosure  of  information on  the  finances  and 
performance  of  state-owned  enterprises.  The 
modified  RRP  also  includes  a  new  reform  to 
simplify  the  tax  system,  with  a  focus  on 
reducing  the  number  of  tax  benefits.  The  tax 
legal framework was modified in May 2023. 

introduced  for 

Unlocking investments for the 
green and digital transitions 

Measures  to  adapt  to  climate  change 
have been implemented. The RRP supported 
the  delivery  of  at  least  179  new  firefighting 
and  fire-prevention  vehicles  and  other  pieces 
of  equipment.  Several  measures  also  aim  to 
increase  the  resilience  of  land  vulnerable  to 
wildfires and biodiversity loss, such as through 
landscape  redevelopment  and  management 
programmes,  and  fuel  management  bands  to 
isolate  outbreaks  of  wildfires.  To  promote 
sustainable  land  management,  Portugal  has 
also improved its land registry and monitoring 
systems.  Adaptation  measures  in  the  field  of 

 
water  efficiency  and  landscape  management 
are  also  included  in  the  RRP,  to  help  Portugal 
better  deal  with  the  current  and  future 
impacts  of  climate  change.  More  efficient 
irrigation technologies and the optimisation of 
the  use  of  existing  water  resources  will  help 
reduce  water 
the  urban  and 
agricultural sectors in Algarve.  

losses 

in 

Renewable  energy  production  and  energy 
efficiency  are  increasing.  Portugal  has 
adopted a national hydrogen strategy and has 
been  developing  a  regulatory  framework  for 
renewable  hydrogen  production.  Portugal  also 
launched  two  calls  for  supporting  private 
projects  to  produce  hydrogen  and  other 
renewable  gases.  The  autonomous  regions  of 
Azores  and  Madeira  will  invest  in  renewables 
and storage solutions. The REPowerEU chapter 
scales  up  the  existing  renewables  and  energy 
efficiency measures  and includes the  creation 
of a national observatory for energy poverty to 
monitor and develop policies related to energy 
poverty.  To  strengthen  the  capacity  of  the 
national  administration  to  handle  renewable 
energy  and  energy  efficiency  projects,  the 
REPowerEU  chapter  also  includes  the  training 
of  500  public  officials.  These  measures  are 
further  complemented  by  the  2021-2027 
cohesion  policy  programmes,  with  a  total  of 
EUR  1.2  billion  in  funding  to  upgrade  the 
energy  performance  of  Portugal’s  building 
stock,  increase  the deployment  of  renewables 
and support the integration of energy storage 
systems  into  the  transmission  network  (see 
Annex 4). 

RRP  measures  aimed  at  decarbonising 
transport  are  in  their  first  stages.  A 
contract  was  signed  for  the  construction  of  a 
Bus  Rapid  Transit  line  in  Porto,  which  will 
operate  zero-emission  buses  as  were  the 
contracts  for  the  expansion  of  Lisbon  and 
Porto  metro  networks.  Portugal  has  also 
signed contracts to purchase 145 new electric 
or  hydrogen  buses  for  Lisbon  and  Porto  and 
will  sign  additional  contracts  for  300  zero-
emission buses to be used across the country. 
More  than  8 000  charging  points  for  electric 
vehicles are already available at national level. 
finances 
policy 
cohesion 
The 
complementary  actions, 
regional 
programmes investing in railway infrastructure 

fund 
including 

and  rail  rolling  stock,  further  contributing  to 
decarbonisation of transport. 

for 

green 

strategy 

While waste management continues to be 
a  challenge,  the  RRP  and  cohesion  policy 
industry 
strengthen 
funding  will 
decarbonisation 
circular 
the 
and 
economy.  As  part  of  the  RRP,  a  revised 
public 
national 
procurement,  including  mandatory  ecological 
criteria, has been adopted. Projects to improve 
the circular economy and bioeconomy aspects 
of  textiles,  shoes  and  resin  production  have 
been  selected  for  support.  A  new  reform  has 
also been included in the revised RRP that will 
introduce  new  recovery  schemes  for  plastic 
bottles  and  metal.  Calls  for  tender  have  also 
been  launched  to  support  projects  for  the 
decarbonisation  of  industrial  processes  have 
been  launched.  Moreover, the  first  calls  under 
the  2021-2027  cohesion  policy  programmes 
in the areas of the circular economy and waste 
management (total budget of EUR 564 million) 
are expected to be published this year.  

The  digitalisation  of  public  services  and 
businesses  is  underway.  Supported  by  the 
RRP,  five  additional  public  services  are  now 
available  through  the  single  digital  services 
online portal. People can access them by using 
their  online  electronic  identity.  The  modified 
RRP includes the financing of over 90 research 
projects  for  advanced  digital  services  in  the 
public  administration. 
the 
development of a network of digital innovation 
hubs  is  promoting  the  uptake  of  disruptive 
technologies  by  businesses  and  fostering 
entrepreneurship 
sectors. 
Portugal  has  also  established  a  national 
network  of  test  beds,  which  aims  to  help 
businesses  develop  innovative  products  by 
providing 
and 
to 
infrastructure.  Cohesion  policy  funds  are  also 
being  used  to  digitalise  over  300  public 
institutions. 

Investment 

equipment 

innovative 

access 

in 

in 

Important  measures  are  contributing  to 
the digital transition in education and the 
development  of  digital  skills.  A  total  of 
600 000  laptops  were  distributed  to  pupils 
and  teachers  in  public  schools,  and  four 
massive  open  online  courses  on  digital  skills 
have been created with the help of the RRF. In 

8 

 
Box 3: 

Combined action for more impactful EU funds 

To boost economic growth and maximise the impact of EU funding, the Portuguese RRP 
includes  reforms  that  support  investments  under  other  EU  instruments,  creating 
important synergies and complementarities between the various funds. For example, to 
improve workers’ basic and digital skills and adapt the skills offer to current and future labour 
market  needs,  the  Portuguese  RRP  is  supporting  a  comprehensive  reform  of  the  vocational 
education  and  training  system.  The  reform  is  supplemented  by  investments  in  training 
infrastructures. The ESF+ demography, qualifications and inclusion programme complements the 
RRP by providing for the necessary services, such as support to set up and deliver courses. 

system 

services to strengthen their role in the national 
(NHS);  established  new 
health 
integrated  responsibility  centres 
in  public 
hospitals;  and  adopted  a  new  mental  health 
law  regulating,  amongst  others,  the  rights  of 
people  with  mental  illness.  To  promote  the 
the  NHS,  Portugal 
digital 
upgraded 
technology 
networks  in  the  NHS  and  implemented  new 
functionalities 
and 
telemonitoring.  

transition  of 
local 

information 

telehealth 

for 

Significant  efforts  have  been  made  to 
increase  social  housing.  The  revised  RRP 
includes  EUR  3.2  billion  of  investment  to 
increase 
the  supply  of  permanent  and 
temporary  housing.  Agreements  have  been 
signed  with  municipalities  to  support  the 
construction  and  renovation  of  social  housing 
and  temporary  accommodation.  Construction 
renovation  works  have  started  for 
and 
affordable public housing and student housing.  

investments 

funds  enhance 

in 
EU 
education  and  skills.  RRP  measures  aim  to 
foster  the  development  of  the  innovation 
system,  support  researchers,  reform  study 
programmes,  strengthen  digital  skills,  and 
ensure  equal  access  to  quality  public  schools. 
Portugal  is  upgrading  facilities  for  vocational 
education  and 
training,  providing  digital 
training  for  teachers  and  purchasing  digital 
education  equipment  in  Azores.  The  European 
Social  Fund  will  also  support  the  reskilling  of 
adults,  and  invest  in  actions  such  as  modular 
training, technology specialisation courses and 
qualification  centres.  By  the  end  of  2022,  the 
social  inclusion  and  employment  operational 
programme  had  already  reached  130 000 
adult and young participants.  

addition, more than 9 200 digital kits (a tablet 
or  laptop  with  the  relevant  software  and 
digital  school  manuals)  were  distributed  in 
Madeira.  Portugal  also  introduced  legislative 
amendments to reinforce vocational training in 
digital  skills.  This  reform  is  complemented  by 
the  Portugal  Digital  Academy  platform,  which 
is  already  operational  to  users  and  offers 
training  in  digital  skills.  The  revised  RRP  also 
strengthened  the  support  for  the  digital 
transition in education in Azores and Madeira. 

Investing in people for economic 
growth and resilience  

It 

The  RRP  provides  innovative  answers  to 
socio-economic  challenges. 
includes 
broad  reforms  and  investments  to  provide 
more 
targeted  social  services.  Dedicated 
technical units have been set up to respond to 
the  needs  of  disadvantaged  communities  in 
Lisbon  and  Porto.  Pilot  actions  to  support 
homeless people are being carried out through 
individualised  integration  plans.  Measures  to 
create and renovate care facilities in the social 
sector,  and  to  introduce  innovative  home  and 
community  care  solutions,  have  also  started 
with  the  award  of  financing  contracts.  The 
revised  RRP  also  includes  a  key  reform  to 
simplify  the  social  benefits  system  to  ensure 
that potential beneficiaries receive the support 
they  are  entitled  to.  The  Technical  Support 
Instrument  is  also  helping  with  the  design  of 
this reform. 

The  RRP  also  aims  to  make  the  health 
long-term  care  systems  more 
and 
resilient  and  digital.  Portugal  revised  the 
organisation  and  functioning  of  primary  care 

9 

 
 
EU funds support job creation and quality 
jobs.  The  RRP  provides  financial  support  for 
employers to offer open-ended contracts, with 
33 000  people  already  hired,  of  which  over 
60% are women. The European Social Fund is 
supporting  professional  training  to  promote 
quality  employment,  particularly  for  young 
people. The Just Transition Fund also promotes 
greater  economic  diversification  and  fosters 
job  creation  in  three  areas  affected  by  the 
energy  transition.  It  will  also  help  to  create 
jobs  and  support 
reskilling 
upskilling (see Annex 4). 

training 

for 

10 

 
FURTHER PRIORITIES AHEAD 

Portugal  faces  additional  challenges 
related  to  demographic  ageing,  the  tax 
system,  affordable  housing,  the  business 
environment,  climate  adaptation  and  the 
electricity  grid.  Tackling  these  challenges 
long-term 
increase  Portugal’s 
will  help 
competitiveness  and  ensure  the  resilience  of 
its economy. It will also help Portugal to make 
the  UN 
further  progress 
Sustainable Development Goals (SDGs).  

in  achieving 

Policy progress has been made, according 
to  the  policy  assessment  under  the 
macroeconomic  imbalance  procedure.  The 
Government  adopted  in  the  end  of  2022  and 
during  2023  a  set  of  measures  aimed  at 
mitigating  the  risks  from  increased  interest 
rates  on  mortgage 
loans.  The  ongoing 
implementation of reforms and investments in 
the  context  of  the  RRP  and  cohesion  policy 
programmes is expected to continue to have a 
favourable 
impact  on  Portugal’s  growth 
potential.  These  reforms,  investments  and 
programmes  are  also  contributing  to  the 
country’s  sustainability  with  respect  to  other 
countries,  particularly  through  progress  in  the 
areas  of  energy  efficiency,  renewables  and 
competitiveness. The implementation of fiscal-
structural reforms, inside and beyond the RRP, 
can  help  strengthen  Portugal’s  medium-term 
fiscal sustainability. 

It  is  important  to  address  the  identified 
challenges  both  at  the  national  and 
regional  level  to  reduce  regional  disparities 
and improve administrative capacities and the 
ability  to  spend in  a balanced  way  across the 
country.  

11 

The ageing population raises 
concerns for public finances and 
access to services 

shrinking 

projected 

Nonetheless, 

Portugal’s population is ageing rapidly. In 
recent years Portugal has recorded an increase 
in  population,  driven  by  the  positive  net 
migration. 
demographic 
projections are not favourable for the country. 
The 
working-age 
population, exacerbated by the projected fall in 
net  migration  and  rising 
life  expectancy, 
present  a  structural  challenge  for  Portugal. 
This  situation  is  clearly  demonstrated  by  the 
old-age  dependency  ratio (3)  (see  Graph  3.1). 
This ratio is expected to peak at 70% in 2051, 
meaning that, while in 2022 there were close 
to  3  workers  for  each  pensioner,  by  2051 
there will be fewer than 1.5.  

Ageing  will  have  a  negative  impact  on 
public  finances  in  Portugal.  An  increase  in 
the  number  of  older  people  implies  higher 
age-related  expenditure  on  health,  long-term 
care  and,  in  particular,  on  pensions.  By  2046, 
pensions  are  projected  to  reach  an  all-time 
high  of  15.2%  of  GDP,  3  percentage  points 
more  than  in  2022,  before  gradually  going 
down until 2070 (4). Previous estimates (5) had 
forecast  a  more  limited  increase.  A  shrinking 
working-age  population,  who  are  also 
taxpayers, would lead to lower revenues from 
taxes  on  labour  income,  such  as  the  personal 

(3)  The proportion of the elderly population (aged 65 years 
or  more) in  the  pension  system  to  contributors,  i.e.  the 
working-age population aged between 20-64. 

(4)  European Commission-EPC (2024), ‘2024 Ageing Report 
-  Economic  and  budgetary  projections  for  the  EU 
Member States (2022-2070)’. 

(5)  According  to  the  2021  Ageing  Report 

(European 
Commission,  Institutional  Paper  142,  November  2020) 
pension expenditure was expected to peak at 14.6% of 
GDP at 2035, 2 pps of GDP more than in 2019. 

 
 
 
income tax (6).  With a still high level  of public 
debt  of  99.1%  of  GDP 
in  2023,  these 
developments  contribute  to  the  consistently 
high  fiscal  sustainability 
risks  faced  by 
Portugal in the medium-term (see Annex 21).  

Graph 3.1: Old-age dependency ratio (2023-
2070) 

(1) Working-age population are individuals aged between 
20-64. The older population is aged 65 or more. 
Source: European Commission, 2024 Ageing Report 

skills 

shortages 

raise 
Ageing  and 
concerns  about  the  adequacy  of  health 
and  long-term  care  services,  as  well  as 
education.  Long-term  care  services  are 
severely  underfunded,  resulting  in  insufficient 
supply,  also  due  to  skills  and  staff  shortages, 
with  a  ratio  of  0.8  workers  per  100  people  in 
need (7).  In  healthcare,  40%  of  doctors  are 
over 55 years old (see Annex  16).  The ageing 
of  doctors  comes  on  top  of  the  difficulties  in 
retaining  and  hiring  doctors  and  nurses.  In 
fact, difficulties with staff retention and hiring 
remain a concern in strategic sectors, such as 
the  public  administration,  healthcare  and 
education,  mainly  due  to  a  lack  of  training 
opportunities, career promotion paths and low 
pay. Regional disparities and divergent costs of 
living  also  affect  the  attractiveness  of  public 
sector  jobs  in  certain  areas  of  the  country. 
is  also  negatively 
Portugal’s  civil  service 

though 

the  overall  share  of 

the 
affected  by  ageing,  exacerbated  by 
relatively  low  attractiveness  of  public  sector 
employment.  Over  the  last  decade,  there  was 
a  strong  increase  in  educational  attainment, 
the 
even 
population  with  higher  education  remains 
below  the  EU  average.  The  lack  of  much-
needed  skills in digital  and clean technologies 
also  hinders  Portugal’s  competitiveness  (see 
Annex  13  and  Annex  10).  The  shrinking  and 
ageing  of  the  working-age  population  are 
particularly challenging for the development of 
the  main 
further 
certain 
metropolitan areas (See Annex 17). 

regions 

from 

Further  simplification  would  improve  the 
efficiency  and  effectiveness  of  the  tax 
system.  Portugal 
introduced  a  new  RRP 
reform  that  will  address  the  complexity  and 
transparency of its tax system, focusing on tax 
benefits (8)  (see  Section  2).  However,  the 
structure  of  corporate  income  tax  remains 
complex,  with  both  state  and  municipal 
surcharges. This limits the effectiveness of tax 
collection.  Direct  tax  withholdings  are  high, 
structurally  above  2%  of  GDP  on  average  in 
the  recent  past (9),  which  represents  an  extra 
tax 
burden 
administration.  Outstanding  tax  arrears  and 
the recurrent cost of tax collection remain high 
and  above  the  EU  average.  In  addition,  the 
effectiveness  of  the  tax  system  is  further 
hindered by an ageing tax administration staff. 
There are too few new recruits, with more than 
half of the staff expected to retire in the next 
decade (see Annex 19). 

taxpayers 

and 

the 

for 

(8)  See 

‘2023  Country  Report  –  Portugal’ 

(European 
Commission,  SWD(2023)  622  final,  May  2023)  for  a 
review of the challenges faced by Portugal’s tax benefit 
system. 

(6)  Portuguese  Fiscal  Council, 

‘Budgetary  Risks  and 
Sustainability  of  Public  Finances  2023’,  December 
2023. 

(7)  European Commission, ‘Long-Term Care Report’, 2021. 

(9)  A new model for direct tax withholdings was applied as 
of 1 July 2023 to ensure that by year-end there are no 
major differences between the tax already submitted to 
the state and the amount that is finally calculated. 

12 

0.010.020.030.040.050.060.070.080.0-1.5-1.0-0.50.00.51.01.52.0in percentage (%)year-on-year (%)Working age population (lhs)Elderly population (lhs)Old-age dependency ratio (rhs) 
   
 
 
the  governance 
Annex  6).  Streamlining 
structure  would  help  to  achieve  effective 
coordination  at  the  sub-national  level  and 
economies  of  scale,  and  would  also  improve 
efficiency  (see  Annex  17).  It  would  also  be 
beneficial  to  increase  water  retention  in  the 
landscape  and  manage  the  possible  changes 
in  economic  practices 
long-term. 
Improving  the  management  of  wastewater, 
in  water  pipelines,  better 
reducing 
the  natural  sponge 
monitoring, 
function  of 
the 
extraction of ground water, restoring wetlands 
and  rivers  (including  flood  plains),  and  rolling 
out  other  nature-based  solutions  show 
potential  to  address  the  above-mentioned 
challenges.  

restoring 
the 

landscape, 

reducing 

leaks 

the 

in 

There is a shortage of affordable 
housing  

Despite  measures  in  the  RRP  and  the 
possibilities  of  support  offered  by  other 
is  a  shortage  of 
EU  funds,  there 
increased 
affordable  housing  due  to 
house  and  rental  prices.  The  housing  price 
index has more than doubled since 2015, and 
is  one  of  the  highest  in  the  EU.  Housing 
demand remains strong but access to housing 
at  affordable  conditions  has  deteriorated  in 
recent  years,  particularly  in  Lisbon  and  Porto. 
This  situation  also  makes  it  difficult  for 
workers  to  be  mobile.  The  situation  is  mainly 
due to insufficient housing supply, increases in 
the  mortgage  interest  rate,  and  rising  house 
purchase and rental prices. It is also the result 
of greater demand for short-term rentals due 
to  the  strong  growth  in  tourism.  Portugal’s 
home  ownership  ratio  is  high,  implying  that 
the  challenge  primarily  affects  disadvantaged 
groups. Homelessness has worsened in recent 
years,  most  notably  for  migrants  and  their 
families, which was not seen before at such a 
scale.  Energy  poverty  also  remains  high  for 
poverty.  Despite 
of 
people 
improvements  through  the  energy  efficiency 
measures  for  residential  buildings  within  the 
RRP  and  the  cohesion  policy  programmes,  a 
the  population 
significant  proportion  of 

risk 

at 

Climate change has an impact on 
biodiversity and the availability of 
water  

Climate  change  brings  challenges  for 
water management and the protection of 
biodiversity  in  Portugal.  With  a  moderate 
climate  protection  gap (10), 
the  country, 
particularly  the  southern  regions,  is  heavily 
affected by droughts, impacting large areas of 
the  country,  (6.4%  on  average  over  2000-
2020  and  even  34.8%  in  2022).  Reduced 
annual rainfall and an increase in its variability 
affect  river  flows,  aquifer  recharge  and  flood 
risk,  impacting  many  economic  sectors  from 
agriculture  to  energy,  and  putting  hydropower 
generation  at 
risk.  Climate  change  also 
exacerbates the risks to biodiversity, including 
through  forest  fires.  Portugal  stands  out 
globally  as  the  country  with  the  highest 
percentage  of  its  forests  lost  to  wildfires 
between  2001  and  2021,  about  13%  of  the 
area  of  forested  land (11).  In  Portugal,  while 
the  size  of  the  area  protected  under  Natura 
2000  is  on  a  par  with  the  EU  average,  some 
species and habitats, particularly in the marine 
environment, are still not sufficiently protected 
(see Annex 6). 

of 

the  water 

in  the  areas  of 
Challenges  remain 
governance 
supply, 
rehabilitating bodies of water, and water 
efficiency. Portugal has increased its capacity 
to  adapt  to  climate  change  by  strengthening 
the  relevant 
is 
finalising a national roadmap for adaptation to 
climate  change  until  2100 (12).  However,  an 
integrated water management strategy would 
help  to  strike  the  balance  between  water  use 
and  ecological  requirements,  while  ensuring 
adaptation  to  long-term  climate  risks  (see 

legal  framework,  and 

it 

(10)  Share  of  non-insured  economic  losses  in  total  losses 
after a climate-related catastrophe event. See  ‘Closing 
the  climate  protection  gap  -  Scoping  policy  and  data 
gaps’  (European  Commission,  SWD(2021)  123  final, 
May 2021). 

(11)  Bousfield et. al 2023.  

(12)  National  Roadmap  for  Adaptation  2100  |  Portuguese 

Environment Agency (apambiente.pt) 

13 

 
 
Support 

(17.5%)  still  struggle to adequately  heat their 
homes (13). 
dedicated 
financial  instruments  for  renovations  are  still 
not  easily  accessible  in  Portugal,  which  could 
also  support  households  that  have  limited 
access to private financing.  

through 

Graph 3.2: House price index - quarterly data 

Source: Eurostat 

Fostering competitiveness 

long-term  barrier 

regulatory  and 
Long-standing  heavy 
administrative  requirements  reduce  the 
attractiveness  of  Portugal’s  business 
environment. Portugal has the highest share 
of  companies  in  the  EU  that  cite  business 
regulation  as  a 
to 
investment,  and  a  large  proportion  of  firms 
cite licensing regimes and inefficiencies in the 
judicial system as long-term barriers. Similarly, 
most firms consider administrative delays and 
red tape as obstacles to their daily operations. 
Stronger  regulatory  impact  assessments  and 
in 
engagement 
stakeholder 
improved 
identify  potential 
lawmaking  would  help 
burdens.  Additional 
regulatory  costs  are 
imposed  on  firms  by  the  complex  and 
fragmented corporate tax framework.  

Despite  an  increase  in  private  research 
and  development  (R&D)  in  recent  years, 
public spending on research has been low 
and  has  stagnated  over  the  last  decade. 
R&D  activities  in  Portugal  increased  markedly 
in  recent  years,  supported  also  by  large  RRP 
investments  in  research  projects.  However,  it 
will  be  important  for  Portugal  to  continue 
including  on  net-zero 
investing 
technologies, 
cooperation 
fostering 
between  businesses  and  research  institutes, 
also  beyond  the  timeframe  of  the  Recovery 
and  Resilience  Facility.  Additional  efforts  will 
be  needed  to  meet  the  target  of  public  and 
private  R&D  expenditure  to  3%  of  GDP  by 
2030.  Such  investments  will  be  pivotal  to 
technological 
increasing 
development as well as its labour productivity. 

in  R&D, 
and 

country’s 

the 

to 

A  further  increase  in  labour  productivity 
is  key  to 
improving  competitiveness. 
Shortages  of  skilled  staff  and  mismatches  of 
skills  are  reported  as  some  of  the  major 
Portugal. 
investment 
barriers 
Furthermore,  expanding  the  digitalisation  of 
businesses and services and fostering a more 
agile  and  innovative  business  environment 
would  improve  productivity  (see  Annex  12). 
70%  of  SMEs  in  Portugal  had  at  least  the 
basic level of digital intensity. 

in 

Shortcomings in the electricity grid 
and fossil fuel subsidies risks 
delaying the green transition  

energy 

projects 

is  experiencing  delays 

in 
Portugal 
renewable 
and 
limitations  in  grid  and  storage  capacity. 
Last  year’s  historic  increase  in  solar  power 
production  and  the  higher  level  of  installed 
capacity  are  positive  indicators.  However,  the 
growth of renewables needs to be increased to 
meet  the  ambitious  target (14)  of  the  national 
energy  and  climate  plan  (NECP),  including  by 
repowering  existing  wind  energy.  Renewable 
projects are hindered by logistical problems, a 
shortage  of  components  and  raw  materials, 

(13)  Inability to keep one’s home adequately warm, EU-SILC 

survey, Eurostat, 2022. 

(14)  Draft NECP 2023: 20.46GW target for solar energy. 

14 

1001101201301401501601701801902002102202015-Q12015-Q32016-Q12016-Q32017-Q12017-Q32018-Q12018-Q32019-Q12019-Q32020-Q12020-Q32021-Q12021-Q32022-Q12022-Q32023-Q12023-Q3PTEUEA2015=100 
  
 
 
labour  shortages  and  slow  and 
inflation, 
complicated  licensing  procedures.  The  new 
extension  of  the  deadline  for  finalising  solar 
energy projects (15) is also causing delays and 
blocking access to the electricity grid for other 
projects.  The  pipeline  of  renewable  energy 
projects  lacks  clear  visibility  as  there  is  no 
long-term  planning  for  auctions.  The  power 
networks  will  need  to  serve  the  growing 
demand  linked  to:  (i)  clean  mobility;  (ii)  the 
increased  electrification  of  heating,  cooling 
and  industry;  and  (iii)  renewable  hydrogen 
production,  but  short-term  grid  and  storage 
capacity are already lacking (see Annex 7). The 
lacks  efficiency,  and 
electricity  grid  also 
transparency  on 
the  capacities  available. 
Furthermore, it is still insufficient to adapt to a 
more  decentralised,  digitalised  and  flexible 
electricity  system (16).  Portugal  would  benefit 
from further investment in the electricity grids, 
including  by  upgrading  existing  power  lines 
and by promoting flexibility in the system  

Graph 3.3: Available hosting capacity for 
power generation in the national distribution 
grid 

through  solutions  such  as  storage,  the  use  of 
smart  meters  and  incentives  to  consume  at 
off-peak  hours,  as  well  as  demand  response 
mechanisms.  

Deteriorating education outcomes 
threaten competitiveness 

to 

risk 

They 

an 
coupled 

increase 
with 

level  of  educational 
The  declining 
future 
outcomes  poses  a 
competitiveness.  Portugal's  Programme  for 
International  Student  Assessment 
(PISA) 
results  have  deteriorated,  in  line  with  the  EU 
in 
show 
average. 
underachievement, 
low 
proportions of top  performers in mathematics 
and  science,  which  may  pose  a  risk  to 
productivity growth and competitiveness in the 
future.  The  underachievement  of  students 
from  disadvantaged  groups  is  worsening,  and 
the  underachievement  gap  between  students 
born  within  Portugal  and  outside  of  the 
country  is  still  very  wide,  despite  a  reduction 
compared  to  the  previous  PISA  cycle.  As  the 
share  of  foreign-born  students  enrolled  in 
mandatory  schooling  increased  from  7.2%  to 
12.3% in the last 3 years, it will be important 
to  adapt  the  educational  system  to  facilitate 
into 
integration  of  migrant  students 
the 
Portuguese society from an early age. 

Regional  differences  play  a  role 
in 
educational success. Despite the low overall 
rate  of  early  school  leavers  and  training, 
significant  regional  disparities  persist.  Rural 
areas  experience  higher  drop-out  rates  than 
is  the 
urban  areas.  Particularly  troubling 
situation  in  Azores,  where  the  rate  reaches  a 
concerning 26.5%. 

As  the  teaching  force  ages,  there  is  an 
increasing  shortage  of  teachers.  In  2021, 
approximately  half  of  the  schoolteachers  in 
mainland  Portugal  were  above  the  age  of  50 
and only 2% were below the age of 30. At the 
same  time,  the  number  of  higher  education 
graduates in teacher training fell considerably, 
suggesting  a  lack  of  attractiveness  in  the 
profession.  Ensuring  an  adequate  number  of 
well-trained teachers is essential for delivering 

(1)  The 
‘committed  connection  Power”  concerns 
commitments  with  a  production  license  that  are  not  yet 
connected,  with  an  assigned  grid  connection  point  and 
with the power requested yet to be committed. 
Source: E-redes 

(15)  Ministerial  Order  1/SEAMB/SEENC  with  a  further  10-
month  extension  of  the  deadline  for  the  projects  from 
the 2019/2020 auction (77 months in total to conclude 
a solar project). 

(16)  A  power  generation 

facility 

that  uses  multiple 

renewable energy sources. 

15 

0100020003000400050006000202220232022202320222023ConnectedCommittedIn/AwaitingConfirmationPower Connection [MVA] 
  
 
quality  education  to  both  the  current  and 
future generations (see Annex 15). 

Box 4: 

The mid-term review of cohesion policy funds for Portugal 

The  mid-term  review  of  cohesion  policy  funds  is  an  opportunity  to  assess  cohesion 
policy  programmes  and  tackle  emerging  needs  and  challenges  in  EU  Member  States 
and their regions. Member States are reviewing each programme taking into account, among 
other things the challenges identified in the European Semester, including in the 2024 country-
specific recommendations. This review forms the basis for a proposal by the Member State for 
the definitive allocation of 15% of the EU funding included in each programme.  

Portugal  has  made  progress  in  implementing  cohesion  policy  programmes  and  the  European 
Pillar of Social Rights, but challenges remain as outlined in this report, including Annexes 14 and 
17. In particular, disparities remain between the mainland’s coastal and inland areas on the one 
hand,  and  between  the  mainland  and  the  outermost  regions  on  the  other,  as  well  as  between 
metropolitan areas and small cities and towns. Against this background, it remains important to 
continue implementing the planned priorities, paying particular attention to: (i) applied research 
(in the areas identified in smart specialisation strategies), knowledge transfer and valorisation of 
R&D  results,  the  innovation  capacity  of  SMEs,  the  green  transition  and  competitiveness;  (ii) 
wastewater collection and treatment, water reuse and access (particularly in remote areas and 
the outermost regions), reducing leaks in the networks, the circular economy, energy  efficiency 
and  renewable  energy  in  line  with  the  national  energy  and  climate  plan;  (iii)  administrative 
capacity  to  meet  the  conditions  for  more  effective  and  efficient  public  investments;  (iv) 
education  and  training,  the  development  of  qualifications  and  skills  demanded  by  the  labour 
market,  and  targeted  active  labour  market  policies,  especially  for  young  people;  (v)  ensuring 
equal  access  to  education,  health  and  social  services,  in  particular  for  people  from 
disadvantaged groups.  

The  needs  in  the  area  of  preventing  and  preparing  for  risks  related  to  climate  change  merit 
specific  consideration  in  preparing  the  mid-term  review.  Portugal  could  also  benefit  from  the 
opportunities provided by the Strategic Technologies for Europe Platform (STEP) initiative (17) to 
support  the  transformation  of  industry,  particular  with  a  particular  focus  on  advanced  and 
resource-efficient manufacturing, sustainable transport, biomedicine and biotechnology, and net 
zero  technologies,  whilst  also  investing  in  the  skills  and  qualifications  required  to  meet  the 
demand for workers in these sectors. 

(17)  Regulation (EU) 2024/795 

16 

 
 
 
 
 
KEY FINDINGS 

resilience  plan 

With its wide policy scope and substantial 
financial  envelope,  Portugal’s  recovery 
and 
includes 
measures 
to  address  a  series  of 
structural  challenges  in  synergy  with 
other  EU  funds,  including  cohesion  policy 
funds, by:  

(RRP) 

investments 

•  Contributing  to  the  green  transition 
with 
in  renewable  energy, 
energy  efficiency  in  buildings,  the  circular 
economy,  and 
the  decarbonisation  of 
transport and industry; 

•  Digitalising  businesses  and  public 
services,  as  well  as  contributing  to  the 
and 
in 
digital 
improving people’s digital skills; 

education 

transition 

•  Enhancing its business environment by 
reducing  restrictions  in  highly  regulated 
professions,  improving  access  to  finance 
for  businesses,  promoting  research  and 
innovation, and improving the efficiency of 
the justice system; 

•  Combatting  precarious  contracts  and 
research 
fostering  education  and 
through  programmes  and  training  courses 
to reskill and upskill the adult population; 

•  Supporting 

disadvantaged 
communities,  increasing  the  efficiency  of 
the  national  health  system  and  boosting 
investment 
in  social  and  affordable 
housing; 

•  Promoting the fiscal sustainability over 
the  medium  term,  including  a  reform  to 
simplify the tax system. 

implementation 

The 
Portugal’s 
recovery  and  resilience  plan  is  facing 
increasing  challenges.  Renewed  efforts  are 
key for a successful implementation of all the 

of 

measures of Portugal’s recovery and resilience 
plan by August 2026. 

Beyond  the  reforms  and  investments  in 
the RRP and cohesion policy programmes, 
Portugal would benefit from: 

•  Ensuring 

medium-term 

fiscal 
sustainability, including by mitigating  the 
impact  of  ageing  on  Portugal’s  pension 
system,  streamlining  the  corporate  income 
tax  structure  and  improving  the  efficiency 
of the tax administration; 

•  Enhancing 

competitiveness 

by 
supporting private investment, reducing the 
regulatory  and  administrative  burden, 
further  strengthening  regulatory 
impact 
assessments, investing more in R&D&I, and 
promoting digitalisation;  

•  Improving  the  performance  of  the 
public  sector  to  also  address  challenges 
posed by the ageing population; 

•  Tackling 

teacher 

shortages 

and 
educational 
underachievement, 
particularly  within  the  migrant  population 
and  in  rural  areas  and  the  outermost 
regions; 

•  Increasing  the  capacity  of  the  grid 
infrastructure  and  electricity  storage, 
improving 
procedures, 
connection 
increasing  their  transparency  to  attract 
the 
investors 
accelerate 
implementation  of 
renewable  energy 
projects;  

and 

•  Improving  water  management  and 
environmental protection to adapt to the 
impacts  of  climate  change  and  ensure 
long-term  economic  and  environmental 
resilience.

17 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Cross-cutting indicators 

A1.  Sustainable Development Goals 

A2.  Progress in the implementation of country-specific recommendations 

A3.  Recovery and resilience plan – implementation 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy transition and competitiveness 

A8.  Fair transition to climate neutrality 

Productivity 

A9.  Resource productivity, efficiency and circularity 

A10.  Digital transformation 

A11.  Innovation 

A12.  Industry and single market 

A13.  Public administration 

Fairness 

A14.  Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

A15.  Education and training 

A16.  Health and health systems 

A17.  Economic and social performance at regional level 

Macroeconomic stability 

A18.  Key financial sector developments 

A19.  Taxation 

A20.  Table with economic and financial indicators 

A21.  Debt sustainability analysis 

LIST OF TABLES 

A2.1. 
A3.1. 

Summary table on 2019-2023 CSRs 
Key facts of the Portuguese RRP 

21 

24 

24 

26 

30 

32 

35 

37 

37 

42 

47 

50 

50 

52 

54 

56 

60 

62 

62 

65 

67 

69 

73 

73 

76 

79 

80 

27 
30 

 
 
 
Support from EU instruments in Portugal 
EU / euro area loans under the 2010-2018 financial assistance programmes 
Resilience indices across dimensions for Portugal and the EU-27 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
Key Energy Indicators 
Key indicators for a fair transition in Portugal 
Circularity indicators 

A3.2.  Measures in Portugal’s RRP 
A4.1. 
A4.2. 
A5.1. 
A6.1. 
A7.1. 
A8.1. 
A9.1. 
A10.1.  Key Digital Decade targets monitored by the Digital Economy and Society Index indicators 
A11.1.  Key innovation indicators 
A12.1. 
Industry and the Single Market 
A13.1.  Public administration indicators 
A14.1.  Social Scoreboard for Portugal 
A14.2.  Social Scoreboard for Portugal 
A15.1.  EU-level targets and other contextual indicators under the European Education Area strategic framework 
A16.1.  Key health indicators 
A17.1.  Selected indicators at regional level in Portugal 
A18.1.  Financial Soundness Indicators 
A19.1.  Taxation indicators 
A20.1.  Key economic and financial indicators 
A21.1.  Debt sustainability analysis - Portugal 
A21.2.  Heatmap of fiscal sustainability - Portugal 

LIST OF GRAPHS 

A1.1. 
Progress towards the SDGs in Portugal 
A2.1. 
Portugal’s progress on the 2019-2023 CSRs (2024 European Semester) 
A3.1. 
Total grants disbursed under the RRF 
A3.2. 
Total loans disbursed under the RRF 
A4.1. 
Distribution of cohesion policy funding across policy objectives in Portugal 
A4.2. 
Distribution of RRF funding by pillar in Portugal 
A6.1. 
Greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2022 
A6.2. 
Changes in livestock density and organic farming 
A6.3. 
Environmental investment gap, annual average 
A7.1. 
Portugal´s energy retail prices for households and industry & service 
A7.2. 
Trends in electricity prices for non-household consumers (EU and foreign partners) 
A7.3. 
Portugal's installed renewable capacity (left) and electricity generation mix (right) 
A8.1. 
Fair transition challenges in Portugal 
A8.2. 
Job vacancy rate in transforming sectors 
A9.1. 
ETS emissions by sector since 2013 
A9.2. 
Treatment of municipal waste 
A11.1.  Public expenditure on R&D as % of GDP 
A12.1.  Labour productivity in PPS (% of EU-27) 
A12.2.  Net fixed capital formation (5-year average) 
A12.3.  Business Regulations as a major obstacle to investment (5-year average) 
A13.1.  Ratio of 25-49 to 50-64 year olds by sector and occupation 
A13.2.  Share of employees by education attainment level and by sector 
A15.1.  Underachievement rates by field, PISA 2012, 2018 and 2022 
A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2024-2070 
A18.1.  Credit growth 
A19.1.  Tax revenues from different tax types as % of total taxation 
A19.2.  Tax wedge for single and second earners as a % of total labour costs, 2023 

22 

31 
34 
34 
35 
41 
46 
48 
51 
53 
55 
59 
61 
62 
64 
66 
68 
70 
75 
76 
79 
82 
82 

24 
26 
31 
31 
33 
33 
37 
39 
40 
42 
42 
43 
47 
49 
50 
51 
54 
56 
56 
57 
60 
60 
65 
67 
67 
73 
77 
77 

 
 
 
LIST OF MAPS 

A17.1.  Portugal, Regional Competitiveness Innovation Sub-Index, 2022 edition 

69 

23 

 
 
 
 
CROSS-CUTTING INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

This  Annex  assesses  Portugal’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  four  dimensions  of  competitive 
sustainability.  The  17  SDGs  and  their  related 
indicators  provide  a  policy  framework  under  the 
UN’s  2030  Agenda  for  Sustainable  Development. 
The  aim  is  to  end  all  forms  of  poverty,  fight 
inequalities  and  tackle  climate  change  and  the 
environmental crisis, while ensuring that no one is 
left  behind.  The  EU  and  its  Member  States  are 
committed  to  this  historic  global  framework 
agreement  and  to  playing  an  active  role  in 
maximising  progress  on  the  SDGs.  The  graph 
below  is  based  on  the  EU  SDG  indicator  set 
developed  to monitor  progress  on  the  SDGs  in  an 
EU context. 

related 

Portugal  is  improving  overall  on  the  SDG 
environmental 
indicators 
sustainability (SDGs 2, 6, 7, 9, 11, 12, 13, 14, 
15).  It  performs  well  on  SDG 7  (Affordable 
and clean energy) but needs to catch up with 
the  EU  average  on  sustainable  industry  and 

to 

is 

final 

increasing 

in  ground  water 

infrastructure (SDG 9) and sustainable cities 
(SDG 11). 
the  utilised 
In  2021,  19.3%  of 
agricultural  area  in  Portugal  was  under  organic 
in  2021).  The  share  of 
farming  (EU:  9.9% 
renewable 
energy 
in  gross 
energy 
consumption  increased  from  30.6%  in  2017  to 
34.7%  in  2022,  well  above  the  EU  average  (23% 
in 2022). The environmental impact of agriculture 
is  lower  than  the  EU  average,  but  the  level  of 
nitrate 
(from 
19.3 mg  NO3  per  litre  in  2016  to  22.6 mg  in 
2021), higher than the EU average (20.5 in 2021). 
Portugal  protects  less  than  5%  of  its  maritime 
areas (EU: 12.1%). Circular economy indicators are 
also  well  below  EU  averages,  with  a  low  rate  of 
recycling  of  municipal  waste  (30.4%  in  2021, 
against  48.6%  for the  EU  in  2022)  and  a  circular 
material  use  rate  that,  even  if  slightly  improved 
since  2017,  is  only  around  one  fifth  of  the  EU 
average. The share of public transport (buses and 
trains) in total passenger transport and the use of 
rail  and  inland  waterways  in  freight  transport  are 
well  below  the  EU  average.  Various  measures  in 

Graph A1.1: Progress towards the SDGs in Portugal 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings – Sustainable development 
indicators - Eurostat (europa.eu). A high status does not mean that a country is close to reaching a specific SDG, but signals that it 
is doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 5 
years. The calculation does not take into account any target values as most EU policy targets are only valid for the aggregate EU 
level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of 25 April 2024. Data refer mainly to the period 2017-2022 or 2018-2023. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

24 

 
 
 
 
 
 
investments 

Portugal’s  recovery  and  resilience  plan  (RRP)  aim 
to  further  contribute  to  emission  savings.  These 
include 
in  energy  storage  and 
renewables, renewable hydrogen, energy efficiency 
renovations, 
lines, 
increased  use  of  bioproducts  in  industry,  and  the 
decarbonisation of industry.  

the  extension  of  metro 

Portugal  is  improving  on  SDG  indicators 
assessing  the  fairness  of  society  and  the 
economy  (SDGs 1,  3,  4,  5,  7,  8,  10)  but  still 
needs  to  catch  up  with  the  EU  average  on 
health and well-being (SDG 3). The poverty rate 
(persons at risk of poverty or social exclusion) was 
slightly below the EU average in 2022 (20.1%, vs 
21.6%  for  the  EU),  also  after  social  transfers 
(16.4%,  against  16.5%  for  the  EU).  Portugal 
performs well for people living in households with 
very  low  work  intensity  (5.6%  of  the  population 
aged  less  than  65  in  2022,  vs  8.3%  at  EU  level) 
and  on  the  housing  cost  overburden  rate  (5%  of 
population in 2022, against  8.7% at EU level). On 
the  in-work-at-risk-of-poverty  rate,  Portugal  is 
above  the  EU  average  (10.3%,  vs  8.5%).  The 
urban-rural  gap  has  increased  significantly  and 
remains far above the EU average. The same trend 
applies  to  energy  poverty,  with  17.5%  of  the 
population unable to keep their homes adequately 
warm  in  2022  (EU:  9.3%).  The  citizenship  gap 
(difference  between  EU  and  non-EU  nationals) 
narrowed  for  the  poverty  rate  but  increased  for 
some 
employment 
improvements, most  of  the  health  and  well-being 
indicators are still far from the EU average. These 
include those on road deaths, the obesity rate and 
healthy  life  expectancy  (58.3  years  in  2021, 
against  63.6  years  for  the  EU).  Education  and 
training indicators are better than the EU average, 
with 
rate 
(population aged 25-34) increasing from 35.1% in 
2018 to 40.9% in 2023 (vs an increase of the EU 
average  from  38.7%  to  43.1%).  The same  is true 
for  the  participation  of  adults  in  learning,  which 
stood at 13.4% in 2023 (EU: 12.7%). Portugal also 
performs  better  than  the  EU  average  on  gender 
equality,  with  a  low  gender  employment  gap,  and 
a  gender  pay  gap  slightly  below  the  EU  average 
(but  still  above  10%).  The  share  of  women  in 
senior  management  and 
in  government  has 
progressed  in  the  last  few  years,  surpassing  the 
EU  average.  The  RRP  includes  measures  intended 
to  achieve  progress  towards  a  more  equal  and 
healthy  society.  These include  reforms  of  primary 
care  services  and  simplification  of  the  social 
benefit  system,  and  investments  in  community-

tertiary  education  attainment 

training.  Despite 

and 

the 

based  social  services,  social  housing,  and  student 
accommodation.  Another  measure  under  the  RRP 
is  household  support 
for  energy  efficiency 
renovation. 

labour  market 

Portugal  is  improving  on  SDG  indicators 
related to productivity (SDGs 4, 8, 9) but still 
needs  to  catch  up  with  the  EU  average  on 
innovation  and  industry  (SDG  9).  Basic  digital 
skills  among  the  adult  population  are  progressing 
(56%  in  2023)  and  are  above  the  EU  average 
(55.6%).  The  Portuguese 
is 
performing  relatively  well  compared  to  the  EU 
average,  with  a  high  employment  rate (78.2%, vs 
an  EU  average  of  75.3%,  in  terms  of  population 
aged  20  to  64  in  2023)  and  a  sharp  decrease  in 
long-term  unemployment,  which  fell  to  2.5%  in 
2023  (in  terms  of  active  population,  EU:  2.1%). 
Despite  slow  improvement,  R&D  and  innovation 
remains  a  key  concern.  Only  1.7%  of  GDP  was 
allocated  to  R&D  in  2022  (EU:  2.24%),  while  the 
number  of  patent  applications  submitted  to  the 
European  Patent  Office  per  million  inhabitants 
remains  very  low:  31  in  2023  (EU:  153).  The 
ambitious  RRP  measures  have  the  potential  to 
transform the Portuguese business sector and the 
R&I  system.  These  measures  aim  to  improve  the 
business-academia link, increase R&D, and reform 
vocational education and training. 

While  Portugal  is  improving  on  some  SDG 
indicators related to macroeconomic stability 
(SDGs 8,  17),  it  is  moving  away  from  the 
target  linked  to  peace,  justice,  and  strong 
institutions  (SDG  16).  It  is  closing  its  gap  with 
the  EU  average  in  terms  of  the  investment  share 
of GDP, with 19.4% in 2023 (EU: 22.7%). However, 
central government expenditure on the law courts, 
a key indicator of the quality of the justice system, 
remains below the EU average (in 2022, EUR 71.9 
per  capita  in  Portugal  vs  EUR 113.7  per  capita  at 
EU  level).  The  share  of  the  population  reporting 
crime, violence or vandalism dropped from 10.5% 
in  2015  to  6.6%  in  2020  (EU:  10.7%)  but  the 
death  rate  due  to  homicide  and  the  victims  of 
trafficking  in  human  beings  are  progressing.  The 
RRP  includes  measures  to  improve  the  efficiency 
of  administrative  and  tax  courts  and  to  improve 
public 
the 
financial  management, 
introduction of, for example, IT solutions. 

through 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other annexes. 

25 

 
ANNEX 2: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 

Graph A2.1: Portugal’s progress on the 2019-2023 
CSRs (2024 European Semester) 

Source: European Commission. 

The Commission has assessed the 2019-2023 
country-specific  recommendations  (CSRs) (18) 
addressed  to  Portugal  as  part  of  the  European 
Semester. These recommendations concern a wide 
range of policy areas that are related to 14 of the 
17  Sustainable  Development  Goals  (SDGs)  (see 
Annexes  1  and  3). The  assessment  considers  the 
policy action taken by Portugal to date (19) and the 
commitments  in  its  recovery  and  resilience  plan 
(RRP) (20).  At  this  stage  of  RRP  implementation, 
74%  of  the  CSRs  focusing  on  structural  issues 
from  2019-2023  have  recorded  at  least  ‘some 
progress’,  while  26%  recorded  ‘limited  progress’ 
(see  Graph  A2.1).  As  the  RRP  is  implemented 
further,  considerable  progress 
in  addressing 
structural CSRs is expected in the coming years. 

(18)  2023  CSRs:  EUR-Lex  -  32023H0901(22)  -  EN  -  EUR-Lex 

(europa.eu) 

2022  CSRs:  EUR-Lex  -  32022H0901(22)  -  EN  -  EUR-Lex 
(europa.eu) 

      2021  CSRs:  EUR-Lex  -  32021H0729(22)  -  EN  -  EUR-Lex 

(europa.eu) 

      2020  CSRs:  EUR-Lex  -  32020H0826(22)  -  EN  -  EUR-Lex 

(europa.eu) 
2019  CSRs:  EUR-Lex  -  32019H0905(22)  -  EN  -  EUR-Lex 
(europa.eu) 

(19)  Including  policy  action 

in  the  Recovery  and 
reported 
Resilience  Facility  (RRF)  reporting (twice  a  year  reporting on 
progress 
implementing  milestones  and  targets  and 
resulting from the payment requests assessment). 

in 

(20)  Member  States  were  asked  to  effectively  address  in  their 
RRPs  all  or  a  significant  subset  of  the  relevant  country-
specific  recommendations  issued  by  the  Council.  The  CSR 
assessment  presented  here  considers 
the  degree  of 
implementation of the measures included in the RRP and of 
those  carried  out  outside  of  the  RRP  at  the  time  of 
assessment.  Measures  laid  down  in  the  Annex  of  the 
adopted  Council  Implementing  Decision  on  approving  the 
assessment of the RRP, which have not yet been adopted or 
implemented but considered credibly announced, in line with 
the CSR assessment methodology, warrant ‘limited progress’. 
can 
Once 
to 
‘some/substantial 
implementation’, 
progress 
depending on their relevance. 

these  measures 
or 

implemented, 

lead 

full 

26 

No progress0%Limited progress26%Some progress56%Substantial progress8%Full implementation10% 
 
 
 
 
 
 
   
 
 
 
Table A2.1:  Summary table on 2019-2023 CSRs 

(Continued on the next page) 

27 

PortugalAssessment in May 2024*RRP coverage of CSRs until 2026**Revelant SDGs2019 CSR 1Some ProgressAchieve the medium-term budgetary objective in 2020, taking into account the allowance linked to unusual events for which a temporary deviation is granted. Use windfall gains to accelerate the reduction of the general government debt ratio.Not relevant anymoreNot applicableSDG 8, 16Improvethequalityofpublicfinancesbyprioritisinggrowth-enhancingspendingwhilestrengtheningoverallexpenditurecontrol,costefficiencyandadequatebudgeting,withafocusinparticularona durable reduction of arrears in hospitals.Some ProgressRelevant RRP measures implemented as of 2022 and being planned as of 2022, 2023 and 2025SDG 3, 8, 16Improve the financial sustainability of State-owned enterprises, while ensuring more timely, transparent and comprehensive monitoring.Some ProgressRelevant RRP measures being implemented as of 2021 and 2022SDG 92019 CSR 2Some ProgressAdopt measures to address labour market segmentation.Some ProgressRelevant RRP measures being implemented as of 2023SDG 8Improve the skills level of the population, in particular their digital literacy, including by making adult learning more relevant to the needs of the labour market.Some ProgressRelevant RRP measures being implemented as of 2021 and 2022, and planned as of 2022,2023 and 2025SDG 4Increase the number of higher education graduates, particularly in science and information technology.Some ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022 and 2025SDG 4Improve the effectiveness and adequacy of the social safety net.Some ProgressRelevant RRP measures being implemented as of 2021and 2022 and planned for 2022, 2023 and 2024SDG 1, 2, 102019 CSR 3Some ProgressFocus investment-related economic policy on research and innovation,Some ProgressRelevant RRP measures being implemented as of 2021 and 2022 and planned for 2022SDG 9, 10, 11railway transport and port infrastructure,Limited ProgressRelevant RRP measures being planned as of 2022 and 2025SDG 10, 11low carbon and energy transition and extending energy interconnections, taking into account regional disparities.Some ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2022, 2023 and 2024SDG 7, 9, 10, 11, 132019 CSR 4Some ProgressAllow for a swifter recovery of the collateral tied to non-performing loans by increasing the efficiency of insolvency and recovery proceedings.Some ProgressRelevant RRP measures being planned as of 2023SDG 8Reducetheadministrativeandregulatoryburdenonbusinesses,mainly by reducing sector-specific barriers to licensing.Limited ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2023SDG 8, 9Developaroadmaptoreducerestrictionsinhighlyregulatedprofessions.Substantial ProgressRelevant RRP measures being planned as of 2022SDG 9Increasetheefficiencyofadministrativeandtaxcourts,inparticularby decreasing the length of proceedings.Some ProgressRelevant RRP measures being planned as of 2023SDG 8, 162020 CSR 1Some ProgressInlinewiththegeneralescapeclause,takeallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability,whileenhancinginvestment. Not relevant anymoreNot applicableSDG 8, 16Strengthen the resilience of the health system Some ProgressRelevant RRP measures being implemented as of 2021, 2022 and planned as of 2023 and 2025SDG 3and ensure equal access to quality health and long-term care. Limited ProgressRelevant RRP measures being implemented as of 2021, 2022 and planned as of 2023 and 2025SDG 3, 8, 102020 CSR 2Some ProgressSupport employment and prioritise measures to preserve jobs. Some ProgressRelevant RRP measures being planned as of  2023 SDG 8Guaranteesufficientandeffectivesocialprotectionandincomesupport. Some ProgressRelevant RRP measures being implemented as of 2021 and 2022 and planned for 2023 and 2024SDG 1, 2, 10Support the use of digital technologies to ensure equal access to quality education and training Some ProgressRelevant RRP measures being implemented as of 2021 and 2022, and planned as of 2023 and 2024 and 2025SDG 4, 8, 10and to boost firms’ competitivenessSome ProgressRelevant RRP measures being implemented as of 2021 and 2022 and planned as of 2023 and 2025SDG 8, 9  
 
 
 
  
 
Table (continued) 

(Continued on the next page) 

28 

2020 CSR 3Some ProgressImplementthetemporarymeasuresaimedatsecuringaccesstoliquidity for firms, in particular small and medium-sized enterprises. Substantial ProgressRelevant RRP measures being implemented as of 2021SDG 8, 9Front-load mature public investment projects and Some ProgressRelevant RRP measures being implemented as of 2021SDG 8, 16promote private investment to foster the economic recovery. Substantial ProgressRelevant RRP measures being implemented as of 2021 and planned as of 2023SDG 8, 9Focus investment on the green and digital transition, in particular on clean and and efficient production and use of energy, Some ProgressRelevant RRP measures being implemented as of 2021 and 2022 and planned as of 2023 and  2024 SDG 7, 9, 13rail infrastructure Limited ProgressRelevant RRP measures being implemented as of 2021SDG 11and innovation.Some ProgressRelevant RRP measures being implemented as of 2021 and 2022SDG 92020 CSR 4Some ProgressIncrease the efficiency of administrative and tax courtsSome ProgressRelevant RRP measures being planned as of 2023SDG 8, 162021 CSR 1Not relevant anymoreIn2022,usetheRecoveryandResilienceFacilitytofinanceadditionalinvestmentinsupportoftherecoverywhilepursuingaprudentfiscalpolicy.Preservenationallyfinancedinvestment.Limitthe growth of nationally financed current expenditure.Not relevant anymoreNot applicableSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term.Not relevant anymoreNot applicableSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,bothontherevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasures,toensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,notably supporting the green and digital transition.Not relevant anymoreNot applicableSDG 8, 16Giveprioritytofiscal-structuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,includingbystrengtheningthecoverage,adequacy,andsustainabilityofhealthandsocialprotection systems for all.Not relevant anymoreNot applicableSDG 8, 162022 CSR 1Substantial ProgressIn2023,ensureprudentfiscalpolicy,inparticularbylimitingthegrowthofnationallyfinancedprimarycurrentexpenditurebelowmedium-termpotentialoutputgrowth,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Stand ready to adjust current spending to the evolving situation.Substantial ProgressNot applicableSDG 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilienceFacilityandother Union funds.Full ImplementationNot applicableSDG 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringcredibleandgradualdebtreductionandfiscalsustainabilityinthemediumtermthroughgradualconsolidation,investmentandreforms.Full ImplementationNot applicableSDG 8, 16Improvetheeffectivenessofthetaxandsocialprotectionsystems,inparticularbysimplifyingbothframeworks,strengtheningtheefficiencyoftheirrespectiveadministrations,andreducingtheassociated administrative burden.Limited ProgressRelevant RRP measures being implemented as of 2022 and 2023; and being planned as of 2025SDG 1, 2, 8, 10, 12, 162022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestonesandtargetsincludedintheCouncilImplementing Decision of 13 July 2021.SwiftlyfinalisethenegotiationswiththeCommissiononthe2021-2027cohesionpolicyprogrammingdocumentswithaviewtostarting their implementation.2022 CSR 3Limited ProgressEnhancetheconditionsforatransitiontowardsacirculareconomy,inparticularbyincreasingwasteprevention,recyclingandreusetodivert waste away from landfills and incinerators.Limited ProgressRelevant RRP measures being implemented as of 2021 and 2023SDG 6, 12, 15RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports.Progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
 
  
 
Table (continued) 

Note: 
* See footnote (20)  
** RRP measures included in this table contribute to the implementation of CSRs. Nevertheless, additional measures outside the 
RRP may be necessary to fully implement CSRs and address their underlying challenges. Measures indicated as ‘being 
implemented’ are only those included in the RRF payment requests submitted and positively assessed by the European 
Commission. 
Source: European Commission. 

29 

2022 CSR 4Some ProgressReduce overall reliance on fossil fuels,Some ProgressRelevant RRP measures being implemented as of 2021, 2022 and are being planned for 2023SDG 7, 9, 13including in the transport sector.Some ProgressRelevant RRP measures being implemented as of 2022 and are being planned for 2023SDG 11Acceleratethedeploymentofrenewablesbyupgradingelectricitytransmissionanddistributiongrids,enablinginvestmentsinelectricity storageLimited ProgressRelevant RRP measures are being planned for 2023SDG 7, 9, 13andstreamliningpermittingprocedurestoallowforfurtherdevelopmentofwind,particularlyoffshore,andsolarelectricityproduction, as well as renewable hydrogen production.Some ProgressRelevant RRP measures being implemented as of 2021SDG 7, 8, 9, 13Strengthentheincentivesframeworkforenergyefficiencyinvestments in buildings.Some ProgressRelevant RRP measures are being planned for 2024 and 2025SDG 7Increase energy interconnections.Limited ProgressSDG 7, 9, 132023 CSR 1Substantial ProgressWinddowntheemergencyenergysupportmeasuresinforce,usingtherelatedsavingstoreducethegovernmentdeficit,assoonaspossiblein2023and2024.Shouldrenewedenergypriceincreasesnecessitateneworcontinuedsupportmeasures,ensurethatthesearetargetedatprotectingvulnerablehouseholdsandfirms,fiscallyaffordable, and preserve incentives for energy savings.Limited ProgressNot applicableSDG 8, 16Ensureprudentfiscalpolicy,inparticularbylimitingthenominalincreaseinnationallyfinancednetprimaryexpenditurein2024tonotmorethan1.8%1,unlessahigherreferencerateinnetnationallyfinancedprimaryexpendituregrowthisestimatedtobecompatiblewithPortugalreachingitsMTOof-0.5%ofGDP,interaliaifinterestexpenditure is lower than currently projected by the Commission.Full ImplementationNot applicableSDG 8, 16PreservenationallyfinancedpublicinvestmentandensuretheeffectiveabsorptionofRRFgrantsandotherEUfunds,inparticularto foster the green and digital transitions.Full ImplementationNot applicableSDG 8, 16Fortheperiodbeyond2024,continuetopursueamedium-termfiscalstrategyofgradualandsustainableconsolidation,combinedwithinvestmentsandreformsconducivetohighersustainablegrowth, to achieve a prudent medium-term fiscal position.Full ImplementationNot applicableSDG 8, 16Improvetheeffectivenessofthetaxandsocialprotectionsystems,inparticularbyprioritisingthesimplificationofbothframeworks,strengtheningtheefficiencyoftheirrespectiveadministrations,andreducing the associated administrative burden.Limited ProgressRelevant RRP measures being implemented as of 2022 and 2023; and being planned as of 2025SDG 1, 2, 8, 10, 12, 162023 CSR 2Acceleratetheimplementationofitsrecoveryandresilienceplan,alsobyensuringanadequateadministrativecapacityand,followingtherecentsubmissionoftheaddendum,includingtheREPowerEUchapterandtheadditionalloanrequest,rapidlystarttheimplementationoftherelatedmeasures.Proceedwiththespeedyimplementationofcohesionpolicyprogrammes,inclosecomplementarity and synergy with the recovery and resilience plan.2023 CSR 3Limited ProgressImprovetheconditionsforthetransitiontowardsacirculareconomy,inparticularbyincreasingwasteprevention,recyclingandreuse,todivert waste away from landfills and incinerators.Limited ProgressRelevant RRP measures being implemented as of 2021 and 2023SDG 6, 12, 152023 CSR 4Some ProgressReduce overall reliance on fossil fuels.Some ProgressRelevant RRP measures being implemented as of 2021 and 2022 and are being planned as of 2023SDG 7, 9, 13Furtheracceleratethedeploymentofrenewablesbyfurthersimplifyinganddigitalisingpermittingtoallowforadditionalwindparticularlyoffshoreandsolarelectricityproduction,aswellaspromoting self-consumption and renewable energy communities.Some ProgressRelevant RRP measures being planned as of 2023 and 2024SDG 7, 9, 13Increase electricity interconnection capacityLimited ProgressSDG 7, 9, 13andupgradetheelectricitytransmissionanddistributiongrids,enabling investment in electricity storageLimited ProgressRelevant RRP measures being planned as of 2024SDG 7, 9, 13anddigitalisationofthegrid,includingthefasterroll-outofsmartmeters.Some ProgressSDG 7, 9, 13Accelerateinvestmentinenergyefficiencybypromotingfinancialschemestoattractprivateinvestmentandsupportinghouseholdsinneed.Some ProgressRelevant RRP measures being planned as of 2023SDG 1, 2, 7, 10Stepuppolicyeffortsaimedattheprovisionandacquisitionofskillsand competences needed for the green transition.Some ProgressRelevant RRP measures being planned as of 2024SDG 4RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 

This Annex provides a snapshot of Portugal’s 
implementation of its recovery and resilience 
plan  (RRP),  past  the  mid-way  point  of  the 
Recovery  and  Resilience  Facility’s 
(RRF) 
lifetime.  The  RRF  has  proven  central  to  the  EU’s 
recovery  from  the  COVID-19  pandemic,  helping 
speed  up  the  twin  green  and  digital  transition, 
while  adapting  to  geopolitical  and  economic 
resilience 
developments, 
against  future  shocks.  The  RRF  is  also  helping 
implement the UN Sustainable Development Goals 
and 
country-specific 
recommendations (see Annex 2).  

strengthening 

address 

and 

the 

The  RRP  paves  the  way  for  disbursing  up  to 
EUR 16.3 billion in grants and EUR 5.9 billion 
in  loans  under  the  RRF  over  the  2021-2026 
period,  representing  8.4%  of  Portugal’s 
GDP (21). As of mid-May 2024, EUR 7.8 billion has 
been  disbursed  to  Portugal  under  the  RRF, 
comprising EUR 6.1 billion in grants and EUR 1.65 
billion in loans. 

Portugal  still  has  EUR  14.4  billion  available 
in grants and loans from the RRF. This will be 
disbursed  after  the  assessment  of  the  future 
fulfilment  of  the  remaining  361  milestones  and 
targets (22)  included  in  the  Council  Implementing 
Decision (23)  (CID),  ahead  of  the  2026  deadline 
established for the Facility.  

Portugal’s  progress  in  implementing  its  plan 
is  published  in  the  Recovery  and  Resilience 
Scoreboard (24).  The 
scoreboard  gives  an 
overview  of  the  progress  made  in  implementing 
the  RRF  as  a  whole.  Graphs  A3.1  and  A3.2  show 
the  current  state  of  play  as  reflected  in  the 
scoreboard. 

Portugal’s RRP includes a REPowerEU chapter 
to phase out its dependency on Russian fossil 
its  energy  supplies  and 
fuels,  diversify 

(21)  GDP 

information 

is  based  on  2023  data.  Source: 

https://ec.europa.eu/economy_finance/recovery-and-
resilience-scoreboard/index.html?lang=en  

(22)  A milestone or target is satisfactorily fulfilled once a Member 
State  has  provided  evidence  to  the  Commission  that  it  has 
reached  the  milestone  or  target  and  the  Commission  has 
assessed it positively in an implementing decision. 

(23)  https://data.consilium.europa.eu/doc/document/ST-10149-

2021-ADD-1-REV-1/en/pdf  

produce  more  clean  energy  in  the  coming 
years.  To  kick-start  the  REPowerEU  chapter’s 
implementation,  EUR  171.1  million  was  disbursed 
as  pre-financing  on  21  December  2023.  This 
helped the launch relevant reforms like setting up 
the Energy Poverty Observatory. 

The  plan  has  a  strong  focus  on  the  green 
transition, dedicating 41.2% of the available 
funds  to  measures  that  support  climate 
objectives  and  21.1%  of  its  total  allocation 
to support the digital transition. It also retains 
a  strong  social  dimension  with  social  protection 
measures, especially related to social housing.  

Table A3.1:  Key facts of the Portuguese RRP 

Source: RRF Scoreboard 

timely 

With  three  payment  requests  completed, 
Portugal’s  implementation  of  its  RRP  is 
underway.  However, 
completion 
requires  increased  efforts.  The  Commission 
gave a positive assessment of Portugal’s first and 
second payment requests, taking into account the 
opinion of the Economic and Financial Committee. 
This  led  to  EUR  1.2  billion  being  disbursed  in 
financial  support  on  9  May  2022  and  EUR  1.8 
billion  on  8  February  2023 (25).  The  related  58 
milestones  and  targets  covered  reforms  and 
investments  such  as  the  National  Strategy  to 
Combat  Poverty  digital  transformation  of  the 
public administration, and the Banco Português de 
Fomento. 
reforms  and 
investments  in  the  areas  of  health,  taxation, 
innovation,  qualifications  and 
investment  and 

There  were  also 

(24)  https://ec.europa.eu/economy_finance/recovery-and-

resilience-scoreboard/country_overview.html 

(25)  When  requested  payments  are  disbursed,  the  pre-financing 
is cleared proportionally. The net amounts are quoted here.  

30 

Initial plan CID adoption date13 July 2021Scope Revised plan with REPowerEU chapterLast major revision17 October 2023Total allocation EUR 16.3 billion in grants and EUR 5.9 billion in loans (8.4% of 2023 GDP)Investments and reforms 117 investments and 44 reforms Total number of milestones and targets463Fulfilled milestones and targets102 (22% of total) 
 
 
 
     
 
 
skills, 

digital 
the  blue  economy, 
renewable  gases  and  bio-economy  and  waste 
management.  

forestry, 

Graph A3.1: Total grants disbursed under the RRF 

Note: This graph displays the amount of grants disbursed so 
far  under  the  RRF.  Grants  are  non-repayable  financial 
contributions.  The  total  amount  of  grants  given  to  each 
Member  State  is  determined  by  an  allocation  key  and  the 
total estimated cost of the respective RRP. 
Source: RRF Scoreboard 

The most recent payment request, which the 
Commission  assessed  positively  on  13 
December  2023,  led  to  the  disbursement  of 
EUR  2.5  billion  on  28  December  2023.  The 
disbursement,  combining  the  third  and  fourth 
instalments,  reflected  the  positive  assessment  of 
44  out  of  47  milestones  and  targets  covering 
among  others  the  digitalisation  of  healthcare, 
affordable  housing,  the  business  environment, 
decarbonisation  of  transport,  rural  fire  prevention 
and  the  justice  system.  The  remaining  target  and 
two  milestones  on  health  sector  reforms  and  the 
reform  of  regulated  professions  had  not  been 
fulfilled.  The  Commission  has 
satisfactorily 
therefore  activated  the 
‘payment  suspension' 
procedure, as envisaged in Article 24(6) of the RRF 
Regulation.  Upon  provision  of  evidence  within  the 
period  stipulated  in  the  provisions  of  the  RRF 
Regulation, 
the 
satisfactory  fulfilment  of  the  milestones  and 
target  and,  if  appropriate,  lift  the  suspension  of 
the payment. 

the  Commission  will  assess 

Graph A3.2: Total loans disbursed under the RRF 

Source: RRF Scoreboard 

As  of  15  May  2024,  Portugal  is  working 
towards  the  payment  request  for  the  fifth 
instalment  of  grants  and  loans.  Table  A3.2 
highlights  some  relevant  measures  achieved  so 
far,  and  some  that  will  be  implemented  before 
2026 to keep making Portugal’s economy greener, 
more digital, inclusive, and resilient.  

Table A3.2:  Measures in Portugal’s RRP 

Source: FENIX 

31 

EUR 6.12billion (37%)Total allocation: EUR 16.325billionEUR 1.65billion (28%)Total allocation: EUR 5.891billionReforms and Investments Implemented• National Hydrogen Strategy• Mental health reform• National Urgent and Temporary Housing PlanUpcoming Reforms and Investments• Alliances for Business Innovation• Simplification of the tax system• Energy efficiency one-stop-shops for citizens 
 
     
 
     
 
  
 
 
 
 
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

EU funding instruments provide considerable 
resources for recovery and growth to the EU 
Member  States.  In  addition  to  the  EUR  22.2 
billion  of  Recovery  and  Resilience  Facility  (RRF) 
funding  described  in  Annex  3,  EU  cohesion  policy 
funds (26)  provide  EUR  22.6  billion  to  Portugal  for 
the 2021-2027 period (27). Support from these two 
instruments  combined  represents  around  16.88% 
of  the  country’s  2023  GDP,  compared  to  the  EU 
average  of  5.38%  of  GDP (28).  Cohesion  policy 
supports  regional  development,  economic,  social 
and  territorial  convergence  and  competitiveness 
through  long-term  investment  in  line  with  EU 
priorities and with national and regional strategies. 

During  the  2014-2020  programming  period, 
cohesion  policy  funds  boosted  Portugal's 
competitiveness, with  tangible achievements 
notably  in  research  and  innovation,  water 
supply,  skills,  social  cohesion  and  workers’ 
adaptation  to  change.  By  the  end  of  the 
eligibility  period  in  December  2023,  2014-2020 
cohesion  policy  funds (29)  had  made  EUR  23.5 
billion available to Portugal (30), of which EUR 13.3 
billion has been disbursed since March 2020, when 
the 
The 
pandemic 
achievements  of  cohesion  policy  funds  include 
support  to  over  47 000  businesses  in  terms  of 
R&D,  innovation  and  digitalisation,  and  improved 
water  supply  for  more  than  1.2  million  people  so 
far.  Annex  17  analyses  the  economic  and  social 
dynamics, highlighting recent positive trends in the 
country’s  performance 
innovation. 
During the same period, around EUR 580 million of 

in  regional 

began (31). 

COVID-19 

(26)  In  2021-2027,  cohesion  policy  funds  include  the  Cohesion 
Fund,  the  European  Regional  Development  Fund,  the 
European Social Fund Plus and the Just Transition Fund. 

(27)  European  territorial  cooperation 

(ETC)  programmes  are 
excluded  from 
total 
investment,  including  national  financing,  amounts  to  EUR 
30.9 billion.  

In  2021-2027, 

the  figure. 

the 

(28)  RRF  funding 

loans,  where 
includes  both  grants  and 
applicable. The EU average is calculated  for cohesion policy 
funds excluding ETC programmes. GDP figures are based on 
Eurostat data for 2022. 

(29)  In  2014-2020,  cohesion  policy  funds  included  the  Cohesion 
Fund,  the  European  Regional  Development  Fund,  the 
European  Social  Fund  and  the  Youth  Employment  Initiative. 
REACT-EU allocations are included but ETC programmes are 
excluded. 

(30)  In  2014-2020,  the  total  investment,  including  national 

financing, amounted to EUR 29.8 billion.  

(31) Cut-off date: 14 May 2024. 

32 

traineeships, 

funding  from  the  European  Social  Fund  financed 
promoting  quality 
professional 
employment  for  (re)qualified  unemployed  people 
and job seekers, particularly young people, through 
practical  work  experience.  With  an  initial  2023 
target of 120 960 participants, the social inclusion 
and  employment  operational  programme  had 
already 
reached  129 969  adult  and  young 
participants, of which 65 620 of them were young 
people not in education, employment or training by 
the end of 2022. 

by 

over 

supporting 

In  2021-2027, 

In  the  current  programming  period  (2021-
2027),  cohesion  policy will  provide a  further 
boost  to  Portugal’s  competitiveness,  to  the 
green  transition  and  to  social  cohesion, 
improving  the  living  and  working  conditions 
of  Portugal’s  people. 
the 
European  Regional  Development  Fund  and  the 
Cohesion  Fund  will  boost 
innovation  and 
16 000 
digitalisation 
companies  and  digitalising  more  than  300  public 
institutions. Significant investments are planned in 
energy  efficiency,  which  are  expected  to  reduce 
energy  use  in  public  buildings,  businesses  and 
homes  by  13.8  million  MWh/year.  The  Just 
Transition  Fund  (JTF): i) provides  further  economic 
diversification;  ii) fosters  job  creation  in  three 
territories  affected  by  the  energy  transition, 
following the closure of coal-fired power plants in 
Sines (Alentejo Litoral) and Pego (Médio Tejo) and 
a  refinery  in  Matosinhos  (Metropolitan  Area  of 
Porto);  and 
the  upskilling  and 
reskilling of workers. The JTF will help create 490 
jobs  and  help  provide  training  courses  to  reskill 
and  upskill  workers  with  the  aim  of  finding  new 
quality  jobs  for  590  workers  affected  by  the 
decarbonisation  of  the  economy.  These  measures 
will help people better overcome the challenges of 
the  green  and  digital  transition.  With  this  work, 
cohesion  policy  substantially  contributes 
to 
achieving  the  UN  Sustainable  Development  Goals 
(SDGs)  in  Portugal,  in  particular  SDG  9  (Industry, 
innovation,  infrastructure),  SDG  8  (Decent  work 
and economic growth) and SDG 1 (No poverty). 

iii) promotes 

Through combined action, cohesion policy and 
the recovery and resilience plan (RRP) have a 
mutually  reinforcing  impact  in  Portugal.  For 
instance,  while  the  RRP  has  been key  in providing 
financial support for energy efficiency measures in 
residential,  private  and  central  government 
buildings,  the  2021-2027  regional  programmes 
have 
into  energy 
efficiency  in  regional  and  local  administration 

focused  on 

investments 

 
 
 
 
managing  wildfires.  The  TSI 
is  also  helping 
and 
specific 
implement 
Portugal 
investments  included  in  its  RRP,  e.g.  support  to 
adopt  legislative  and  regulatory changes  linked  to 
achieving the SDGs.  

reforms 

Graph A4.2: Distribution of RRF funding by pillar in 
Portugal 

Each  RRP  measure  helps  achieve  the  aims  of  two  of  the  six 
policy pillars of the RRF. The primary contribution is shown in 
the  outer  circle  while  the  secondary  contribution  is  shown  in 
the inner circle. Each contribution represents 100% of the RRF 
funds. Therefore, the total contribution to all pillars displayed 
on this chart amounts to 200% of the RRF funds allocated to 
Portugal. 
Source: European Commission 

Portugal  also  receives  funding  from  several 
other  EU  instruments  including  those  listed 
in Table A4.1. For a more complete view of loans, 
see  Table  4.2  on  EU  funded  loans  along  with 
complementary  bilateral  Member  States-funded 
loans  given  to  Portugal  in  the  context  of  its  past 
financial  assistance  programme  and 
their 
outstanding amounts. 

buildings.  On  digitalisation  of 
the  public 
administration,  the  combination  of  reforms  and 
investments into administrative modernisation and 
the digital transition of the central administration, 
was  combined  with  support  from  cohesion  policy, 
particularly  the  2021-2027  regional  programmes 
that  financed  the  modernisation  of  local  and 
regional administrations, which focused on new or 
significantly  upgraded  public  services  reaping  the 
benefits  of  digitalisation.  The  RRP  reforms  that 
aim to modernise the VET system are expected to 
provide  successful  educational  alternatives  for 
young people, while improving the low educational 
and  qualification  attainment  levels  and  tackling 
the  high  incidence  of  workers  lacking  basic  and 
digital  skills.  Investments  in  infrastructure  for 
building  specialised  technology  centres  and  the 
modernisation  of  the  public  employment  service’s 
network  of  vocational  training  centres  is  brought 
together  with  the  support  from  the  European 
Social Fund Plus, which helps establish and provide 
the 
demography, 
qualifications  and  inclusion  thematic  programme 
is  the  main  instrument  to  help  deliver  these 
services  during  the  2021-2027  programming 
period. The contribution of cohesion policy and the 
RRP across different policy objectives is illustrated 
by Graphs A4.1 and A4.2. 

courses. 

training 

The 

Graph A4.1: Distribution of cohesion policy funding 
across policy objectives in Portugal 

Source: European Commission 

The Technical Support Instrument (TSI) helps 
Portugal  invest  in  its  public  administration 
and create a better enabling environment for 
EU  and  national  investment.  The  TSI  has 
funded  projects 
to  design  and 
in  Portugal 
implement growth-enhancing reforms since 2017. 
The  support  provided 
included,  for 
instance,  help  to  implement  the  European  Child 
Guarantee and national smart cities/smart territory 
strategy,  and  to  boost  capacities  for  climate 
for  preventing  and 
adaptation,  particularly 

in  2023 

33 

PO1 Smarter EuropePO2 Greener EuropePO3 Connected EuropePO4 Social EuropePO5 Europe closer to citizensPO8 JTF specific objectiveGreen transitionDigital transformationSmart, sustainable andinclusive growthSocial & territorial cohesionHealth & resilienceNext generation 
      
  
 
Table A4.1:  Support from EU instruments in Portugal 

(1) RRF implementation period is 2021-2026. 
(2) The public sector loan facility’s programming period is 2021-2025 and the amount reflects the national share in its grant 
component reserved until the end of the period.   
(3) Common agricultural policy programming periods are 2014-2022 and 2023-2027.   
(4) EMFF – European Maritime and Fisheries Fund, EMFAF – European Maritime, Fisheries and Aquaculture Fund. 
(5) Data on the Connecting Europe Facility covers transport and energy and has a cut-off date of 15 May 2024. 
(6) Data on Horizon Europe (2021-2027) has a cut-off date of 13 May 2024. 
(7) 2021-2027 data on the LIFE programme has a cut-off date of 15 May 2024. 
(8) The amount of the EU guarantee signed under the EFSI Infrastructure and Innovation Window was derived based on the 
signed amount of the operations and the average internal multiplier, as reported by the EIB (cut-off date is 31 December 2023). 
(9) The amount of the EU guarantee and of the volume of operations signed under InvestEU includes the EU compartment as well 
as the Member State compartments (cut-off date is 31 December 2023).   
(10) SURE - European instrument for temporary support to mitigate unemployment risks in an emergency. 
Source: European Commission 

Table A4.2:  EU / euro area loans under the 2010-2018 financial assistance programmes 

Data include upfront retained amounts (prepaid margin, service fee). The cut-off date is 15 May 2024. 
Source: European Commission 

34 

Amount 2021-2027 (EUR million)Cohesion policy22 602.4RRF grants (1)16 325.1Public sector loan facility (grant component) (2)17.0Common agricultural policy (3)6 127.0EMFF/EMFAF (4)378.6Connecting Europe Facility (5) 78.4Horizon 2020 / Horizon Europe (6) 720.8LIFE programme (7) 47.2Volume of operations (EUR million)European Fund for Strategic Investment 2015-2020 (8)2 824.8InvestEU 2021-2027 (9) 377.3PeriodTotal amount available (EUR million)Disbursed amount (EUR million)SURE (10)2020-20226 234.56 234.5RRF 2021-20265 8911 650.011 800.0 877.5 126.4EU loans392.5 714.31 156.169EU guaranteesEU Guarantee (EUR million)EU grantsAmount 2014-2020 (EUR million)23 547.5--PeriodTotal amount disbursed (EUR billion)Outstanding amount (EUR billion)European Financial Stability Facility2011-201427.325.3European Financial Stabilisation Mechanism2011-201424.322.3 
 
 
 
 
  
 
 
  
 
ANNEX 5: RESILIENCE 

Table A5.1:  Resilience indices across dimensions for Portugal and the EU-27 

(1) The synthetic indices aggregate the relative resilience situation of countries across all considered indicators. For an indicator, 
each  country’s  relative  situation  in  the  latest  available  year  is  compared  with  the  collection  of  values  of  that  indicator  for  all 
Member States and all years in the reference period. 
Source: Resilience Dashboards - version spring 2024, data up to 2022 

resilience 

This  Annex  uses  the  Commission’s  resilience 
dashboards  (RDB) (32)  to  show  Portugal’s 
relative 
and 
vulnerabilities (33)  that  may  be  of  relevance 
for  societal,  economic,  digital  and  green 
transformations,  and  dealing  with  future 
shocks and geopolitical challenges. (34) 

capacities 

According  to  the  RDB’s  set  of  resilience 
indicators,  Portugal  has  overall  medium 
vulnerabilities, on a par with the EU average, 
and overall medium capacities, below the EU 
average.  For  capacities,  the  trend  is  stable  with 
respect  to  last  year,  but  there  have  been  some 
improvements 
some 
deteriorations.  This  is  reflected  in  the  distribution 
of indicators across different resilience categories. 

in  vulnerabilities,  and 

(32)  Https://ec.europa.eu/info/strategy/strategic-

planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en. Resilience is defined as the 
ability  not  only  to  withstand  and  cope  with  challenges  but 
also  to  undergo  transitions,  in  a  sustainable,  fair,  and 
democratic  manner.  2020  Strategic  Foresight  Report: 
Charting  the  course  towards  a  more  resilient  Europe 
(COM(2020) 493). 

(33)  Vulnerabilities  describe  features  that  can  exacerbate  the 
negative  impact  of  crises  and  transitions,  or  obstacles  that 
may  hinder  the  achievement  of  long-term  strategic  goals, 
while  capacities  refer  to  enablers  or  abilities  to  cope  with 
crises and structural changes and to manage transitions. 

(34)  This  Annex  is  linked  to  Annex  1  on  SDGs,  Annex  6  on  the 
green  deal,  Annex  8  on  the  fair  transition  to  climate 
neutrality,  Annex  9  on  resource  productivity,  efficiency  and 
circularity,  Annex  10  on  the  digital  transition  and  Annex  14 
on the European pillar of social rights. 

35 

Around 35% of all vulnerability indicators fall into 
the low or medium-low category, around 30% fall 
into the medium category, and less than 35% into 
the medium-high or high category. The distribution 
is similar for the capacity indicators.  

Portugal  has  maintained 
its  medium 
capacities  and  vulnerabilities  in  the  social 
and  economic  dimension  with  respect  to 
2023.  Despite  some  improvements  in  terms  of 
social  and  economic  vulnerabilities,  thanks  to  a 
decrease in the long-term unemployment rate and 
the  non-financial  corporation  debt  to  GDP  ratio, 
the country remains at medium vulnerability level 
the  highest  projected  old-age 
with  one  of 
dependency 
terms  of  social  and 
economic  capacities,  Portugal’s  household  saving 
rate  has  decreased,  but  its  employment  rate  has 
increased,  putting  its  overall  capacities  at  the 
same level as in the 2023 RDB. 

ratios. 

In 

in 

overall 

With  respect  to  the  2023  RDB,  Portugal  has 
its  medium  capacities  and 
maintained 
the  green  dimension. 
vulnerabilities 
Although 
are 
vulnerabilities 
green 
comparable  to  the  EU  average,  Portugal  has  a 
relatively  low  GHG  emissions  per  capita  rate  and 
the lowest waste generation rate in the EU. At the 
same time, it has high vulnerabilities related to its 
resources  and  high 
renewable 
consumption  footprint  per  capita.  Among 
its 
capacities,  Portugal  has  the  EU’s  lowest  e-waste 
recycling  rate,  one  of  its  highest  soil  carbon 
contents,  and 
low  environmental 
protection expenditures.  

freshwater 

relatively 

PTPTEU-272023 RDB2024 RDB2024 RDBHighMedium-highMediumMedium-lowLowHighMedium-highMediumMedium-lowLowCapacitiesGeopoliticalVulnerabilities0.600.520.41Capacities0.490.530.65DigitalVulnerabilities0.570.600.52Capacities0.630.580.65GreenVulnerabilities0.480.410.44Capacities0.440.470.70Social and economicVulnerabilities0.510.520.47Capacities0.510.500.67DimensionDistribution of indicators by vulnerabilities and capacitiesOverall resilienceVulnerabilities0.560.520.50Capacities0.530.540.67Vulnerabilities0%20%40%60%80%100%Vulnerabilities(60 indicators)Capacities(63 indicators) 
 
 
 
  
 
 
vulnerabilities 

In  the  digital  dimension,  Portugal  has 
and  medium 
medium 
capacities  which  decreased  compared  to  the 
2023  RDB.  Regarding  its  digital  vulnerabilities, 
access  to  broadband  internet  for  rural  areas  and 
access to digital public services remain low. On the 
digital  capacities  side,  the  number  of  information 
and  communication  (ICT)  Master’s  graduates  is 
among the lowest in the EU,  alongside  rather low 
cybersecurity awareness. 

Portugal’s  geopolitical  vulnerabilities  have 
its  geopolitical  capacities 
increased  and 
remained  stable.  Its  geopolitical  vulnerabilities 
have  increased,  in  line  with  the  general  EU 
deterioration,  the  main  reason  being  military 
expenditures,  a  long  way  away  from  the  goal  of 
2% of GDP. Portugal’s geopolitical capacities have 
remained  stable,  with  some  improvements  in 
intra-EU  trade  in  energy  and  the  proportion  of 
non-EU citizens employed in Portugal. 

36 

 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

losses 

Portugal  has  made  progress  in  the  green 
transition, with more action needed to address 
potential 
from  climate  hazards,  on 
sustainable  water  management,  biodiversity  and 
ecosystem protection, and other areas. This Annex 
provides  a  snapshot  of  climate,  energy,  and 
environmental  aspects  of 
in 
Portugal (35). 

transition 

the 

for 

Portugal’s draft updated national energy and 
climate  plan  (NECP)  provides  information  on 
the  investment  needed  to  achieve  its  2030 
climate and energy targets for some policies 
and  measures  only.  Portugal  expects  high 
retrofitting  buildings, 
investment  needs 
electrification,  alternative 
industry, 
in 
electrifying 
transport  sector  and  power 
generation  from  renewable  energy  sources.  The 
plan  outlines  the  main  sources  of  public,  incl.  EU, 
funding  for  key  policies  and  measures.  While 
private  capital  is  not  specifically  mentioned,  the 
plan  refers  to  initiatives  to  stimulate  private 
financial  flows.  Since  a  budgetary  overview  is 
lacking,  potential 
funding  gaps  cannot  be 
pinpointed (36). 

fuels 

the 

target  with 

Portugal is projected to reach its 2030 effort 
sharing 
the  policies  and 
measures  currently  in  place (37).  In  2022, 
Portugal’s  greenhouse  gas  emissions  from  its 
effort  sharing  sectors  are  expected  to  be  16.8% 
below  2005  levels.  Current  policies  are  projected 
to  reduce  these  emissions  by  38.5%  from  2005 
is  9.8  percentage  points  over 
levels,  which 
Portugal’s  target  to  achieve  a  28.7%  reduction. 
Portugal is therefore expected to exceed its effort 

(35)  This Annex is complemented by Annex 7 on energy transition 
and  competitiveness,  Annex  8  on  the  fair  transition  to 
climate neutrality, Annex 9 on resource efficiency, circularity, 
and productivity, and relevant topics in other annexes to this 
country report. 

(36)  See  the  Commission’s  (2023)  assessment  of  the  draft 

national energy and climate plan of Portugal. 

(37)  The  national  greenhouse  gas  emission  reduction  target  is 
laid  down  in  Regulation  (EU)  2023/857  (the  Effort  Sharing 
Regulation).  The  aim  is  to  align  action  in  the  sectors 
concerned with the objective to reach the EU-level economy 
wide  target  of  greenhouse  gas  reductions  of  at  least  55% 
compared  to  1990  levels.  The  target  also  applies  to  the 
sectors  outside  the  current  EU  Emissions  Trading  System, 
notably  buildings  (heating  and  cooling),  road  transport, 
agriculture,  waste,  and  small  industry  (known  as  the  effort 
sharing sectors). 

37 

sharing  target  with  existing  measures.  Additional 
policies  considered  by  Portugal  are  projected  to 
add a further 3.5 percentage points, resulting in a 
in  effort  sharing  emissions 
42% 
compared to  2005 (38).  In  its  draft  updated  NECP, 
Portugal  confirms  its  commitment  to  achieve 
climate neutrality by 2050.  

reduction 

Graph A6.1: Greenhouse gas emissions from the 
effort sharing sectors in Mt CO2eq, 2005-2022 

Source: European Environment Agency 

in 

There  is  scope  for  increasing  Portugal’s  
renewable  energy  ambition 
its  final 
updated NECP (39). Currently set at 49% by 2030 
in  its  draft  updated  NECP,  Portugal’s  renewable 
is  slightly  below  the  required 
energy  target 
contribution  of  51%. 
Its  energy  efficiency 
contributions  of  16.71  Mtoe  in  primary  energy 
consumption  and  14.37  Mtoe  in  final  energy 
consumption  for  2030  set  in  the  draft  updated 
NECP  match  those  required  by  the  Energy 
Efficiency Directive.  

(38)  The  effort  sharing  emissions  for  2022  are  based  on 
approximated 
inventory  data.  The  final  data  will  be 
established in 2027 after a comprehensive review. Portugal’s 
draft  updated  NECP  does  not  provide  emission  projections 
for the effort sharing sectors. The information on projections 
of  effort  sharing  emissions  ‘with  existing  measures’  (WEM) 
and ‘with additional measures’ (WAM) is based on the latest 
data that had to be reported by 15 March 2023 under Article 
18 of Regulation 2018/1999 (the Governance Regulation). 

(39)  The  EU  target  set  out  in  the  revised  Renewable  Energy 
Directive is to have 42.5% of gross final energy consumption 
coming  from  renewable  energy  sources  by  2030,  with  the 
aspiration to reach 45%. The formula in Annex I to Directive 
(EU) 2023/1791 sets the indicative national contribution for 
Portugal  at  15.164  Mtoe  for  primary  energy  consumption 
and  13.41  Mtoe  for  final  energy  consumption.  See  the 
Commission Recommendation of 18.12.2023 to Portugal. 

010203040506020052022MtCO2eWasteSmall industryAgricultureBuildings (under ESR)Domestic transport (excl. aviation) 
 
 
 
        
 
 
 
The  transition  to  sustainable  transport  is 
slowly  gaining  ground  in  Portugal (40).  Both 
passengers  and  land  freight  are  predominantly 
transported  by  road.  Passenger  cars  account  for 
91% of distances travelled, and 88% of freight is 
transported  by  road.  At  1.2%  of  the  passenger 
vehicle fleet in 2022, the uptake of electric cars is 
close  to  the  EU  average.  The  country’s  7 200 
publicly  accessible  charging  points  provide  a 
charging  point  for  every  18  e-vehicles,  far  below 
the  EU  average  of  1:10.  71%  of  Portugal's  rail 
network is electrified. 

Without  further  efforts,  Portugal  will  not 
meet  its  2030  target  for  carbon  removals 
through  and  use, 
land  use  change  and 
forestry (LULUCF). Its forests are responsible for 
a major share of net carbon removals and seem to 
have recovered from the decreased natural carbon 
sink  over  2009-2017  caused  by  severe  forest 
fires, among other phenomena. To reach the 2030 
LULUCF  target,  additional  carbon  removals  of 
968 kt CO2eq  are  needed (41).  However,  according 
to  the  latest  projections,  Portugal  is  expected  to 
fall short of this figure (42). 

faces 

climate  protection 

Portugal 
water  management 
challenges  due  to  climate  change  and  has  a 
wide 
gap  against 
wildfires (43).  Portugal  remains  vulnerable  to 
climate  change-related  extreme  events  such  as 
floods,  coastal  erosion,  droughts  and  heatwaves, 
with  a  moderate  climate  protection  gap  overall. 
Water  management  continues  to  be  a  major 
challenge, as Portugal is among the most drought-
forestry, 
affected  EU  countries.  Agriculture, 
biodiversity,  the  energy  sector,  buildings,  tourism 
and  health  are  all  affected.  Lower  annual  rainfall 
and  its  increased  variability  reduce  river  flows, 
affect  the  recharge  of  aquifers  and  increase  the 
risk  of  flooding.  New  weather  patterns  are 
expected  to  cause more,  longer  and more intense 
heat  waves,  major  fires  in  rural  areas,  and 
local  weather  events. 
unpredictable  extreme 

(40)  Unless  otherwise  indicated,  data  in  this  section  refer  to 
2021.  See  European  Commission,  2023,  EU  transport  in 
figures, transport.ec.europa.eu. 

(41)  National  LULUCF  targets  of  the  Member  States  in  line  with 

Regulation (EU) 2023/839. 

(42)  Projections  submitted  in  Portugal’s  draft  updated  national 

its 

framework 

Portugal  has  increased  its  adaptive  capacity  by 
and 
legal 
strengthening 
implementation  of  adaptation  policy  measures.  It 
is  finalising  a  national  roadmap  for  adaptation 
until  2100,  that  assesses  the  impacts  of  global 
corresponding 
warming 
adaptation  needs.  This  roadmap  will  focus  on 
hydrological balance, forest fires, agroforestry, sea 
level rise, coastal erosion, and storm surges (44). 

outlines 

and 

the 

river 

investment  would  help 

Despite  recent  progress,  Portugal’s  water 
sector  continues  to  face  major  challenges, 
especially in the areas of water governance, water 
body  rehabilitation  and  water  efficiency.  Further 
infrastructure 
improve 
water  management,  such  as 
in  wastewater 
collection and treatment, reduction of leaks in the 
networks  and  general  water  supply,  improving 
monitoring  (quality  and  quantity),  as  well  as  in 
nature-based  solutions  and 
restoration. 
Portugal  also  has  untapped  potential  in  water 
reuse. Portugal has not yet adopted its third River 
Basin Management Plans (RBMPs) under the Water 
Framework  Directive  or  its  second  Flood  Risks 
Management  Plans  under  the  Floods  Directive, 
which  were  due  in  March  2022.  The  water 
exploitation  index  plus  (WEI+)  stood  at  11.4%  in 
2019 (45).  On  average,  6.4%  of  Portugal’s  area 
was  impacted  by  droughts  in  2000-2020.  This 
proportion  rose  to  34.8%  in  2022  -  a  very  dry 
year. In terms of water quality, 52% of all surface 
water  bodies  reached  good  ecological  status,  and 
only 25% reached good chemical status, although 
slightly better than the EU  average (46).  Portugal’s 
marine waters are not yet in a good environmental 
status,  as  tracked  by  the  descriptors  used  in  the 
Marine Strategy Framework Directive according to 
the latest data reported for its marine strategy (47). 

There  is  clear  room  for  improvement  on 
biodiversity  and  nature  protection  and 
restoration.  Portugal  boasts  a  rich  biodiversity, 
and  20.6%  of  its  territory  belongs  to  the  EU 
(EU  average:  18.5%). 
Natura  2000  network 

(44)  See 

the 

Commission’s 

and 
recommendation  on  Portugal’s  progress  on  climate 
adaptation.  

assessment 

2023 

(45)  WEI+  values  above  20%  are  generally  an  index  of  water 
scarcity and values above 40% indicate that stress is severe 
and freshwater use unsuitable.  

energy and climate plan, 2023. 

(46)  Data from the third RBMPs are not yet available. 

(43)  On the climate protection gap, see the annotations to Table 

A6.1. 

(47)  The next reporting on the state of the marine environment is 
due in October 2024. See also Portugal - Marine (europa.eu). 

38 

 
 
 
However,  some  species  and  habitats,  particularly 
in  the  marine  environment,  are  not  sufficiently 
protected.  Therefore,  Portugal  would  benefit  from 
extending its Natura 2000 network with additional 
designations, particularly for marine sites. Overall, 
the status of natural habitats and species covered 
by the Habitats Directive has improved in Portugal, 
although many  are still  in a poor or unfavourable 
condition.  According  to  the  latest  available  data, 
only 24% of habitats and 27% of species are in a 
good  conservation  status.  Portugal’s  common 
farmland  bird index  decreased  from  104  in  2011 
to 94 in 2020. 

On  air  pollution,  Portugal  presents  a  mixed 
picture. While emissions of several  air pollutants 
have fallen in recent decades, air quality continues 
to  be  a  cause  for  concern,  mainly  as  regards 
nitrogen  dioxide.  In  particular,  personal  transport 
exacerbates  problems  with  air  quality  and  traffic 
congestion  in  the  Portugal’s  major  metropolitan 
areas,  affecting  health  and  the  economy.  A 
comprehensive  approach  is  needed  to  tackle  the 
problem  of  air  pollution,  which  is  related  to 
environmental  but  also  climate,  energy  and 
transport  issues.  These  measures  would  also 
improve  the  country’s  compliance  with  the  Noise 
Directive. 

Graph A6.2: Changes in livestock density and 
organic farming 

billion in 2015 to 8.3 billion (48)  in 2023. Portugal 
has recently stepped up its organic farming, which 
reached  19.3%  of  utilised  agricultural  area  (UAA) 
in  2021  (EU  average:  9.1%) (49).  While  most  EU 
Member  States  lowered  their  livestock  densities 
between  2010  and  2020,  Portugal’s  livestock 
density  index  rose  from  0.59%  to  0.63%,  though 
this  is  still  below  the  EU  average  of  0.70%. 
However,  regional  differences  remain  and  the 
in  the  number  of 
most  consistent 
livestock  units  was  reported  in  the  Centro  and 
Alentejo regions where extensive livestock farming 
still  prevails.  Overall,  the  agricultural  sector  was 
responsible for 84.9% of total ammonia emissions 
in 2021 (EU average: 90.7%). In Portugal, 13% of 
UAA  is  composed  of irrigated  land,  and  the  water 
abstracted for agricultural purposes accounted for 
72.9%  of  total  abstraction  in  2019,  making 
agriculture the biggest user of water resources. 

increase 

Agriculture remains a major source of water 
pollution  despite  the  improvement  of  last 
years.  The  latest  figures  for  the  gross  nitrogen 
balance  on  agricultural  land  in  Portugal  show  a 
consistent  nitrogen  surplus,  with  an  average  of 
45.2 kg of nitrogen per hectare per year in 2019 – 
a decrease compared to 2018 levels. The content 
of nitrate in groundwater exceeds the EU average 
(22.6 mg  nitrate/l  vs  20.5),  and  17.5%  of 
groundwater monitoring stations had levels above 
the maximum of 50 mg nitrate/l. The country also 
shows a phosphorous surplus, with an average of 
5.8 kg/ha. Some waterbodies are also affected by 
pesticide  contamination,  although  the  level  is 
below  the  EU  average.  According  to  the  impact 
assessment  for  the  Soil  Monitoring  Law (50),  18% 
of  Portuguese  soil  could  be  considered  as 
unhealthy (51).  Soil  erosion  affects  60%  of 
cropland  area,  while  topsoil  compaction  affects 
4% of the national territory. However, conservation 
tillage  practices,  which 
increase  soil  organic 
carbon, covered 51% of Portugal’s tillable area in 
2016, the second highest share in the EU. 

Livestock  unit  (LSU)/ha  of  UAA:  it  measures  the  stock  of 
animals  (cattle,  sheep,  goats,  equidae,  pigs,  poultry  and 
rabbits) converted in LSUs per hectare of UAA. 
Source: Eurostat 

Portugal  has  the  opportunity  to  accelerate 
the  transition  of  its  agri-food  system  to  an 
environmentally sustainable model.  The value 
of 
the  agricultural  sector’s  annual  output 
increased,  with  some  fluctuations,  from  EUR  7.3 

(48)  Production value at basic price (2015=100).  

(49)  In 2020. 2021 data are not available.  

(50)  SWD 417 final  of  05.07.2023  -  impact  assessment  for  the 
Directive  of  the  European  Parliament  and  of  the  Council  on 
Soil Monitoring and Resilience (Soil Monitoring Law), (cfr. pg. 
10, pg. 189-190, pg. 835-845). 

(51)  However,  not  all  soil  degradation  processes  could  be 
quantified for all land uses. This number simply indicates an 
order of magnitude.  

39 

012024681020162020% LSU per hectare% of total utilised agricultural areaLivestock density index Portugal (% LSU per ha)Livestock density index EU-27 (% LSU per ha)Organic farming Portugal (% of total utilised agricultural area)Organic farming EU-27 (% of total utilised agricultural area) 
            
 
Portugal  would  benefit  from  investing  more 
in  addressing  environmental  challenges. 
According  to  the  latest  estimates,  the  overall 
environmental  investment  needs  for  2021-2027 
are  at  least  EUR  6.0  billion  per  year,  while  the 
financing baseline stands at EUR 4.3 billion. This is 
a  smaller  gap  than  in  the  previous  financing 
period,  equivalent  to  EUR  1.7  billion.  The  annual 
sustainable  water 
for 
investment 
management  and  circular  economy  and  waste 
rose  to  EUR  487  million  and  EUR  472  million 
respectively,  while 
investment  gaps  for 
biodiversity  and  ecosystems  and  pollution 
prevention  and  control  decreased  to  EUR  479 
million EUR 242 million respectively. 

gaps 

the 

Graph A6.3: Environmental investment gap, annual 
average 

The  numbers  are  computed  by  the  European  Commission 
based on the latest internal reports, Eurostat, EIB and national 
data sources. 
Source: European Commission 

40 

5173333985972424874724790100200300400500600Pollution prevention &controlWater managementCircular economy andwasteBiodiversity andecosystemsmillion EUR2014-20202021-2027 
            
 
Table A6.1:  Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources:  (1)  Member  States’  emission  data  for  2019  and  2020  are  in  global  warming  potential  (GWP)  values  from  the  4th 
Assessment Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Member States’ 2005 base year emissions 
under  Regulation  (EU)  2018/842,  emissions  data  for  2021  and  2022,  and  2030  projections  are  in  GWP  values  from  the  5th 
Assessment Report (AR5) of the IPCC. 2021 data are based on the final inventory reports, 2022 data are based on approximated 
inventory reports and European Environmental Agency’s calculation of effort sharing emissions. The final data for 2021 and 2022 
will  be  established  after  a  comprehensive  review  in  2027.  The  2030  target  is  in  percentage  change  of  the  2005  base  year 
emissions. Distance to target is the gap between the 2030 target and projected effort sharing emissions with existing measures 
(WEM) and with additional measures (WAM), in percentage change from the 2005 base year emissions. The measures included 
for  the  2030  emission  projections  reflect  the  state  of  play  as  reported  in  Member  States'  draft  updated  national  energy  and 
climate plans or, if unavailable, as reported by 15 March 2023 as per Regulation 2018/1999. (2) Net removals are expressed in 
negative figures, net emissions in positive figures. Reported data are from the 2024 greenhouse gas inventory submission. 2030 
value  of  net  greenhouse  gas  removals  as  in  Regulation  (EU)  2023/839  –  Annex  IIa.  (3)  The  2030  national  objectives  for 
renewable  energy  and  energy  efficiency  are  indicative  national  contributions,  in  line  with  Regulation  (EU)  2018/1999  (the 
Governance  Regulation),  the  EU-level  2030  renewable  energy  target  set  out  in  Directive  EU/2018/2001  amended  by  Directive 
EU/2023/2413 (the revised Renewable Energy Directive) – 42.5% of gross final energy consumption with the aspiration to reach 
45% –, and the formula in Annex I to Directive (EU) 2023/1791 (the Energy Efficiency Directive). (4) Passenger battery electric 
vehicles (BEV) and fuel cell electric vehicles (FCEV). (5) The climate protection gap refers to the share of non-insured economic 
losses caused by climate-related disasters, based on modelling of the risk from floods, wildfires, windstorms, and the insurance 
penetration rate. Scale: 0 (no protection gap) –4 (very high gap) (European Insurance and Occupational Pensions Authority, 2022). 
(6) Total water consumption in renewable freshwater resources available for a territory and period. (7) Material extractions  for 
consumption and investment. (8) Years of potential life lost through premature death due to exposure to particulate matter with a 
diameter  of  less  than  2.5  micrometres.  (9)  Share  of  habitats  in  good  conservation  status  according  to  the  records  submitted 
under  Art.  17  of  the  Habitats  Directive  (Directive  92/43/EEC)  for  2013-2018.  (10)  Multi-species  index  measuring  changes  in 
population abundances of farmland bird species. (11) Source: annex 12 of the Commission’s proposal for a soil monitoring law, 
SWD (2023) 417 final. (12) Estimates of organic carbon content in arable land. 

41 

Target200520192020202120222030WEMWAMProgress to climate and energy policy targetsGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq, %, pp48,635.8-15%-21%-17%-17%-29%1013Net greenhouse gas removals from LULUCF (2)Kt CO2eq3 489-4 499-4 707-6 021-5 925-1 358n/an/aShare of energy from renewable sources (1) (3)%20%31%34%34%35%51%--Energy efficiency: primary energy consumption (3)Mtoe24.922.119.519.520.815.2Energy efficiency: final energy consumption (3)Mtoe19.017.115.015.716.714.4Projected20182019202020212022202120222030Green transition: mobility         Greenhouse gas emissions: road transportMt CO2e---15.616.5769.0786.610.4Share of zero-emission vehicles in new registrations (4)% 2.03.15.4911.4912.1n/aNumber of publicly accessible AC/DC charging points --251536766509299178446956n/aShare of electrified railways%64.4%67.1%67.1%70.9%-56.1%-n/aGreen transition: buildings         Greenhouse gas emissions: buildingsMt CO2e---4.54.1537.0486.74.3Final energy consumption in buildings2015=100102.9%102.8%101.3%102.1%104.9%104.0%97.2% Climate adaptation         Climate protection gap (5)score 1-4--2.02.01.81.51.5n/a20182019202020212022202020212022State of the environmentWater | Water exploitation index (WEI+) (1) (6)% of renewable freshwater21.311.4---3.6--Circular economy | Material footprint (7)tonnes per person16.717.215.617.016.914.214.814.9Pollution | Years of life lost due to air pollution by PM2.5 (8)per 100.000 inhabitants280270265211-545584-Biodiversity | Habitats in good conservation status (9)%23.714.7                       Common farmland bird index (10)2000=100939594--78--Green transition: agri-food sectorOrganic farming% of total utilised agricultural area5.687.398.0519.31-9.1--Nitrates in groundwatermg NO3/litre-----20.42--Food waste per capitaKg per capita176181-130131-Share of soil in poor health (11)%1841Soil organic matter in agricultural land (12)Mt per ha67----7,904--DistanceEU-27 
 
           
 
ANNEX 7: ENERGY TRANSITION AND COMPETITIVENESS 

f
o
s
s
i
l

This  Annex (52)  sets  out  Portugal’s  progress 
and  challenges  in  accelerating  the  net-zero 
energy  transition  while  bolstering  the  EU’s 
competitiveness 
energy 
sector (53). It considers measures and targets put 
forward in the draft updated National Energy and 
Climate Plans (NECPs) for 2030 (54). 

clean 

the 

in 

Graph A7.1: Portugal´s energy retail prices for 
households and industry & service 

2023,  average  household  gas  prices  in  Portugal 
started declining more slowly than the EU average, 
with  prices  still  exceeding  pre-crisis  levels.  By 
contrast,  average  household  electricity  prices  fell 
more  sharply  than  the  EU  average,  stabilising  at 
pre-crisis levels (55). Following a peak in the second 
halve of 2022, industrial consumers saw a gradual 
decline  in  both  average  gas  and  electricity  prices, 
each dipping by 40% and 14% in the second half 
of  2023,  while  the  electricity  price  gap  moved 
further  away  from  the  EU  average.  In  relative 
terms,  electricity  prices 
for  non-household 
consumers did not increase significantly compared 
to  the  US  and  Japan.  This  suggests  that  the 
international  competitiveness  of  energy-intensive 
industries  in  Portugal  should  not  be  adversely 
affected. 

Graph A7.2: Trends in electricity prices for non-
household consumers (EU and foreign partners) 

an 

insight 

(1) For industry, consumption bands are I3 for gas and IC for 
electricity,  which  refer  to  medium-sized  consumers  and 
provide 
affordability 
(2)  For  households,  the  consumption  bands  are  D2  for  gas 
and 
electricity 
(3)  Industry  prices  are  shown  without  VAT  and  other 
recoverable  taxes/levies/fees  as  non-household  consumers 
are usually able to recover VAT and some other taxes 
Source: Eurostat 

into 

for 

DC 

Average  retail  energy  prices  have  dropped 
significantly  in  Portugal  in  the  first  half  of 
2023,  dipping  below  the  levels  recorded  in 
December  2022,  but  alike  the  EU  trend 
average  electricity  prices  increased  in  the 
second half of 2023. As of the second halves of 

(52)  It is complemented by Annex 6 as the European Green Deal 
focuses on the clean energy transition and by Annex 8 on the 
action  taken  to  mitigate  energy  poverty  and  to  protect  the 
most  vulnerable  groups,  complementing  ongoing  efforts 
under  the  European  Green  Deal,  REPowerEU  and  European 
Green Deal Industrial Plan. 

(53)  In line with the Green Deal Industrial Plan and the Net-Zero 

Industry Act. 

(54)  Portugal submitted its draft updated NECP in June 2023, and 
the  Commission  issued  an  assessment  and  country-specific 
recommendations  on  18  December  2023.  Commission 
Recommendation,  Assessment  (SWD)  and  Factsheet  of  the 
draft updated National Energy and Climate Plan of Portugal - 
European Commission (europa.eu). 

to 

(1) For Eurostat data (EU and PT), the band consumption is ID 
referring 
large-sized  consumers  with  an  annual 
consumption of between 2 000 MWh and 20 000 MWh, such 
as in electricity intensive manufacturing sectors, and gives an 
insight 
competitiveness  
international 
(2) JP = Japan 
Source: Eurostat, IEA 

into 

Some measures giving final consumers direct 
energy support implemented since the outset 
of the energy crisis do not focus the support 
on  the  most  vulnerable  households  or 
companies. Since 2016, all households that meet 
certain  socio-economic  requirements  can  benefit 
from  the  social  tariff.  The  scope  of  entities  that 
will  finance 
recently 
expanded,  and  their  number  increased,  to  cover 
not  only  producers  but  also  suppliers  and 
consumers who purchase electricity directly on the 
wholesale market, without suppliers intervening. 

tariff  was 

the  social 

(55)  As  a  consequence  of  increased  renewable  energy  in  the 

electricity mix and lower price of gas. 

42 

0.000.050.100.150.200.250.300.35€/KWhGas (industry & service) - PTGas (industry & service) - EUGas (households) - PTGas (households) - EUElectricity (industry & service) - PTElectricity (industry & service) - EUElectricity (households) - PTElectricity (households) - EU050100150200250Index ( 2018 S2 = 100)JPUKUSPTEU 
 
      
 
  
 
 
 
Consumer  empowerment  in  the  electricity 
and  gas  markets  is  significant,  but  the 
deployment  of  smart  meters  is  still  below 
the EU average, and energy communities still 
face  some  implementation  challenges.  In 
2022,  almost  all  household  consumers’  electricity 
and  gas  contracts  were  fixed-price  contracts (56). 
Switching rates in electricity were stable, at around 
15%,  while  in  gas  they  increased,  from  less  than 
15%  in  2021  to  almost  23%  in  2022,  and 
switching  procedures  are  quick.  In  2022,  73%  of 
final  household  consumers  had  smart  meters (EU 
average 80%). The existence of administrative and 
security-related 
the 
requirements 
implementation of renewable energy communities, 
as  does  the  bureaucratic  complexity  of  the 
communities  are 
creation  process.  Energy 
beneficiaries  from  investment  measures  under 
Portugal’s  national  recovery  and  resilience  plan 
(RRP). 

obstructs 

in  solar  power, 

renewable installed capacity increased by 1.3 
in  2023,  driven  by  the  significant 
GW 
increase 
in  particular 
photovoltaics (59),  but  further  progress  is 
needed (60).  Portugal  has  ambitious  development 
plans  to  cover  at  least  85%  of  gross  electricity 
consumption  with  renewable  energy  sources  by 
2030.  In  2022,  total  solar  and  wind  installed 
capacity in Portugal increased respectively by 54% 
and  by  0.5%  compared  to  2021 (61) (62).  Portugal 
intends to develop 2 GW of offshore wind by 2030 
(and  allocate  10  GW  of  installed  capacity  to  be 
developed  after  2030) (63),  and  0.2  GW  of  wave 
energy. This target is below the one set out in the 
non-binding EU  Sea Basins Agreement of January 
2023, to which Portugal is a party. 

Graph A7.3: Portugal's installed renewable 
capacity (left) and electricity generation mix 
(right) 

to  27% 

in  2023 (57).  With 

Portugal has strengthened the security of its 
gas supply while increased renewables in the 
energy  mix  has  limited  its  energy  imports 
dependency.  Portugal  has  reduced  its  energy 
dependency  on  non-EU  countries,  from  70%  in 
2013  to  59%  in  2021.  Fossil  fuels  represented 
over 69% of the national energy mix in 2022 and 
their share in the electricity mix reduced from 40% 
in  2022 
the 
commissioning of the Sines LNG terminal and the 
increase  in  the  underground  storage  capacity  of 
Carriço, 
the 
has 
diversification  of  its  portfolio  of  suppliers.  It  also 
cut  its  gas  demand  between  August  2022  and 
August 2023 by  20% compared with the average 
of the previous 5 years. Portugal has 3.57 TWh of 
underground  gas  storage  at  the  Carriço  facility, 
with  a  total  capacity  of  around  0.32  bcm, 
its  annual  gas 
representing  almost  6%  of 
consumption  in  2022.  Portugal  fulfilled  its  gas 
storage obligations last winter, reaching 107% by 
1  November  2023,  and  ended  the  winter  season 
with a storage filled at 86.91% by 1 April 2024. 

accelerated 

Portugal 

With over 30% renewables in the energy mix 
and  73%  in  the  electricity  mix  in  2023 (58), 

(56)  All consumer empowerment data are from the ACER  Market 
Monitoring  report  2023,  i.e.  based  on  data  covering  2022 
https://www.acer.europa.eu/Publications/2023_MMR_Energy_
Retail_Consumer_Protection.pdf.  

(57)  Ember data on electricity mix. 

(1) "Other" includes solid biofuels, renewable municipal waste, 
geothermal energy, biogas and geothermal energy 
Source: IRENA, Ember 

Portugal  has  made  significant  progress  in 
implementing  reforms  to  accelerate  the 
deployment  of  renewables.  It  has  introduced 
legislation  qualifying  all  renewable  energies  for 
the  most  favourable  permitting  procedures  and 
has  created  a  single  application  process  for  the 
entire  administrative  permit  application  and 

(59)  In  2023,  solar  power  accounted  for  10%  of  the  electricity 
mix  and  wind  29%,  while  Portugal  imported  22%  of  its 
electricity from Spain.  

(60)  See Annex 6 and the assessment of the draft of the PT NECP 

update. 

(61)  IRENA report Renewable Energy Statistics 2023, whose data 
might differ from Eurostat data because of using a different 
methodology for calculating AC and DC capacity. 

(62)  Portugal’s  total  solar  installed  capacity  in  2022  was  2536 
MW,  of  which  almost  90%  was  photovoltaic  panels.  Total 
wind  capacity  in  2022  was  5455  MW  of  which  5430  MW 
came from onshore wind and 25 MW from offshore wind. 

(58)  The energy mix is based on gross inland consumption. 

(63)  SWD on the assessment of the draft of the PT NECP update 

43 

 
 
 
 
granting  process (64).  However,  the  pipeline  of 
renewable  energy  projects  is  not  clear,  as  it  has 
not  published  its  long-term  schedule  for  auctions 
for  the  next  3  or  5  years,  and  the  details 
concerning  timing,  the  frequency  of  auction 
procedures,  expected  capacity  and  budget,  and 
eligible technologies are not clear.  

Portugal’s  relatively  high  proportion  of 
renewables in heating and cooling (42.7% in 
2021)  is  mainly  the  result  of  biomass  use, 
with  heat  pumps  covering  a  bit  more  than 
one  fourth  of  this.  The  targets  in  its  draft 
updated  NECP  appear  rather  unambitious,  with 
very  limited  growth  in  heat  pumps (65),  but  also 
solar  thermal  deployment  and  continued  reliance 
on biomass as the main source of renewable heat.   

risks  being  partially  curtailed 

Portugal  may  face  short-term  grid  capacity 
challenges  accommodating  an 
increasing 
proportion  of  renewables.  Portugal’s  installed 
capacity  is  expected  to  increase  by  over  50% 
between 2025 and 2030 (from 30 to 47 GW) (66), 
but 
if  grid 
development  does  not  speed  up,  including  by 
reconductoring.  The  national  transmission  system 
operator  points  out  to  the  lack  of  short-term  grid 
capacity to accommodate the generation increase 
and  aims  to  maximise  the  capacity  the  grid  can 
absorb  by maximising  its interconnection  capacity 
with Spain. In terms of interconnectivity, measured 
as  a  country’s  import  capacity  over  its  installed 
generation  capacity,  Portugal  reached  10.9%  in 
2022 and 13.2% in 2023. This 2.3% increase was 
achieved while solar generation capacity increased 
and  the  availability  of  interconnection  capacity 
decreased.  Portugal  is  one  of  the  EU  Member 
States that most needs storage flexibility solutions 
by 2040 (67) (68).   

(64)  Portugal  has  also  identified  priority  land  or  sea  areas  for 
renewable  energy  projects,  introduced  single  contact  points, 
and  identified  and  introduced  simplified  permit  procedures 
for renewables self-consumers. 

(65)  In  2022,  heat  pump  sales  increased  by  22%  compared  to 

2021. 

(66)  Portugal’s  draft  National  Energy  and  Climate  Plan  update, 

page 43, table 1100. 

(67)  NTSO-E 2022 TYNDP needs study. 

(68)  Portugal  expects  to  reach  3.6  GW  of  pumped  storage 
capacity in 2025 and 3.9 GW in 2030, with an addition of 1 
GW of battery storage capacity. 

44 

Energy efficiency gains have slowed down in 
Portugal,  although  there  is  still  untapped 
potential  for  increasing  energy  efficiency 
and  increasing  funding  sources.  In  2022, 
Portugal increased its primary energy consumption 
by  6.3%  compared  to  2021.  Its  final  energy 
consumption increased by 6.6% compared to 2021 
(a 4.2% increase compared to 2012). In 2023, the 
best results have come from the residential sector, 
which  decreased  its  final  energy  consumption  by 
3.3%,  and  the  worst  from  the  transport  sector, 
which  increased  its  final  energy  consumption  by 
17.1%. 

Portugal has implemented a series of energy 
efficiency  measures  with  support  from 
several  EU  funds.  The  majority  of  measures 
are  directed 
towards  buildings,  while 
measures for industries are rather limited. Its 
RRP support has been scaled up in terms of energy 
efficiency  to  reach  EUR  7  billion.  Cohesion  policy 
funding  in  2021-2027,  amounting  to  EUR  1.5 
billion  (European  Regional  Development  Fund) 
covers energy efficiency investments, targeting at 
least  medium  renovations  in  companies,  existing 
housing stock and public infrastructure.  

Most of Portugal’s energy efficiency schemes 
are still grant-based and the use of financial 
instruments  is  still  very  limited.  In  terms  of 
existing  funding  schemes  to  mobilise  energy 
investments,  Portugal  mainly  uses 
efficiency 
grants-based 
implemented 
funding  schemes 
through  the  Environmental  Fund  but  also  deploys 
some  financial 
instruments  supporting  urban 
renewal projects.  

stock’s 

building 

Portuguese 
energy 
performance is poor, with most public energy 
efficiency  schemes  being  one-off  measures, 
not always taking a building’s overall energy 
performance into account. Portugal needs to do 
a  lot  more  to  make  a  meaningful  contribution  to 
reaching  its  long-term  renovation  strategy  target 
of an 11% reduction in primary energy savings by 
2030  compared  to  the  baseline  year  of  2018. 
Residential  buildings’  final  energy  consumption 
rose  by  8%  between  2021  and  2022 (69).  Only 
17%  of  Portugal’s  national  building  stock  is 

(69)  Final energy consumption in households from Eurostat (data 
tables  of  December  2023),  climate  corrected  by  the  Joint 
Research  Centre  with  reference  period  2005-2022  (FEC 
climate corrected = FEC/ (HDD/HDD reference period). 

 
 
 
very 

energy-efficient 

considered 
(energy 
performance  certificate  A  and  A+),  with  around 
63%  of  buildings  having  an  energy  performance 
certificate  of  class  C  or  lower (70).  Portugal  has 
approved a special energy savings plan for 2022-
2023, with a set of complementary measures and 
behavioural  recommendations  to  reduce  energy 
consumption.  

Regarding  market  surveillance  activities, 
Portugal  does  very  few  checks  on  products 
covered by eco-design and energy labelling. A 
low number of market surveillance activities gives 
cause for concern about compliance levels. 

significant  hydrogen 

Portugal  expects  in  total  to  have  a  capacity 
of  electrolysers  of  5.5  GW (71)  in  2030.  It  is 
planning 
infrastructure 
developments for this decade, namely through the 
already  identified  hydrogen  infrastructure  assets 
part  of  the  European  Green  Hydrogen  Transport 
Corridor,  the  national  hydrogen  strategy,  and  the 
European  List  of  Projects of  Common  and  Mutual 
Interest (72),  and  to  build  up  hydrogen  production 
capacity by developing large-scale electrolysers on 
the coast.  

of 

levels 

biogas 

Portugal  projects  an  acceleration  from  its 
production, 
current 
amounting  to  0.1  BCM  (2021).    Portugal  has 
specific measures in place for the development of 
for  example  by 
biogas  and  bio-methane, 
establishing  a  biomethane  action  plan  and  linking 
its  production  to  the  use  of  agricultural  waste, 
organic waste,  and landfills. (73)  Portugal  registers 
low ambition of production and use of biomethane 
but it is estimated that the country has the ability 
to  replace  about  11%  of  current  natural  gas 
consumption (imports) with biomethane (74).  

particularly  components  of  solar  modules. 
in 
There  have  been  positive  developments 
electrolyser  manufacturing  and  Portugal  has  a 
growing  foothold in  the  wind  supply  chain.  It  also 
has  a  lot  of  battery  manufacturing  potential.  It 
imports  most  of  its  solar  photovoltaic  modules 
from  China  and  has 
limited  manufacturing 
capabilities  throughout  the  photovoltaic  supply 
chain.  For  wind,  Portugal  has  manufacturing 
facilities  for  blades,  generators,  nacelles,  and 
towers (75). 
onshore/offshore 
the 
application  for  classifying  the  15GWh  lithium 
battery  factory  construction  project  in  Sines  as  a 
Project  of  National  Interest  was  submitted  to  the 
AICEP (76). Two lithium mining projects and at least 
one  unit  for  lithium  conversion  are  currently  in 
progress. In 2022, Portugal’s first proton exchange 
membrane  electrolyser  manufacturing  factory 
came online. The facility aims to reach 500 MW of 
annual productive output by the end of 2025. 

In  2023, 

Despite  positive  signs  in  the  innovation 
ecosystem,  Portugal  still  lags  behind  other 
EU countries. The latest research and innovation 
trends  are  positive.  However,  private 
(R&I) 
research  and  development  spending  on  Energy 
Union  priorities  (0.022%  as  a  proportion  of  GDP), 
most  of  it  (71%)  related  to  investments  in 
the  EU 
renewables,  was  significantly  below 
average in 2019. Venture capital investments have 
also  shown  positive  trends  over  the  past  few 
years,  with  EUR  11.7  million  of  investments  in 
clean  energy  technology  start-ups  and  scale-ups. 
However,  there  was  a  decrease  in  2023,  with 
investments totalling only EUR 2.91 million. 

Portugal  remains  highly  dependent  on  non-
EU  countries  for  clean  energy  technologies, 

(70)  National long-term strategy to combat energy poverty. 

(71)  Draft PT NECP update 

(72)  Building/repurposing  two  sections  of  the  internal  hydrogen 
transport  axes;  construction  of  the  CelZa  interconnection 
project (part of the H2Med). 

(73)  Draft  PT  NECP  update  and  the  PT  Biomethane  Action  Plan 

2024-2040 adopted on 15 March 2024. 

(74)  Biomethane 

PT 

fiche 

https://energy.ec.europa.eu/system/files/2023-
09/Biomethane_fiche_PT_web.pdf  

(75)  Since 2018, it has been manufacturing offshore wind towers 

and foundations in Aveiro Port. 

(76)  Agency for Investment and Foreign Trade of Portugal. 

45 

 
 
 
Table A7.1:  Key Energy Indicators 

of 

The 

ranking 

(1) 
2022) 
based 
(2) Venture Capital investment includes Venture Capital deals (all stages), Small M&A deals and Private Equity (PE) growth deals 
(for companies that have previously been part of the portfolio of a VC investment firm or have received Angel or Seed funding). 
Source: Eurostat, Gas Infrastructure Europe, JRC elaboration based on PitchBook data (03/2024), JRC SETIS (2024) 

the  main 

available 

suppliers 

figures 

latest 

(for 

the 

on 

is 

46 

20192020202120222019202020212022Import Dependency [%] 73.9%65.3%66.9%71.3%60.5%57.5%55.5%62.5%of Solid fossil fuels 122.1%-6.5%4.5%107.4%43.3%35.8%37.3%45.8%of Oil and petroleum products 98.1%97.6%97.9%98.7%96.7%96.8%91.7%97.7%of Natural Gas 99.9%99.3%100.0%104.0%89.7%83.6%83.6%97.6%Dependency from Russian Fossil Fuels [%]of Natural Gas 1.6%11.3%13.6%5.1%39.7%41.3%41.1%21.0%of Crude Oil13.5%4.9%7.4%2.6%28.8%26.7%26.4%19.5%of Hard Coal6.4%0.0%0.0%0.0%43.5%49.1%47.4%21.5%2016201720182019202020212022Gas Consumption (in bcm)5.0                   6.3                   5.7                   6.1                 6.0                 5.8                 5.6                 Gas Consumption year-on-year change [%]6.6%24.4%-8.8%5.8%-1.4%-3.7%-3.5%Gas Imports - by type (in bcm)4.9                   6.3                   5.8                   6.1                 5.9                 5.7                 5.8                 Gas imports - pipeline3.3                   2.6                   2.0                   0.5                 0.5                 0.1                 0.1                 Gas imports - LNG1.63.73.85.65.55.65.7                 Gas Imports - by main source supplier (in bcm) (1)Nigeria0.9                   2.1                   2.4                   3.2                 3.1                 2.9                 2.9                 United States0.1                   0.5                   0.5                   1.3                 1.1                 1.9                 2.0                 Russia-                   -                   -                   0.1                 0.7                 0.8                 0.3                 Trinidad and Tobago-                   -                   -                   0.1                 0.1                 -                 0.4                 20192020202120222023LNG Terminals - storage capacity m3 LNGNumber of LNG Terminals1                      1                      1                      1                    1                    LNG Storage capacity (m3 LNG)390,000          390,000          390,000          390,000        390,000        Underground StorageNumber of storage facilities1                      1                      1                      1                    1                 Technical Capacity (bcm)0.3                   0.3                   0.3                   0.3                 0.3                 20162017201820192020202120222023Gross Electricity Production (GWh) (2)60,329            59,432            59,636            53,154          53,078          50,980          48,808          -              Combustible Fuels29,903         38,344         32,155         27,687       25,214       21,894       23,011       -              Nuclear-                -                -                -              -              -              -              -              Hydro16,909         7,632           13,628         10,243       13,633       13,455       8,839         -              Wind12,474         12,248         12,617         13,667       12,299       13,216       13,244       -              Solar871               992               1,006           1,342         1,716         2,237         3,519         Geothermal172               217               230               215             217             179             195             -              Other Sources0                   0                   0-                   0-                 0-                 0                 0                 -              Gross Electricity Production [%]Combustible Fuels49.6%64.5%53.9%52.1%47.5%42.9%47.1%-              Nuclear0.0%0.0%0.0%0.0%0.0%0.0%0.0%-              Hydro28.0%12.8%22.9%19.3%25.7%26.4%18.1%-              Wind20.7%20.6%21.2%25.7%23.2%25.9%27.1%-              Solar1.4%1.7%1.7%2.5%3.2%4.4%7.2%-              Geothermal0.3%0.4%0.4%0.4%0.4%0.4%0.4%-              Other Sources0.0%0.0%0.0%0.0%0.0%0.0%0.0%-              Net Imports of Electricity (GWh)5,085-               2,684-               2,657-               3,399             1,456             4,753             9,253             -              As a % of electricity available for final consumption -10.7%-5.6%-5.4%7.0%3.1%9.9%18.7%-              Electricity Interconnection [%]8.7%8.3%9.2%8.0%13.7%10.9%13.2%Share of renewable energy consumption - by sector [%]-              Electricity54.0%54.2%52.2%53.8%58.0%58.4%61.0%-              Heating/cooling41.6%41.0%40.9%41.7%41.5%42.7%45.5%-              Transport7.6%7.9%9.0%9.1%9.7%8.6%8.7%-              Overall30.9%30.6%30.2%30.6%34.0%34.0%34.7%-                 20192020202120222023VC investments in climate tech start-ups and scale-ups (EUR Mln)2.90              7.29              5.49              11.68             2.91               as a % of total VC investment (3) in Portugal start-ups and scale-ups0.8%8.4%0.1%1.2%1.7%Research & Innovation spending in Energy Union R&i prioritesPublic R&I (EUR mln)52.5              62.3              72.3              -              -              Public R&I (% GDP)0.024%0.031%0.034%-              -              Private R&I (EUR mln)51.9              5.0                -                -              -              Private R&I (% GDP)0.024%0.002%-                   -                 -                 ELECTRICITY/ENERGYCLEAN ENERGYPortugalEUENERGY DEPENDNCEDIVERSIFICATION OF GAS SUPPLIES 
 
     
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

This  Annex  monitors  Portugal’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
particularly  for  workers  and  households  in 
vulnerable situations. Portugal’s green economy 
is  expanding.  Between  2015  and  2021,  total  jobs 
in  the  environmental  goods  and  services  sector 
grew  by  38.9%  (to  around  130 000  jobs)  (EU: 
18.2%),  reaching  2.7%  of  total  employment  (EU: 
2.7%).  Also  between  2015  and  2022, 
the 
greenhouse  gas  emission  intensity  of  Portugal’s 
workforce  (see  Graph  A8.1  and  Table  A8.1) 
declined from 13.7 to 10.4 tonnes per worker (EU: 
14.3  tonnes  per  worker  in  2022) (77),  indicating  a 
positive  trend  in  the  green  transition.  Upskilling 
and 
in  declining  and 
transforming  sectors  has  increased,  which  helps 
implement  the  Council  Recommendation of  2022 
on  ensuring  a  fair  transition  towards  climate 
neutrality (78).  However,  further  development  of 
green skills remains key to a fair transition and to 
implementing  the  REPowerEU  plan.  Portugal’s 
recovery  and  resilience  plan  (RRP)  outlines  crucial 
reforms  and  investments  for  the  country (79), 
complementing  the  territorial  just  transition  plans 
and  actions  supported  by  the  European  Social 
Fund  Plus  (ESF+)  and  the  European  Regional 
Development Fund. 

reskilling  of  workers 

Employment  in  Portugal’s  sectors  that  are 
most  affected  by  the  green  transition  is 
decreasing.  In  2023,  employment  in  Portugal’s 
energy-intensive  industries  represented  3.2%  of 
total  employment  (EU:  3.5%).  Employment  in 
mining  and  quarrying  has  fallen  by  25.2%  since 
2015 (to around 15 400 workers in 2023). The job 
vacancy  rate  in  construction  (see  Graph  A8.2),  a 
key  sector  for  the  green  transition,  is  lower  than 
the  EU  average  (1.4%  vs  3.6%  in  EU  in  2023). 
However,  47%  of  the  small  and  medium-sized 
enterprises (SMEs) in the sector agreed that skills 
in  general 
shortages  could  hold  them  back 

(77)  Workforce-related  calculations  are  based  on  the  EU  Labour 
Force  Survey.  Note,  in  the 2023 country  report  for  Portugal, 
such  indicators  were  calculated  based  on  employment 
statistics in the national accounts. This may result in limited 
comparability across the two reports. 

(78)  The Council Recommendation of 16 June 2022 on ensuring a 
fair  transition  towards  climate  neutrality  (2022/C  243/04) 
covers  employment,  skills,  tax-benefit  and  social  protection 
systems, essential services and housing. 

(79)  See also the 2022 country report (Annex 6) and Annex 3 for 

business  activities (80).  According  to  the  European 
Labour  Authority  (ELA) (81),  labour  shortages  were 
reported in 2023 for a number of occupations that 
required specific skills or knowledge for the green 
transition (82),  including  electrical  mechanics  and 
fitters,  civil  engineers,  and  plumbers  and  pipe 
fitters.  Out  of  a  total  of  EUR  5.7  billion,  the 
Demography, 
thematic 
Qualifications 
allocate 
approximately EUR 610 million to increasing green 
skills and jobs and boosting the green economy. 

Inclusion  will 

programme 

ESF+ 

and 

Graph A8.1: Fair transition challenges in Portugal 

Source:  Eurostat,  EU  Labour  Force  Survey,  EMPL-JRC  GD-
AMEDI/AMEDI+ and DISCO(H) projects (see Table A8.1). 

labour  market 

industries,  workers’  participation 

Upskilling  and  reskilling  in  declining  and 
transforming  sectors  increased.  Skills  are  key 
for  smooth 
transitions  and 
preserving jobs in transforming sectors. In energy-
intensive 
in 
education  and  training  increased  from  9.3%  in 
2015  to  11.4%  in  2023  (EU:  10.9%).  In  Portugal, 
64%  of  SMEs  think  that  the  skills  required  for 
greening  business  activities  are  becoming  more 
important  (EU:  42%) (80).  If  Portugal  matches  its 
projected contribution to the EU’s 2030 renewable 
target,  between  2 800  and  3  500 
energy 
additional skilled workers will be needed to deploy 
wind  and  solar  energy,  which  may  require  skills 
investments of EUR 11.9-14.8 million (83). Specific 
investments  under  the  Recovery  and  Resilience 

(80)  Eurobarometer on skills shortages, recruitment, and retention 

strategies in small and medium-sized enterprises. 

(81)  Based on the European Labour Authority 2024 EURES Report 
on labour shortages and surpluses 2023, i.e. data submitted 
by the EURES National Coordination Offices 

(82)  Skills  and  knowledge  requirements  are  based  on  the 
(ESCO) 

European  Skills  Competences  and  Occupations 
taxonomy on skills for the green transition. 

an overview. 

(83)  EMPL-JRC AMEDI project. 

47 

0.00.51.01.52.02.53.0Greenhouse gasemissions per workerEmployment inEnergy-IntensiveIndustriesEducation & trainingin Energy-IntensiveIndsutriesEnergy povertyTransport poverty(proxy)Carbon inequalityPT Latest vs EU LatestEU LatestPT 2015 vs EU Latest 
 
 
  
 
 
Table A8.1:  Key indicators for a fair transition in Portugal 

Source: Eurostat (env_ac_ainah_r2, lfsa_egan2d, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-JRC 
GD-AMEDI/AMEDI+ and DISCO(H) projects. 

Facility and the Just Transition Mechanism provide 
training  to  reskill  workers  in  regions  affected  by 
the  transition,  together  with  a  broader  training 
offer  at  national  level  and  flexibility  mechanisms 
to  encourage  in-company  training.  Under  the  Just 
Transition Fund, EUR 223.8 million will be provided 
to support measures and actions aimed at workers 
and  areas  affected  by  the  closure  of  coal  power 
plants  in  Sines  and  Pego  and  of  the  refinery  in 
Matosinhos. 
Development 
Coordination  Committee  of  Northern  Portugal 
(CCDR-NORTE)  launched  a  call  for  proposals  in 
2023  co-designed  with  former  workers,  that 
focuses  on  training,  requalification  and  upskilling 
to  meet  regional  market  needs.  The  Institute  for 
Employment  and  Vocational  Training  (IEFP)  began 
its  first  operations  in  late  2023,  targeting  the 
workers of the closed refinery in Matosinhos. 

Regional 

The 

the 

indicator 

Energy  poverty  indicators  have  improved  in 
Portugal  over  recent  years,  but  remain  high, 
especially  for  those  at  risk  of  poverty. The 
share  of  the  population  unable  to  keep  their 
homes adequately warm decreased from 23.8% in 
2015  to  17.5%  in  2022  (EU  average:  9.3%) (84). 
increased  by  1.1 
However, 
percentage points between 2021 and 2022 on the 
back  of  energy  price  increases  due  to  supply 
constraints caused by the COVID-19 pandemic and 
Russia’s  war  of  aggression  against  Ukraine, 
despite  the  emergency  measures  implemented  in 
Portugal. In particular, 35.8% of the population at 
risk  of  poverty  (AROP)  (EU:  20.1%)  and  19.1%  of 
lower middle-income households (in deciles 4-5) in 
2022 (EU: 11.6%) were affected in 2022.  Despite 
of  the  adoption  in  2023  of  the  National  Strategy 
on  energy  poverty,  more  comprehensive  and 
targeted measures to address this problematic are 
still  missing.  Portugal  in  its  RRP  REPowerEU 
Chapter plans to set up a national observatory on 

(84)  Energy poverty is a multi-dimensional concept. The indicator 
used  focuses  on  an  outcome  of  energy  poverty.  Further 
indicators are available at the Energy Poverty Advisory Hub. 

48 

energy  poverty  to  monitor  and  support  through 
targeted  policies  households  in  need,  including by 
setting  up  a  financing  scheme.  Meanwhile,  in 
January  2023,  55.7%  of  population  at  risk  of 
poverty  spent  a  considerable  proportion  of  their 
budget (more than 6%)  on private transport fuels 
(EU: 37.1%) (85). 

issue 

leading 
in  Portugal. 

Consumption  footprint  inequality  remains  a 
to  environmental 
critical 
the 
In  2021, 
inequalities 
consumption  footprint  for  20%  of  the  population 
with the highest income was 1.9 times higher than 
the footprint of the poorest 20% (EU: 1.8) (86). For 
the  richest  20%  of  households,  the  consumption 
footprint is highest for food and housing while for 
poorest  households 
is  food  and  mobility. 
Average  air  pollution  levels  in  2021  stood  below 
the EU average (7.4 vs 11.4 µg/m3 PM2.5), and all 
regions  were  below critical  air  pollution levels (87). 
However, there are an estimated 2 100 premature 
deaths yearly due to exposure to air pollution (88).  

it 

(85)  Developed 

in 

the 

the  EMPL-JRC  GD-
context  of 
AMEDI/AMEDI+ projects. Methodology explained in Economic 
and  distributional  effects  of  higher  energy  prices  on 
households in the EU. 

(86)  Developed in the context of the EMPL-JRC DISCO(H) project. 
Methodology  explained  in  Joint  Research  Centre,  2024. 
Carbon  and  environmental  footprint  inequality  of  household 
consumption  in  the  EU.  JRC137520.  The  EU  average  refers 
to EU27 without Italy (household income data not available 
for IT in the HBS) 

(87)  Two times higher than the recommendations in the WHO Air 

Quality Guidelines (annual exposure of 5µg/m3). 

(88)  EEA- Air Quality Health Risk Assessment 

IndicatorDescriptionPT 2015PTEUGHG per workerGreenhouse gas emissions per worker – CO2 equivalent tonnes13.710.5 (2022)14.3 (2022)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24) and automotive (C29)3.2%3.2% (2023)3.5% (2023)Education & training EIIAdult participation in education and training (last 4 weeks) in energy-intensive industries9.2%11.4% (2023)10.9% (2023)Energy povertyShare of the total population living in a household unable to keep its home adequately warm23.8%17.5% (2022)9.3% (2022)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport51.4%55.7% (2023)37.1% (2023)Carbon inequalityRatio between the consumption footprint of the top 20% vs bottom 20% of the income distribution1.91.9 (2021)2.7 (2021) 
 
 
 
  
 
Graph A8.2: Job vacancy rate in transforming 
sectors 

C - Manufacturing 
F - Construction 
H - Transportation and storage 
Source: Eurostat jvs_a_rate_r2. 

for  a 

Portugal  is  developing  policies,  legislative 
reforms  and  programmes 
fair 
transition  towards  climate  neutrality,  which 
are at early stages of implementation. Under 
the   REPowerEU  component  in  the  RRP, measures 
are underway to tackle labour shortages and skills 
mismatches,  also  in  the  context  of  the  green 
transition.  Specific  taxation  measures  are  needed 
to  incentivise  job-to-job  transitions  from  energy-
intensive  industries  into  green  jobs  and  align 
businesses  with  the  green  objectives.  Efforts  are 
also needed to provide public employment services 
and  ensure  occupational  health  and  safety 
inspections  are  carried  out  to  address  new 
emerging  challenges  related  to  the  transition. 
Furthermore,  action  is  needed  to  ensure  social 
dialogue is included in fair green policymaking and 
implementation (89). 

(89)  Based  on 

the  monitoring 

the  Council 
Recommendation  on  ensuring  a  fair  transition  towards 
climate neutrality, which took place in October 2023. 

review  of 

49 

0,0%0,5%1,0%1,5%2,0%2,5%3,0%3,5%4,0%CFHEU 2023PT 2023PT 2015 
       
 
 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

The green transition of industry and the built 
environment,  in  particular  decarbonisation, 
resource  efficiency  and 
is 
Portugal’s 
essential 
competitiveness (90).  In  this  regard,  priorities  for 
Portugal  are  waste  management  and  the  use  of 
circular materials in industry and construction. 

circularity, 

boost 

to 

Portugal would  benefit from  accelerating  its 
circular economy transition to achieve the EU 
Circular  Economy  Action  Plan  goals.  The 
material  footprint  increased  from  15  to  17.2 
tonnes per capita between 2016 and 2019. After a 
drop  in  2020,  it  increased  and  reached  16.9 
tonnes per capita in 2022. Total waste production 
per  capita  increased  from  1.3  to  1.6  tonnes  per 
capita between 2010 and 2020, well below the EU 
average.  In  the  Portuguese  National  Energy  and 
Climate Plan, the role of circular economy beyond 
waste  management  is  mentioned,  also  in  relation 
to  the  economy’s  decarbonisation.  A  significant 
part  of  the  research,  innovation  and  development 
section  is  dedicated  to  circular  economy,  which  is 
also identified as an important field towards which 
investments must be directed. 

Graph A9.1: ETS emissions by sector since 2013 

Source: European Commission 

(ETS) 

System 

Trading 

Greenhouse gas emissions covered by the EU 
Emissions 
in 
Portugal (91) have declined steadily since 2017. In 
2023,  power  generation  was  responsible  for  32% 
of  Portugal’s  ETS  emissions,  a  much  lower  share 
than  in  the  EU  overall  (57%).  Of  the  total 
emissions  from  all  industry  sectors,  cement  and 
lime production emitted 43%, refineries 27%, and 

‘other’ industries 27% (92). In 2023, ETS emissions 
in  Portugal  were  almost  half  as  high  as  in  2013. 
The  reduction  of  ETS  emissions  has  largely  been 
driven by the power sector, where greenhouse gas 
emissions  have  declined  by  69%  since  2013. 
Industrial  emissions 
lime  or 
refineries  had  only  modest  emission  reductions 
over the previous decade. 

from  cement, 

steady 

progress 

Despite 
in  waste 
management  in  the  past  decade,  action 
remains  warranted.  The  municipal  waste 
recycling  rate  increased  from  29.1%  to  30.4% 
between 2017 and 2021 but remained too low to 
meet  the  EU  target  of  recycling  50%  by  2020. 
Portugal  is  among  the  countries  that  are  not  on 
track  to  meet  the  EU  packaging  and  municipal 
waste recycling targets for 2025 (93). The recycling 
rate  of  plastic  packaging  was  38.1%  in  2021. 
Furthermore,  Portugal’s  e-waste  recycling  has 
dramatically decreased in the last few years, going 
from  80.9%  in  2017  to  51.7%  in  2021.  The 
country  has  moved  away  from  heavy  reliance  on 
landfills  but  is  still  at  risk  of  missing  the  2035 
landfilling  target.  Innovation  in  waste  treatment 
technologies  is  growing,  as  illustrated  by  the  fact 
that 5 new patents were registered in 2021. 

Portugal  has  adopted  policies  to  address 
circular  economy  challenges,  but  results  are 
yet  to  materialise.  Portugal  adopted  a  national 
Circular  Economy  Action  Plan  in  2017  and  a  new 
one  is  still  under  preparation.  A  new  national 
legislation on waste management was approved in 
2020.  The  new  national  waste  management  plan 
(PNGR 2030)  and the Strategic Plan for Municipal 
Waste (PERSU 2030) were adopted in March 2023. 
The  Strategic  Plan  for  non-urban  Waste  (PERNU 
2030)  was  adopted  in  October  2023.  The  new 
regional  waste  management  plans  for  Madeira 
and Azores were already adopted too, in 2021 and 
2023,  respectively.  However,  overall,  progress  in 
this  field  has  been  limited,  although  the  situation 
varies  by  region.  Therefore,  it  is  now  essential  to 
implement  these  new  plans,  as  well  as  to  adopt 
including  additional 
the  pending  measures, 
initiatives and further investments. 

(90)  See also Annexes 6, 7 and 12. 

(91)  This  analysis  excludes  air  travel.  For  more  details  and  the 
data  sources,  see  Weitzel,  M;  van  der  Vorst,  C.  (2024), 
Uneven  progress  in  reducing  emissions  in  the  EU  ETS,  JRC 
Science for policy brief, JRC138215, Joint Research Centre. 

(92)  Other  than  cement  and  lime  production,  chemicals,  metals, 

refineries, and power generation. 

(93)  Waste early warning report, European Commission, published 

on 8 June 2023. 

50 

00.20.40.60.811.205101520253020132014201520162017201820192020202120222023Emissions relative to 2013Mt CO2eCement & LimeChemicalsMetalsRefineriesPower generationOtherPortugal (both axes) 
 
 
  
 
 
 
Table A9.1:  Circularity indicators 

Source: Eurostat, European Environment Agency 

Graph A9.2: Treatment of municipal waste 

Source: Eurostat 

improving  the 
is  still  room  for 
There 
efficiency  of  Portugal’s 
The 
industry. 
secondary  material  use  rate  is  rather  low  and 
stood at 2.6% in 2022, well below the EU average 
of  11.5%.  Between  2017  and  2022,  resource 
productivity  increased,  but  the  gap  with  the  EU 
average 
is  still  wide.  Resource  productivity 
expresses  how  efficiently  the  economy  uses 
material  resources  to  produce  wealth.  Improving 
resource  productivity  can  help  minimise  negative 
impacts  on 
reduce 
dependence  on  volatile  raw  material  markets. 
Portugal  was  dependent  on  imports  for  30.8%  of 
materials  used  in  2022,  compared  with  an  EU 
average 
country 
comparatively  more  vulnerable  to  supply  chain 
disruptions.  Furthermore,  water  abstraction  for 
manufacturing  purposes  accounted  for  3.1%  of 
total water abstracted in 2018. Still, the country is 
taking  up  circular  economy 
progressing 

the  environment  and 

of  22.4%,  making 

the 

in 

approaches.  The  2022  Eco-Innovation  Scoreboard 
placed  the  country  in  the  ‘eco-innovation  average 
performers  group’,  with  a  score  of  105.7.  As  of 
2023,  Portugal  totalled  33  awarded  EU  Ecolabel 
licences and 6 065 products with the EU Ecolabel, 
increasing  and  good  take-up  of 
showing  an 
products and licences. 

Portugal  could  use  its  built  environment 
more  efficiently  and  reduce  associated 
waste.  In  2023,  Portugal’s  building permits index 
–  based  on  useful  floor  area  –  stood  at  231.6, 
showing  a  large  increase in  construction  activities 
since  2015 (94).  The  residential  floor  area  per 
capita stood well above the EU average in 2020 – 
at  44.29  versus  36.48 m2  per  capita  –  and 
increased at a higher pace than the EU average. A 
similar trend was reported for non-residential floor 
area  per  capita,  which  still  stood  below  the  EU 
average  in  2020  –  at  13.01  versus  15.31 m2  per 
capita.  In  2020,  Portugal  submitted  a  long-term 
renovation  strategy  to  decarbonise  the  building 
stock, which recognises circular economy principles 
as  fundamental.  However,  the  amount  of  waste 
generated  from  construction  and  demolition 
activities  per  capita  doubled  between  2012  and 
2020  and  remained  well  below  the  EU  average. 
The  proportion  of  backfilling  has  increased  since 
2014 and stood at 63.4% in 2020, well above the 
EU average of 9.9%. 

(94)  2015=100. 

51 

5075135135130010020030040050060020182019202020212022Kg per capita Waste treatment to be determinedLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27201820192020202120222023EU-27Latest yearIndustryResource productivity (purchasing power standard (PPS) per kilogram)1.41.51.51.51.7-2.52022Circular material use rate (%)2.22.32.52.62.6-11.52022Eco-innovation index (2013=100)97.398.498.3104.6105.7-121.52022Recycling of plastic packaging (%)33.935.633.938.1--40.72021Cost of air emissions from industry (EUR bn)6.45.45.04.7--352.72021Built environmentRecovery rate from construction and demolition waste (%)93.0-95.088.5--89.02020Soil sealing index (base year = 2006)103.2-----103.42018Non-residential floor area (m2 per capita)20.120.420.6---18.02020Waste backfilled (%)60.7-63.4-31.9-9.92020 
          
 
 
 
          
 
ANNEX 10: DIGITAL TRANSFORMATION 

infrastructure/connectivity 

transformation  by  2030, 

Digital  transformation  is  key  to  ensuring  a 
resilient and competitive economy. In line with 
the  Digital  Decade  Policy  Programme,  and  in 
particular  with  the  targets  in  that  Programme  for 
digital 
this  Annex 
describes  Portugal’s  performance  on  digital  skills, 
digital 
the 
digitalisation  of  businesses  and  public  services. 
to  progress  on 
Where 
implementing  the  Recovery  and  Resilience  Plan 
(RRP).  Portugal  allocates  21%  of  its  total  RRP 
(EUR 4.5 billion) (95).  Under 
budget 
Cohesion Policy, an additional EUR 2.4 billion (11% 
of  the  country’s  total  Cohesion  Policy  funding)  is 
allocated 
digital 
transformation (96). 

to  digital 

country’s 

relevant, 

refers 

and 

the 

to 

it 

The  Digital  Decade  Policy  Programme  sets 
out a pathway for Europe’s successful digital 
transformation  by  2030.  Portugal’s  national 
roadmap outlines the actions it intends to take to 
reach the objectives and targets at national  level. 
The first Report on the State of the Digital Decade 
highlighted the need to accelerate and deepen the 
collective efforts to reach the EU-wide targets and 
objectives (97).  Among  others,  a  digitally  skilled 
population 
the  development  and 
adoption  of  digital  technologies  and  leads  to 
productivity  gains  and  new  business  models.  It 
also  leads  to  higher  inclusion  and  participation  in 
an environment increasingly shaped by the digital 
transformation (98). 
technologies, 
infrastructure  and  tools  all  play  a  role 
in 
addressing 
the  current  structural  challenges, 
including  strategic  dependencies,  cybersecurity 
and climate change.  

increases 

Digital 

(95)  The  share  of  financial  allocations  that  contribute  to  digital 
objectives  has  been  calculated  using  Annex  VII  to  the 
Recovery and Resilience Facility Regulation. 

(96)  This amount includes all investment specifically aimed at or 
substantially  contributing  to  digital  transformation  in  the 
2021-2027 Cohesion Policy programming period. The source 
funds  are  the  European  Regional  Development  Fund,  the 
Cohesion Fund, the European Social Fund Plus, and the Just 
Transition Fund. 

(97)  European  Commission  (2023):  Report  on  the  State  of  the 
Digital Decade 2023, 2023 Report on the state of the Digital 
Decade | Shaping Europe’s digital future (europa.eu). 

(98)  See  for  example  OECD  (2019):  OECD  Economic  Outlook, 
Digitalisation and productivity: A story of complementarities, 
OECD  Economic  Outlook,  Volume  2019  Issue  1  |  OECD 
iLibrary  (oecd-ilibrary.org)  and  OECD  (2019):  Going  Digital: 
Shaping 
– 
Lives 
Summary, https://www.oecd.org/digital/going-digital-
synthesis-summary.pdf. 

Improving 

Policies, 

Portugal performs averagely on digital skills. 
It performs at the EU average on the share of the 
population  (aged  16-74)  having  at  least  basic 
digital skills. However, the  share of ICT specialists 
in total employment is still below but close to the 
EU  average  (4.5%  versus  4.8%).  By  contrast,  the 
proportion of ICT graduates is one of the lowest in 
the EU and still much below the EU average (2.5% 
versus  4.5%).  Portugal  has  significant  room  to 
accelerate  the  implementation  of  its  measures, 
amplify  them  and  catch  up  with  the  EU’s  top 
performers.  Improving  digital  skills  is  a  national 
priority  reflected  in  Portugal’s  RRP  with  initiatives 
targeting  various  population  groups,  for  example 
investment in computers for pupils and teachers.  

digital 

infrastructure/connectivity, 
On 
Portugal shows mixed results. It performs well 
in fast broadband, reaching 94% in fixed very high 
capacity  network  (VHCN)  and  92%  in  fibre  to  the 
premises  (FTTP)  coverage,  significantly  exceeding 
the EU average. At 98%, its overall 5G coverage is 
above the EU average of 89%. A large part of it is 
rolled out in the 3.4-3.8 GHz spectrum band, which 
is  important  for  enabling  advanced  applications 
requiring large spectrum bandwidth.  

improvement 

is  room  for 

There 
in  the 
digitalisation  of  Portuguese  businesses.  The 
proportion of businesses with at least basic digital 
intensity  (54%)  is  below  the  EU  average  (58%). 
The combined uptake of cloud, big data or artificial 
intelligence (54%) is just below the EU average of 
55%.  The  RRP  envisages  significant  investments, 
for  example  in  the  National  Test  Beds  Network. 
remaining  RRP  measures 
Implementing 
efficiently  could  help  SMEs  to  understand  and 
apply digital solutions. This, in turn, could improve 
SMEs’ ability to integrate these solutions into their 
business  processes.  In  2022,  2.5%  of  enterprises 
in  Portugal  reported  ICT  service  outage  due  to 
cyberattacks  (e.g.  ransomware  attacks,  denial  of 
service  attacks).  However,  33.7%  of  enterprises 
developed  or  reviewed  their  ICT  security  policy 
within the previous 12 months. 

the 

Portugal  is  a  good  performer  in  providing 
digital  public  services.  It  is  almost  on  par  with 
the EU average in providing digital public services 
to  businesses,  and  exceeds  the  EU  average  in 
providing  digital  services  to  the  public.  Portugal 
has  two  electronic  identification  (eID)  schemes 
that  have  been  notified  under 
the  eIDAS 
Regulation,  with  a  high  level  of  assurance:  the 
digital  mobile  key  (Chave  Móvel  Digital)  and  the 

52 

 
 
 
 
identity  card 

national 
(eID  card,  Cartão  de 
Cidadão). The country is also involved in two pilot 
projects  funded  by  the  Digital  Europe  Programme 
to  test  the  European  Digital  Identity  Wallet  in 
everyday  use.  Portugal  places  great  emphasis  on 
implementing  ‘digital  by  default’  across  its  public 
sector  services  and  IT  systems.  It  has  allocated  a 
substantial  part  of  the  digital  transformation 
investments  envisaged 
the 
digitalisation  of  the  state’s  finances  and  the 
business  environment,  and 
improving  public 
administration’s efficiency.  

its  RRP 

to 

in 

Table A10.1: Key Digital Decade targets monitored by the Digital Economy and Society Index indicators 

(1) This represents about 10% of total employment. 
(2) The fibre to the premises coverage indicator is included separately as its evolution will also be monitored separately and taken 
into consideration when interpreting VHCN coverage data in the Digital Decade. 
(3) At least 75% of EU enterprises have taken up one or more of the following, in line with their business operations: (i) cloud 
computing services; (ii) big data; (iii) artificial intelligence.   
Source: Digital Economy and Society Index 

53 

EUDigital Decade target by 2030 2022202320242024(EU)Digital skillsAt least basic digital skills55%55%56%56%80%% individuals20212021202320232030ICT specialists (1)4.5%4.3%4.5%4.8%20 million% individuals in employment aged 15-7420212022202320232030Digital infrastructure/connectivityFixed very high capacity network (VHCN) coverage91%93%94%79%100%% households20212022202320232030Fibre to the premises (FTTP) coverage (2)88%91%92%64%-% households2021202220232023Overall 5G coverage0%70%98%89%100%% populated areas20212022202320232030Digitalisation of businessesSMEs with at least a basic level of digital intensity52%NA54%58%90%% SMEs2021202320232030Data analyticsNANA39%33%-% enterprises20232023Cloud28%28%32%39%-% enterprises2021202120232023Artificial intelligence7%7%8%8%-% enterprises2021202120232023AI or cloud or data analytics (3)NANA54%55%75%% enterprises202320232030Digitalisation of public servicesDigital public services for citizens79788279100Score (0 to 100)20212022202320232030Digital public services for businesses82828285100Score (0 to 100)20212022202320232030Access to e-health recordsNA638679100Score (0 to 100)2022202320232030Portugal 
 
      
 
 
 
 
 
 
 
 
 
 
ANNEX 11: INNOVATION 

This  Annex  provides  a  general  overview  of 
the  performance  of  Portugal’s  research  and 
innovation  system,  which 
is  essential  for 
delivering  the  twin  transition  and  ensuring  long-
term competitiveness. 

Portugal  is  a  ‘moderate  innovator’  but  the 
gap  between  its  performance  and  the  EU 
average  is  becoming  larger.  According  to  the 
2023  edition  of 
Innovation 
Scoreboard (99), Portugal's innovation performance 
increased by 7.7 percentage points since 2016, but 
at  a  lower  rate  than  the  EU’s  (8.5pp).  Its  overall 
performance  remains  below  the  EU  average 
(85.6% of the EU performance). 

the  European 

Graph A11.1: Public expenditure on R&D as % of 
GDP 

Source: Eurostat 

intensity 

total  R&D 

research  and 

innovation 
The  country’s 
performance is impacted by insufficient (and 
declining)  levels  of  public  R&D  investment. 
While 
is  progressively 
increasing (and reached 1.70% in 2022, against an 
EU  average  of  2.24%),  fully  driven  by  increasing 
investment  efforts  from  the  private  sector,  public 
expenditure on R&D has been on a declining trend 
over  the  last  decade  and  fell  to  0.60%  in  2022 
(compared to 0.64% in 2021 and 0.68% in 2010). 
This 
is  a  setback  as  Portugal  wants  public 
spending  on  R&D  to  hit 1%  of  GDP by  2030.  In 
addition,  the  significant  discrepancies  in  R&D 
investment (100)  among  the  seven  Portuguese 

(99)  2023  European  Innovation  Scoreboard  (EIS),  country  profile: 
Portugal  https://ec.europa.eu/assets/rtd/eis/2023/ec_rtd_eis-
country-profile-pt.pdf  The  EIS  provides  a  comparative 
analysis of innovation performance in EU countries, including 
the  relative  strengths  and  weaknesses  of  their  national 
innovation systems (also compared to the EU average). 

(100)  2023  Regional 

Innovation  Scoreboard,  Country  Profile: 
Portugal  https://ec.europa.eu/assets/rtd/ris/2023/ec_rtd_ris-
regional-profiles-portugal.pdf. 

54 

regions  also  weigh  on  the  country’s  overall 
performance (see Annex 17). 

impacting 

the  excellence  of 

The  stagnant  level  of  public  investment  is 
also 
the 
Portuguese public research system. The share 
of scientific publications of the country within the 
top  10%  most  cited  scientific  publications 
worldwide is on a declining trend and international 
co-publications  as  %  of 
total  number  of 
publications are also modest (101). Nonetheless, the 
country  has  one  of  the  highest  numbers  of  new 
graduates in science and engineering per thousand 
population aged 24-35 (20.6 in 2021 compared to 
the  EU-27  average  of  16.9)  and  a  capacity  to 
attract  foreign  doctoral  students  (58%  of  all 
doctorate  students  in  2023 (102)).  Despite  the 
modest attractiveness of research careers (103), the 
number  of  researchers  employed  by  the  public 
sector  is  also  quite  high  (6.2  per  thousand 
population in 2022 against an EU average of 4.1). 
Portuguese authorities are trying to fight research 
precarity 
the  Scientific  Employment 
Stimulus, launched in 2017 and slowly reinforced, 
incentives  for  the  hiring  of 
which  provides 
researchers  and  the  development  of  scientific 
employment plans by public or private institutions. 

through 

Business  enterprise  expenditure  on  R&D  is 
steadily increasing but further efforts will be 
needed to reach the target of 2% of private 
investment  in  R&D  by  2030.  While  it  remains 
below  the  EU  average  (1.06%  of  GDP  in  2022 
against  an  EU  average  of  1.48%),  business  R&D 
intensity  increased  by  50%  between  2010  and 
2022. The country has one of the highest levels of 
public support for business R&D in Europe, but the 
availability  of  venture  capital  is  still  very  low  and 
has remained stagnant in the last decade (0.022% 
in  2022  compared  to  an  EU  average  of  0.085%), 
which may hinder the growth of young innovative 
enterprises.  Business  innovation  capacity  remains 
limited  with  modest  patenting  activity  compared 
to  the  EU  average,  especially  in  the  energy 

(101)  53.7% in 2022 against an EU average of 55.5%, according 

to Science-Metrix data. 

(102)  European Innovation Scoreboard. 

(103)  OECD Review of Higher Education, Research and Innovation: 
https://www.oecd-

Portugal 
ilibrary.org/docserver/9789264308138-
en.pdf?expires=1669907865&id=id&accname=oid031827&
checksum=D62C22DB51A43DD26752612666522CBF. 

(2019): 

0.560.580.60.620.640.660.680.720102015202020212022 
 
  
 
 
 
Table A11.1:Key innovation indicators 

(1) EU average for the last available year or the year with the largest number of country data. 
Source: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical Database), Invest EU 

sector (104). The  recovery and resilience plan (RRP) 
‘Mobilising  Agendas  for  Business 
investment 
Innovation’  could  be  a  powerful  tool  to  enhance 
business  innovation  capacity  as  the  goal  is  the 
development  of  new  products,  processes  or 
services  in  relevant  strategic  areas.  In  addition, 
cohesion  funds  –  mainly  through  the  Innovation 
and  Digital  Transition  Programme 
(COMPETE 
2030)  -  support  investments  in  applied  R&I, 
including  industrial  and  experimental  research  in 
areas  aligned  with 
the  smart  specialisation 
strategies. 

remaining 

a  major 

While 
challenge, 
Portugal’s  efforts  to  enhance  public-private 
cooperation  are  giving  their  first  results.  As 
an  example,  while  the  share  of  public-private 
scientific  co-publications  is  still  below  the  EU 
average,  it  has  been  steadily  increasing  over 
recent  years  and 
total 
publications in 2022. On the other hand, the share 
of  public  expenditure  on  R&D  financed  by 
businesses  has  remained  stagnant  over  the  past 
few  years,  at  a  very  low  level  (0.013%  in  2022 
compared to an EU average of 0.054%). Moreover, 

reached  6.3%  of 

(104)  According to OECD patent data. 

financed  grants 

although  on  an  increasing  path,  the  number  of 
is  also 
researchers  employed  by  businesses 
modest (105),  which  may  suggest  limited  mobility 
opportunities  between  the  public  and  the  private 
sector.  The  country  has  dedicated  significant 
resources  to  this  challenge.  For  the  first  time,  in 
2023  Portugal 
for  PhD 
studentships in a non-academic environment, with 
the  aim  of  encouraging  companies  to  host  PhD 
students  during  their  doctoral  degree,  thereby 
favouring  employment  of  PhD  holders  in  the 
recovery  and 
private  sector.  Moreover, 
different 
(RRP) 
resilience 
fostering  knowledge 
investments  aimed  at 
‘collaborative 
valorisation, 
as 
laboratories’ 
together 
relevant  partners  from  the  public  and  the  private 
sector,  and  the  ‘Mobilising  Agenda  for  Business 
Innovation’  which 
between 
are 
companies, scientific and technological institutions. 

such 
(COLABs)  which  bring 

the 
includes 

consortia 

plan 

the 

(105)  According  to  OECD  data,  researchers  (FTE)  employed  by 
business  per  thousand  active  population  is  5.2  in  2022, 
compared to the EU average of 5.6. 

55 

EU2022average (1)R&D intensity (GERD as % of GDP)1.541.241.611.671.702,24Public expenditure on R&D as % of GDP0.680.650.660.640.60,73Business enterprise expenditure on R&D (BERD) as % of GDP0.710.580.9211.061.48Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 9.998.54::9.6Patent Cooperation Treaty (PCT)  patent applications per billion GDP (in PPS)0.611.02::3.4Public-private scientific co-publications as % of total publications4.855.766.37.6Public expenditure on R&D financed by business enterprise (national) as % of GDP0.0080.0120.0160.0140.0130.054New graduates in science & engineering per thousand pop. aged 25-341316.219.520.6:16.9Total public sector support for BERD as % of GDP0.1280.1550.4360.35:0.204R&D tax incentives: foregone revenues as % of GDP0.090.110.3550.25:0.104Share of environment-related patents in total patent applications filed under PCT (%)2215.214.7::14.7Venture capital (market statistics) as % of GDP0.0280.0290.020.0210.0220.085Employment share of high growth enterprises measured in employment (%):19.7:::12.51Portugal2010201520202021Key indicators Finance for innovation and economic renewalQuality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation  
 
 
 
 
  
 
ANNEX 12: INDUSTRY AND SINGLE MARKET 

0.64%  of  GDP  (compared  to  an  EU  average  of 
3.76%);  and,  over  the  past  5  years,  annual  net 
private investment has remained below 1%, below 
the  EU  average  of  4.1%  (see  Graph A12.2). 
However,  FDI  in  Portugal  has  been  one  of  the 
highest  in  the  EU  and  inward  FDI  stock  reached 
70% of GDP in 2022.  

Graph A12.2: Net fixed capital formation (5-year 
average) 

in  Portugal  has 

Productivity 
remained 
sluggish  over  the  past  two  decades.  Labour 
productivity (GDP per hour worked) has stagnated 
over the past 20 years. In 2000, it stood at 67.9% 
of  the  EU  average  compared  to  71.3%  in  2023 
(see  Graph  A12.1).  Despite  its  initial  low  levels  in 
2000,  productivity  has  not  been  able  to  converge 
on 
in 
the  EU  average.  Gains  were  made 
productivity per worker (reaching 80.1% in 2013), 
but 
labour  productivity  slumped  back  down, 
beforing reverting upwards to a peak of 80.7% of 
the  EU  average  in  2023.  On  a  sectoral  level, 
productivity has varied over the past 20 years with 
growth  driven  by  manufacturing  while 
the 
construction 
sector  weighed  down  overall 
productivity  growth.  The  contribution  of  total 
factor  productivity  (TFP)  to  productivity  growth 
was mixed.  

Graph A12.1: Labour productivity in PPS (% of 
EU-27) 

Source: AMECO 

Access to finance has improved (particularly 
for SMEs), but challenges remain. Portugal has 
improved  its  ranking  in  the  SME  EIF  Access  to 
Finance  Index  (17th)  but  remains  below  the  EU 
average  and  below  its  highest  ranking  of  14th  in 
2020.  The  percentage  of  businesses  whose  loan 
applications  are  rejected  or  refused  has  been  on 
an  upward  trend  over  the  past  3  years.  In  2023, 
14.3% of businesses did not secure bank financing 
(the  third  highest  percentage  in  the  EU  and  more 
than  double  the  percentage  of  firms  rejected  or 
refused  in  2021  (6%)  (107)).  Almost  two  thirds 
(61%)  of  Portuguese  firms  prefer  bank  loans  as 
their  source  of  external  financing,  but  56%  of 
businesses  cite  high  interest  rates  as  the  most 
important  obstacle  to  obtaining  financing. 
In 
addition, access to finance is a key barrier to firm 
investment. More than half of businesses say that 
the non-availability of finance is a barrier to long-
investment,  versus  an  EU  average  of 
term 
44%  (108).  Portugal  performs  poorly 
in  other 
avenues  of  finance  such  as  venture  capital  and 
payment times. Companies highlight the fact  that 
the prevalence of late payments and difficulties in 

(107)  SAFE. 

(1)  GDP  in  current  purchasing  power  standards  per  hour 
worked and as a percentage of the EU average 
Source: AMECO 

Investment  is  recovering  but  remains  low. 
Overall,  Portugal  has  one  of  the  lower  levels  of 
investment  in  the  EU  (19.4%  compared  to  22.2% 
in the EU for 2023  (106)), but this has improved in 
recent years. Public investment will be boosted by 
the implementation of the Recovery and Resilience 
Plan  (RRP),  but  private  investment  is  recovering 
from  the  great  financial  crisis  and  has  been 
resilient, particularly in the wake of the COVID-19 
pandemic and global uncertainty. However, private 
investment  levels  remain  lower  than  pre-2010 
levels.  In  2023,  net  private  investment  stood  at 

(106)  Eurostat, Gross fixed capital formation (investments). 

(108)  EIB Investment Survey (2023).  

56 

020406080100120010305070911131517192123% of EU27PortugalSpainGreece-4-20246810HLSILVPTDKITSKHRESLUFIBGDKNLBEFRPLATCZMTIEROSEHUCYLTEENET PRIVATE INVESTMENT AS % OF GDPEU27 5-year-average 
 
      
 
      
 
 
 
environment  (109). 

collecting them is a significant issue for Portugal’s 
to 
business 
InformaDB, 85% of  Portuguese companies do not 
respect  payment  deadlines  (110).  Moreover,  the 
payment 
business-to-business 
transactions  and  from  the  public  sector  remain 
above 2 weeks (15 and 17 days respectively).  

According 

gaps 

in 

regulatory 

challenges 

that  77%  of 

are 
Persistent 
hampering the business environment. Portugal 
implemented  a  series  of  well-received  reforms 
under  SIMPLEX+,  but  survey  data  consistently 
suggest that regulatory obstacles are a significant 
hindrance  to  private  investment.  According  to  the 
EIB investment survey, 83% of firms cite business 
regulation  as  a  long-term  barrier  to  investment, 
the  highest  in  the  EU.  Over  the  past  5  years,  the 
perception  of  regulatory  obstacles  to  investment 
has  been  almost  double  the  EU  average  (see 
Graph  A12.3).  An  OECD  survey  of  investors  also 
respondents  considered 
found 
administrative delays and other red tape issues as 
a very important or moderately important obstacle 
to  their  operations  in  Portugal  (111).  In  addition, 
Portuguese  businesses  perceive  tax  compliance 
procedures  and  licensing  as  cumbersome  and 
time-consuming (112).  Recent  changes  in  licensing 
laws  should  support  industry  by  introducing  tacit 
approvals  for  building  permits (113).  At  the  same 
time, Portugal’s RRP includes steps to improve the 
business  environment.  In particular,  the  reform  of 
regulated  professions  will  promote  competition  in 
professional  services  by 
regulatory 
barriers 
to  ownership  and  management  of 
professional firms. Moreover, under component 18 
of the RRP, the measure on the removal of barriers 
to  licensing  should  also  help  improve  Portugal’s 
business environment. 

reducing 

(109)  OECD, The Impact of Regulation on International Investment 

in Portugal. 

(110) InformaDB, Payment Study 2023. 

(111)  OECD, The Impact of Regulation on International Investment 

in Portugal. 

(112)  OECD, The Impact of Regulation on International Investment 

in Portugal. 

(113)  Decree Law No 10/2024. 

Graph A12.3: Business Regulations as a major 
obstacle to investment (5-year average) 

Source: EIBIS 

A 

low 

record 

Portugal’s  lack  of  adequately  skilled  human 
capital  is  an  acute  challenge  for  SMEs  (see 
Annex 14). 
in 
20-year 
unemployment  and  peak  vacancy  rates  suggests 
that  Portugal’s  labour  market  may  be  suffering 
from a skills mismatch (see Annex  14). Portugal’s 
economy  is  notable  for  its  low-qualified  workers, 
whose  share  of  the  labour  market  is  more  than 
twice  the  EU  average (114).  Portugal  also  has  one 
of  the  highest  percentages  of  under-qualified 
workers in managerial positions (115). 52% of SMEs 
cited  difficulties  in  finding  employees  with  the 
right  skills  as  their  most  serious  problem (116). 
Vacancy  rates  in  manufacturing  and  construction 
are  in  line  with  the  Portuguese  average,  but 
sectors  such  as  information  and  communication 
struggle  the  most  in  filling  vacancies,  with  rates 
double 
in 
2023 Q3) (117).  This  is  supported  by  the  fact  that 
the  percentage  of  ICT  graduates  is  half  the  EU 
average.  However,  Portugal  ranks  above  the  EU 
average when it comes to individuals with above-
basic  digital  skills (118).  Roughly  half  (51%)  of  the 
total job openings that are expected to be created 

those  of  other 

sectors 

(4% 

(114)  CEDEFOP, 

Country 

p. 11, 
https://www.cedefop.europa.eu/files/skills_forecast_2023_po
rtugal.pdf. 

Report 

2023, 

(115)  OECD Economic Surveys: Portugal 2023.  

(116)  Eurobarometer, 2023, SMEs and skills shortages.  

(117)Eurostat: 

https://ec.europa.eu/eurostat/databrowser/view/jvs_q_isco_r2
__custom_8878566/bookmark/table?lang=en&bookmarkId=
fb9e1ab3-4acd-4ce6-bc26-7b121e010c78. 

(118) DESI 2023. 

57 

010203040506070DKFIHUSEEENLLUCZIEMTSLBELTFRSKBGRODECYATITPOHRLVPTESEL% OF FIRMSEU27 average 
 
      
 
in  Portugal  up  to  2035  will  require  high-level 
qualifications  (119). Amendments to the Foreigners 
Act  should  help  Portuguese  businesses  attract 
talent from abroad.  

Portugal  is  well  integrated  into  the  single 
market  and  performs  well  in  relation  to 
single market rules, but there are still gains 
to  be  made.  Portugal’s  trade  integration  within 
the  single  market  for  the  past  5  years  has  been 
below the EU average (30% vs 42%). However, the 
single  market  is  essential  for  trade  in  goods  with 
75%  of  total  trade  destined  for  or  arriving  from 
the  single  market.  There  is  less  integration  for 
trade  in  services.  Intra-EU  trade  in  services  as  a 
percentage of GDP were only 8% in 2022. Portugal 
scores  in  line  with  the  EU  average  on  the  OECD 
Trade  Restrictiveness 
performs 
reasonably  well  when  it  comes  to  single  market 
rules.  Portugal  performs  well  on  the  transposition 
and conformity deficits of single market directives, 
scoring  below  the  EU  average.  Portugal  solved 
86.9%  of  the  SOLVIT  cases  (180)  it  handled 
(slightly  below 
the  EU  average  of  88.3%). 
However,  pending  infringements  over  the  past  5 
years  have  been  above  the  EU  average.  Portugal 
performs  reasonably  well  on  public  procurement. 
Its  percentage  of  single  bids  is  below  the  EU 
average  (21%  compared  to  28%),  but  direct 
awards  are  slightly  above  the  EU  average  (11% 
compared to 8.1%).  

Index  and 

generation. 

Portugal’s  net-zero 
industry  has  great 
potential  (see  Annex  7).  Renewable  energy 
thirds  of  Portugal’s 
accounts  for  over 
two 
industrial 
Portugal’s 
electricity 
electricity  prices  are  some  of  the  cheapest  in  the 
EU,  so  Portugal’s  industry  has  a  comparative 
advantage  in  developing  a  clean  tech  ecosystem 
(particularly  electrolyser  manufacturing  for  green 
hydrogen). Portugal’s RRP and REPowerEU chapter 
its  hydrogen  strategy  and  contains 
revises 
technologies 
measures 
the 
in 
(e.g. grants 
production  of  strategic  technologies  for  the 
climate  transition  and  the  development  of  green 
skills with the goal of training 25 000 people over 
the  next  2  years).  Portugal  also  has  deposits  of 
raw materials such as lithium and tungsten which 
are essential for net-zero technologies. Portugal is 

clean 
investment 

develop 
support 

to 
to 

(119)  CEDEFOP Country Report 2023, 

the  the  EU  average  on 

below 
import 
concrentation index of crticial raw materials (0.19 
vs 0.22).  

the 

Portugal  is  in  the  preliminary  stage  of 
implementing  the  components  needed  to 
connect  to  the  Once-Only  Technical  System 
(OOTS)  (120).  As  part  of  the  Single  Digital 
Gateway  Regulation  (121),  the  system  will  enable 
the automated cross-border exchange of evidence 
between  competent  authorities,  improving  online 
access  to  information,  administrative  procedures 
and  assistance  within  the  EU.  The  onboarding  of 
Portuguese competent authorities is crucial for the 
system  to  function  smoothly  and  to  reduce 
administrative burden.  

innovator  by 

(as  a  percentage  of  GDP) 

Portugal performs well on innovation and research 
and  development,  but  there  is  still  room  for 
improvement (see Annexes 11 and 17). Portugal is 
the 
classified  as  a  moderate 
European  Innovation  Scoreboard,  performing  at 
85.6%  of  the  EU  average  but  progressing  more 
slowly  than  the  rest  of  the  EU.  R&D  intensity  is 
below  the  EU  average  of  2.23%,  but  gross  R&D 
expenditure 
is 
converging on the EU average (it rose from 1.28% 
in  2016  to  1.71%  in  2022  (122)).  The  share  of 
just  below  the  EU 
is 
innovative  enterprises 
average,  with  51.1%  of  firms  engaging 
in 
innovative  activities  in  2018-2020.  The  export 
share  of  high  and  medium-high  R&D  intensive 
activities  as  a  percentage  of  total  exports  is 
roughly  15 pps  below  the  EU  average  (55.5%). 
Moreover, export of high-tech products is 4.7% of 
all trade (the lowest rate in the EU). However, the 
business  sector  in  Portugal  is  quite  dynamic.  The 
rate  at  which  businesses  are  created  and 
destroyed  is  quite  high  compared  to  the  EU 
aggregate  and  this  should  in  principle  make  it 
easier  to  bring  innovations  to  the  market  while 
allowing on-performing firms to exit (productivity-
enhancing resource reallocation). 

(120)  SDG Regulation: Regulation (EU) 2018/1724.  

(121)  Implementing Regulation (EU) 2022/1463. 

https://www.cedefop.europa.eu/files/skills_forecast_2023_po
rtugal.pdf. 

(122)  https://ec.europa.eu/eurostat/statistics-

explained/index.php?title=R%26D_expenditure  

58 

 
 
 
Table A12.1:Industry and the Single Market 

Source:  (1)  AMECO,  (2)  Eurostat,  (3)  Single  Market  Scoreboard,  (4)  OECD,  (5)  ECFIN  BCS,  (6)  COMEXT  and  Commission 
calculations,  (7)  EIB  Investment  Survey,  (8)  Intrum  Payment  Report,  (9)  SAFE  survey,  (10)  EIF  SME  Access  to  Finance  Index.  
* Own Commission calculations for the EU27 average 

59 

POLICY AREAINDICATOR NAME20192020202120222023EU27 average*Net Private investment, level of private capital stock, net of depreciation, % GDP11.200.810.63.8Net Public investment, level of public capital stock, net of depreciation, % GDP1-0.7-0.5-0.2-0.4-0.21.2Real labour productivity per person in industry (% yoy)21-4.95.51.3-2.4-1.24Cost competitivenessNominal unit labour cost in industry (% yoy)23.36.20.34.610.19.83Single Market integrationEU Trade integration, % (Average intra-EU imports + average intra EU exports)/GDP229.52730.134.132.342.9Transposition deficit, % of all directives not transposed30.50.11.41.30.40.7Conformity deficit, % of all directives transposed incorrectly31.31.31.11.30.81.1SOLVIT, % resolution rate per country3100.098.794.093.287.084.8Number of pending infringement proceedings3263237282525.9RestrictionsEEA Services Trade Restrictiveness Index40.050.050.050.050.050.05Single bids, % of total contractors3382420242128.6Direct Awards, %33775118.1Material Shortage (industry), firms facing constraints, %56.44.87.915.89.217.2Labour Shortage using survey data (industry), firms facing constraints, %57.96.68.511.510.923.3Vacancy rate, % of vacant posts to all available ones (vacant + occupied)21.30.91.32.01.92.5Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials60.180.180.180.210.190.22Installed renewables electricity capacity, % of total electricity produced20.70.60.70.8-50Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle745.348.145.846.049.022.2Bankruptcies, Index (2015=100)250.251.645.037.044.6105.6Business registrations, Index (2015=100)2136.7104.8118.0135.4143.7120.2Payment gap - corporates B2B, difference in days between offered and actual payment8-2012141515Payment gap - public sector, difference in days between offered and actual payment8-2512101716Share of SMEs experiencing late payments in past 6 months, %940.341.638.141.837.348.7EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1100.550.650.460.66-0.49EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 110 0.070.070.090.07-0.17Public procurement PortugalHEADLINE INDICATORSEconomic StructureSINGLE MARKETComplianceAccess to financeECONOMIC STRUCTUREShortagesStrategic dependenciesBUSINESS ENVIRONMENT - SMEsBusiness demographyLate payments 
 
      
 
ANNEX 13: PUBLIC ADMINISTRATION 

Portugal’s  public  administration  is  essential 
for  the  economy’s  competitiveness  by,  in 
particular,  shaping  the  conditions  for  the 
twin  transitions  and  creating  a  favourable 
business  environment.  Overall,  Portugal  scores 
slightly  above  the  EU  average  on  perceived 
government effectiveness (123), but it is still below 
the  score 
in  pre-pandemic  years.  Ambitious 
reforms across various sectors under the country’s 
recovery and resilience plan are ongoing although 
progress  varies,  highlighting  the  complexities  and 
challenges of its implementation. 

Portugal  faces  challenges  in  the  ageing  of 
the  civil  service  and  the  attractiveness  of 
public  employment.  To  tackle them, the  country 
has brought in changes to speed up and centralise 
the recruitment of certain categories of staff. The 
ratio  of  25-49  year-old  to  50-64  year-old  in  the 
public  administration  is  still  relatively  low  (Chart  
A13.1). If unaddressed, this could threaten service 
delivery.  The  share  of  employees  in  the  public 
administration with higher education also remains 
below the EU average (Chart A13.2). 

Graph A13.1: Ratio of 25-49 to 50-64 year olds by 
sector and occupation 

(1) 2023 data. 
Source: European Commission, based on the Labour Force 
Survey. 

Portugal  has  taken  steps  to  improve  its 
regulatory 
the 
competence  centre  for  planning,  policy  and 

governance. 

PlanAPP, 

the 

supports 

definition 

foresight, 
and 
implementation  of  public  policies  and  prospective 
analysis,  including  impact  assessments  of  draft 
legislation  and  technical  evaluations  of  public 
policies.  RePLAN,  an 
inter-ministerial  network 
to  ensure 
coordinated  by  PlanAPP,  aims 
cooperation  and  the  sharing  of  knowledge  and 
resources in the areas of strategic planning, public 
policies  and  foresight.  It  is  expected  to  promote 
collaborative work and cross-cutting strategies. 

The  overall  maturity  of  e-government  and 
the  share  of  e-government  users  are 
relatively  high.  However,  Portugal 
ranked 
substantially below the EU average in the public’s 
perception  of  the  provision  of  public  services (124). 
To  achieve  the  public  administration’s  digital 
transformation between  2022  and  2026,  a  series 
of supporting documents have been approved (125), 
focusing on areas such as enterprise architecture, 
digital  identity,  cloud  strategies,  ethical  AI,  data 
governance and cybersecurity. 

Graph A13.2: Share of employees by education 
attainment level and by sector 

(1) 2023 data, 25-64 age bracket High: Education levels 5-8; 
medium (3-4): low (1-2). 
Source: Labour Force Survey (Eurostat). 

The  quality  of  the  justice  system  is  good 
its  efficiency  shows  some 
overall,  and 
challenges 
improvement 
remain (126). 
the 
cases, 

although 
administrative 

In 

(124)  Standard Eurobarometer, 2022. 

(125) tic.gov.pt 

(123)  Worldwide Governance Indicators, 2022. 

(126)  For  more  details,  see  the  2024  EU  Justice  Scoreboard  and 
the Commission’s 2024 Rule of Law Report (forthcoming). 

60 

0.00.51.01.52.02.53.0Publicadministration,defence and socialsecurityEducationHealthcareTotal economyPTHigh-skilled occupationsMedium-skilled occupationsLow-skilled occupationsEU-270%10%20%30%40%50%60%70%80%90%100%PTEU27PTEU27PTEU27Publicadministration (O)Publicadministration,education andhealthcare O-QTotal economyHighMediumLow 
 
   
 
   
 
 
Table A13.1:Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2023 value. If not available, the latest value available is 
shown. (3) Measures the user centricity (including for cross-border services) and transparency of digital public services as well as 
the existence of key enablers for the provision of those services. (4) Defined as the absolute value of the difference between the 
percentage 
positions. 
Flags: (b) break in time series; (d) definition differs; (u) low reliability. 
Source:  E-government  activities  of  individuals  via  websites,  Eurostat  (#  1);  E-government  benchmark  report  (#  2);  Open  data 
maturity report (# 3); Labour Force Survey, Eurostat (# 4, 5, 7); European Institute for Gender Equality (# 6); Fiscal Governance 
Database (# 8, 9); OECD Indicators of Regulatory Policy and Governance (# 10). 

women 

service 

senior 

men 

civil 

and 

of 

in 

disposition  time  has  been  consistently  decreasing 
in  first  instance.  but  has  further  increased  at 
second  instance  (it  remains  above  1 000  days). 
Although  the  number  of  pending  administrative 
cases at first instance is still high, there has been 
a  significant  improvement  in  the  resolution  rate, 
which is above 110%. The level of digitalisation is 
advanced,  with  widespread  use  of  digital 
technologies  by  the  courts  and  prosecution. 
However, gaps remain in the public’s online access 
to judgments. Despite new recruitment procedures, 
there  are  still  challenges  in  allocating  sufficient 
in 
human  resources 
particular legal clerks. On judicial independence, no 
systemic deficiencies have been reported. 

justice  system, 

the 

to 

investment  programme  provides  guidance  for 
public investment allocation over a 10-year period 
covering  all  financing  sources  (EU,  national  and 
others).  Ongoing  efforts  to  integrate  this  10-year 
investment  plan  into  the  medium-term  budgetary 
framework  are  critical  for  its  effectiveness.  On 
project  assessment,  a  common  methodology  is 
currently only used for a limited number of sectors 
(e.g.  public  order  and  safety,  agriculture).  These 
sectors also avail of a central support for training 
on 
of 
and 
assessment methodologies, which could be shared 
with other sectors. Only a few sectors (e.g. tertiary 
education) benefit from an independent review of 
the quality and objectivity of assessments. 

implementation 

development 

investment  has 
The  planning  of  public 
recently  improved,  but  good  practices  are 
still limited to a few sectors (127). The national 

(127)  Belu  Manescu,  C.  (2022),  ‘New  evidence  on  the  quality  of 
in  the  EU’,  European 

public 
Economy Discussion Paper No 177, European Commission. 

investment  Management 

61 

PT20192020202120222023EU-27(2)1n/an/an/a80.880.675.02n/a82.378.479.180.975.830.40.50.70.80.90.8432.834.837.4 (b)36.437.552.9513.113.316.6 (b)17.417.417.967.81.01.66.62.69.271.31.41.3 (b)1.31.11.580.60.60.70.7n/a0.791.91.91.91.9n/a1.410n/an/a1.27n/an/a1.7Medium-term budgetary framework indexIndicator (1)E-government and open government dataShare of internet users within the last year that used a public authority website or appE-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with higher education (levels 5-8, %)Participation rate of public administration employees in adult learning (%)Gender parity in senior civil service positions (4)Ratio of 25-49 to 50-64 year olds in NACE sector OPublic financial management Strength of fiscal rules indexEvidence-based policy makingRegulatory governance 
 
 
        
 
FAIRNESS 
ANNEX 14: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS 

The  European  Pillar  of  Social  Rights  is  the 
compass  for  upward  convergence  towards 
better  working  and  living  conditions  in  the 
EU. This Annex provides an overview of Portugal’s 
progress in implementing the Pillar’s 20 principles 
and the EU headline and national targets for 2030 
on employment, skills and poverty reduction. 

The  Portuguese  labour  market  continued  to 
improve steadily in the aftermath of COVID-
19,  but  young  people  still  face  challenges. 
Economic growth has been slowing down in 2023, 
while the labour market has remained robust. The 
employment rate has been on the rise since 2021 
and  stood  at  78.2%  in  2023  (EU:  75.3%).  The 
unemployment  rate  remained  broadly  stable  in 
2023,  reaching  6.5%  (EU:  6.1%).  The  youth 
unemployment rate (age 15-24), which is steadily 
worsening  in  the  long-term,  stood  at  20.3%  in 
2023,  well  above  the  EU  average  (14.5%).  The 
long-term  unemployment  share  stood  at  2.5%  in 
2023  (above  the  EU  average  of  2.1%)  and  is 
significant 
in  the  overall  pool  of  registered 
unemployed. The Portuguese active labour market 
policies  show  a  lack  of  capacity  to  provide 
individual  and  targeted  support  to  young  job 
seekers, and there is insufficient cooperation with 
key  stakeholders  such  as  social  services  and 
are 
training 
disproportionately  represented  in  temporary  jobs 
(42.9% vs 34.3% in the EU in 2023), and earnings 
of  people  under  30  are  significantly  below  those 
of  older  generations.  As  part  of  its  recovery  and 
resilience  plan 
(RRP),  Portugal  passed  a 
comprehensive reform in April 2023 known as the 
Decent  Work  Agenda,  as  well  as  programmes 
(ATIVAR.PT  and 
targeted  at  young  people 
AVANÇAR). 

providers. 

people 

Young 

in 

the 

Labour and skills shortages are increasing in 
some  sectors  and  professional  groups. 
Employers are finding it increasingly difficult to fill 
vacancies  because  of  labour  and  skills  shortages, 
ICT,  healthcare, 
especially  notably 
construction  and  renewable  energy  sectors.  The 
combination of demographic challenges, skills and 
labour  shortages,  and  structural  challenges  to 
achieving  basic  skills  and  educational  outcomes 
also  undermines  Portugal’s  potential  to  increase 
its  economic  competitiveness.  In  2023,  74%  of 
SMEs faced skills shortages, highlighting the need 
for  better  collaboration  between  employers  and 

in 

the 

public  employment  services,  and  for  tools  to 
assess the skills required by companies and those 
of jobseekers. Portugal’s labour force is becoming 
more  highly  qualified  as  older 
less-qualified 
people retire and younger highly educated workers 
enter  the  labour  market.  By  2025,  the  share  of 
people 
labour  force  with  high-level 
qualifications  should  rise  to  33.1%,  compared  to 
23.9% in 2013. Over the same period, the share of 
workers with a low-level of qualifications or none 
at  all  is  forecast  to  fall  from  55%  in  2013  to 
40.2%  in  2025.  Operations  under  the  European 
Social  Fund  Plus  (ESF+)  such  as  professional 
traineeships, local support structures to get people 
into  work  and  systems  to  anticipate  needs  and 
match  them  with  skills  will  help  Portugal  achieve 
the 2030 national employment target of 80%. 

Table A14.1:Social Scoreboard for Portugal 

(1) Update of 25 April 2024. Members States are categorised 
based  on  the  Social  Scoreboard  according  to  a  methodology 
agreed  with  the  EMCO  and  SPC  Committees.  Please  consult 
the Annex of the Joint Employment Report 2024 for details on 
the methodology. 
Source: Eurostat 

The level of education and training of people 
in Portugal has improved in recent years, but 
the  share  of  low-skilled  adults  is  still  high. 
The RRP and the ESF+ programme for 2021-2027 
include  investments  in  skills,  vocational  education 
and  training  and  adult  learning.  This  is  helping 

62 

33,4856,08,95,65,178,26,52,5109,820,120,723,7213,1547,22,9Critical situationTo watchWeak but improvingGood but to monitorOn averagePolicy areaHeadline indicatorEqual opportunities and access to the labour marketAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Early leavers from education and training(% of  the population aged 18-24, 2023)Share of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2023)Young people not in employment, education or training(% of the population aged 15-29, 2023)Gender employment gap(percentage points, population aged 20-64, 2023)Income quintile ratio (S80/S20, 2022)Dynamic labour markets and fair working conditionsEmployment rate(% of the population aged 20-64, 2023)Unemployment rate(% of the active population aged 15-74, 2023)Long term unemployment(% of the active population aged 15-74, 2023)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2022)Social protection and inclusionAt risk of poverty or social exclusion (AROPE) rate (% of the total population, 2022)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2022)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2022)Disability employment gap (percentage points, population aged 20-64, 2022)Housing cost overburden (% of the total population, 2022)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2022)Self-reported unmet need for medical care (% of the population aged 16+, 2022)Better than averageBest performers 
 
 
 
     
 
 
Portugal  to  achieve  positive  results:  vocational 
education  and  training  courses  play  an  important 
role  in  fulfilling  the  requirements  of  compulsory 
schooling,  improving young  people’s  qualifications 
and  helping  them  make  a  smoother  transition  to 
their  working  life.  The  rate  of  early  leavers  from 
education and training increased to 8.0% in 2023 
(vs 6.5% in 2022 and EU: 9.5% in 2023)  and the 
rate  of  those  not  in  employment,  education  or 
training  (NEETs)  rate  remains  consistently  below 
the  EU  average  (8.9%  vs  11.2%  in  2023).  More 
than a third of the population had completed only 
the  lower  secondary  level  of  education  in  2022 
(EU: 24.9%) (see Annex 15). The continued roll-out 
of  education  and 
is 
important for the reskilling and upskilling of young 
people  and  adults,  particularly  for  the  skills 
required  for  the  digital  and  green  transitions.  The 
share of individuals who have basic or above basic 
general  digital  skills  has  been  growing  and  stood 
at  56.0%  in  2023  (EU:  55.6%)  (see  Annex  10). 
Adult  participation  in  learning  in  the  previous  12 
months  stood  at  33.4%  in  2022  (EU:  39.5%), 
4.6 percentage  points 
in  2016. 
Fostering continuous investment in adult education 
and  training  is  essential  to  achieve  the  national 
target of at least 60% by 2030. 

training  programmes 

lower 

than 

Housing  affordability  is  a  growing  concern, 
while  access  to  social  housing  remains 
limited  and  homelessness  is  on  the  rise. 
House prices reached new highs in 2023, driven by 
inflation and market dynamics, including a lack of 
supply.  The  housing  price  index  (211.27  in  Q4 
2023) (128)  is  more  than  twice  the  2015  baseline 
value and one of the highest in the EU. The rise in 
mortgage  interest  rates  and  rental  prices  has 
impacted  household  budgets,  with  29.4%  of 
tenants 
in  2022  experiencing  housing  cost 
overburden  (vs  26.9%  in  2021).  The  provision  of 
affordable  social  housing  remains  insufficient  as 
investments 
in  housing  under  the  RRP  are 
expected  to  provide  only  26 000  dwellings  up  to 
2026.  According  to  the  current  demand,  90  000 
families  are  considered  to  be  living in  undignified 
conditions  and  entitled  to  affordable  housing 
(Programa 1.º Direito). Homelessness increased by 
78%  in  4  years.  According  to  the  Portuguese 
government,  there  were  10  773  homeless  people 
in  December  2022  (vs  6  044  in  2018).  NGOs  on 
the ground report a change in the demographics of 

(128) EU housing price index – Eurostat. 

people  who  are  homeless,  with  an  increase  in 
homeless migrants and families. 

in  Portugal 

There are not enough long-term care services 
for  a  rapidly  ageing  population.  The  share  of 
the  population  aged  65  and  over  is  forecast  to 
reach 26.5% in 2030, and the share aged 80 and 
over is to reach 8.0%, raising the demand for long-
term  care  (LTC)  services,  which  are  already  in 
short  supply.  LTC 
is  severely 
underfunded,  with  public  spending  at  less  than  a 
quarter  of  the  EU  average  (0.4%  vs  1.7%), 
resulting  in  limited  access  to  formal  services.  In 
2019,  as  regards  publicly  provided  or  funded 
home care services, only 15.9% of people aged 65 
and  over  in  need  of  LTC  used  homecare  services 
(EU:  28.6%).  RRP  investments  of  EUR 637  million 
support  a  new  generation  of  equipment,  social 
services  and  the  national  networks  providing 
integrated continuous care and palliative care. The 
number of formal LTC workers is very low, with a 
ratio  of  0.8  workers  per  100  people  aged  65  and 
over,  which  is  one  of  the  lowest  in  the  EU.  This 
workforce  lacks  proper  skills  and  receives  wages 
that are 73% of the national average.  

little 

Social  transfers  have 
impact  on 
reducing poverty, with the outermost regions 
showing  higher  rates  of  poverty  and  social 
exclusion. The share of people at risk of poverty 
and social exclusion (AROPE)  in Portugal fell from 
22.4%  in  2021  to  20.1%  in  2022,  however  it 
remains  very  high  in  the  Azores  and  Madeira 
(30.3%  and  30.2%  respectively).  In  the  Azores, 
these  disparities  are  accentuated  by  a  high 
income 
number  of  beneficiaries  of  minimum 
schemes  (7.0%  of  people  in  working  age  vs  a 
national  average  of  2.9% 
in  2022)  and  a 
significant  early 
leaving  from  education  and 
training rate (21.7% vs a national average of 8.0% 
in  2023).  Income  inequalities  are  still  high,  with 
the income of the top 20% of the population with 
the highest income reaching 5.13 times more than 
the income of the bottom 20% in 2022 (EU: 4.74). 
The impact of social transfers (excluding pensions) 
in  reducing  poverty  in  2022  remains  low  (23.7% 
vs  an  EU  average  of  35.0%).  Access  to  social 
protection  is  a  challenge:  many  workers  have 
insufficient  formal  coverage  or  have  inadequate 
insufficient  benefits.  A 
coverage  and 
low 
percentage  of 
temporary  and  self-employed 
workers receive benefits (respectively 24.8% vs EU 
44.9%  and  2.9%  vs  EU  16.5%)  and  suffer  from 
higher  poverty  and  social  deprivation  rates.  A 
deterioration  of  social  indicators  in  2023  shows 

63 

 
 
 
scope  for  greater  social  policy  action  to  achieve 
the 2030 national target of 765 000 fewer people 
at  risk  of  poverty  or  social  exclusion.  The 
Portuguese RRP includes a measure to reform and 
simplify  the  country’s  social  protection  system, 
and  thus  improve  its  effectiveness  in  the  fight 
against poverty and social exclusion. 

Table A14.2:Social Scoreboard for Portugal 

(1)  Adult  Education  Survey,  adults  in  learning  in  the  past  12 
months,  special  extraction  excl.  guided  on-the-job  training. 
(2)  Change  in  the  number  of  persons  at  risk  of  poverty  or 
social exclusion (AROPE), reference year 2019. 
Source: Eurostat, DG EMPL 

64 

IndicatorsLatest dataTrend            (2016-2023)2030 target78,2(2023)33,4(2022)-89(2022)Poverty reduction2 (thousands)-765Employment (%)80Adult learning1 (%)60 
 
  
 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  of 
Portugal’s  education  and  training  system 
based on the 2023 Education and Training Monitor 
and  the  2022  OECD  Programme  for  International 
Student Assessment (PISA) results. 

competitiveness. 

The  high  share  of  underachievers 
in 
mathematics  and  the  low  share  of  top 
performers  pose  a  risk  for  the  future 
productivity  and 
PISA 
2022 (129) showed that the proportion of 15-year-
olds  underachieving  in  mathematics,  reading  and 
science  increased  in  Portugal  between  2018  and 
2022,  in  line  with  the  EU.  The  underachievement 
rate is high in mathematics, at 29.7% (EU 29.5%), 
6.4 pps  more  than  in  2018.  Portuguese  students 
in  reading  and  science  with 
perform  better 
underachievement  rates  below  the  EU  average 
(Table A15.1; Graph A15.1). At the same time, the 
share  of  top  performers  dropped  below  5%  in 
reading and science and is now among the lowest 
levels in the EU, especially in mathematics. 

Graph A15.1: Underachievement rates by field, 
PISA 2012, 2018 and 2022 

Source: OECD (2023). 

it 

While the socio-economic gap is smaller than 
other  EU  countries, 
is  widening.  The 
underachievement  rates  of  disadvantaged  groups 
at 46.9% is slightly below the EU average (48.0%). 
Nevertheless, the  socio-economic  gap  widened  by 
4.9 pps  since  2018, 
trends.  The 
underachievement  rate  is  also  19 pps  higher 
among  foreign-born  students  (46.5%)  than  for 
students  without  a  migrant  background  (27.4%). 
The gap is much smaller for native-born students 
with 
(who  have  an 
underachievement rate of 34.5%). 

foreign-born  parents 

like  EU 

The  Plano  21|23  Escola+,  which  aimed  to 
compensate  for  the  loss  of  learning  during 

(129)  OECD  (2023),  PISA  2022  Results  (Volume  I):  The  State  of  Learning 

and Equity in Education 

65 

the  pandemic,  has  been  extended  until  end-
2024.  The  new  23|24  School+  plan,  approved  in 
July  2023 (130),  supports  schools  to  set  up  and 
implement  their  own  learning  recovery  plans  in  a 
variety  of  areas  (reading  and  writing,  curricular 
autonomy, educational resources, assessment and 
diagnosis, inclusion and well-being, and supporting 
educational  communities).  It  will  apply  to  all 
education and training levels. 

completing 

influence  the 
Students’  living  area  still 
leaving  education 
proportion  of  people 
secondary 
upper 
without 
education. In 2023, the rate of early leavers from 
education and training (ELET) rose compared with 
2022 (8.0% vs 6.5%), although still below the EU 
average  (9.5%)  and  the  EU-level  target  (<9%). 
Regional  disparities  in  ELET  persist  and  even 
increased,  ranging  from  over  21.7% (131)  in  the 
Azores  to  6.2%  in  the  North  region.  ELET  rates in 
rural  areas  are  higher  than  in  cities  (9%  vs 
8%) (132),  a  lower  gap  than  the  EU  average 
(0.9 pps vs 1.3 pps). 

is  ageing,  and  the 
The  teaching  force 
shortage  of  teachers  is  worsening  as  few 
young people enter the profession. In 2021, in 
mainland  Portugal,  about  half  of  schoolteachers 
were older than 50 (EU 39.4), while only 2% were 
under 30 years (EU 7.5%). In addition, the number 
of  higher  education  graduates  in  teacher  training 
has  declined  significantly  (from  around  5 000  in 
2014-2015 to 3 500 in 2020-2021). In 2022, the 
government 
education 
institutions  to  increase  the  number  of  teacher 
training places in courses with a high demand and 
those  corresponding  to  scarce  teaching  profiles. 
There  are  currently  shortages  in  various  teaching 
subjects,  and  they  are  particularly  severe  in  the 
Lisbon Metropolitan Area and the Algarve. 

authorised 

higher 

Measures  have  been  adopted  to  remedy 
imbalances  in  the  career  progression  of 
teachers.  The  freezing  of  public  administration 
careers between 2005-2007 and 2011-2017 due 
to  the  economic  crisis  may  have  reduced  the 
attractiveness  of  the  teaching  profession.  During 
these  periods,  teachers  with  permanent  contracts 

(130)  Resolution  of  the  Council  of  Ministers  No.  80-B/2023,  18 

July 2023). 

(131)  Eurostat: edat_lfse_16. 

(132)  Eurostat: edat_lfse_30. 

05101520253035PTEUPTEUPTEUMathematicsReadingScience%2012201820222030 EU target 
 
  
 
 
 
 
Table A15.1:EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Notes: b = break in time series; d = definition differs; e = estimated; p = provisional; u = low reliability; : = data not available. 
Source: 1,3,4,5,7,8,9,10,12=Eurostat; 11= Eurostat, Adult Education Survey; 2,6=OECD, PISA. 

(civil  servants)  worked  for  several  years  without 
their  seniority  in  the  service  being  counted  for 
rights.  The 
career  progression  and  pension 
Portuguese  government  tried  to  remedy  this 
situation  with  a  partial  recovery  of  lost  career 
progression.  In  2023,  the  government  approved  a 
decree (133)  that  establishes  a  special  system  for 
remedying  imbalances  in  career  progression.  The 
measure  is  expected  to  affect  approximately 
70 000 teachers (around 36% of total teachers in 
mainland Portugal). 

Portugal  is  rolling  out  free  access  to  early 
childhood education and care (ECEC) and the 
public  offer  is  set  to  expand.  In  2021,  90.5% 
of  children  aged  3  and  over  attended  ECEC;  this 
was  2.4 pps  less  than  in  2020  and  below  the  EU 
average. In 2022, the government set out specific 
conditions for rolling out free childcare and family 
day  care  centres  for  all  children  born  on  or  after 
1 September  2021 .  The  scheme  aims  to  cover 

100 000  children  by  2024 (134).  Portugal  aims  to 
create  up  to  15 000  new  ECEC  places  by  2026 
through the PARES programme (135). 

The  number  of  tertiary  education  graduates 
decreased  in  2023 (136).  In  2023,  the  tertiary 
education  attainment  rate  for  people  aged  25-34 
was  40.9%  (1.6  pps  below  2022),  lower  than  the 
EU  average  (43.1%)  and  drifted  away  from  the 
EU-level  target  (45%).  There  are  still  significant 
regional differences in these rates (from 20.2% in 
the  Azores  to  46.5%  in  the  Lisbon  Metropolitan 
Area).  There  are  also  differences  by  country  of 
birth (from 36.1% of foreign-born people to 41.8% 
of  native-born  people).  Nevertheless,  more  young 
people are enrolled in higher education studies. In 
2022-2023, students enrolled in higher education 
institutions reached a total of 446 028. 

(134) https://files.dre.pt/1s/2022/07/14400/0001000014.pdf 

(135) https://www.seg-social.pt/programa-de-alargamento-da-

rede-de-equipamentos-sociais-pares 

(133)https://files.diariodarepublica.pt/1s/2023/08/16500/ 

(136) https://www.ine.pt/xportal/xmain?xpid=INE&xpgid=ine_indi 

0000200004.pdf 

cadores&indOcorrCod=0011327&contexto=bd&selTab=tab2  

66 

96%88.7%201391.8%201391.0%92.2%90.5%2021,d92.5%2021,dReading< 15%18.8% 18.0%20.2% 22.5%23.1%202226.2%2022Mathematics< 15%24.9% 22.1%23.3%22.9%29.7%202229.5%2022Science< 15%19.0% 16.8%19.6%22.3%21.8%202224.2%2022< 9 %20.5% 12.6%11.8%10.5%8.0%9.5%Men26.9%14.5%14.7%12.1%9.8%11.3%Women14.0%10.6%8.7%8.7%6.1%7.7%Cities18.9%b11.2%11.5%9.4%8.1%8.6%Rural areas21.3%b14.0%14.6%11.0%9.0%9.9%5By country of birthNative20.5% 11.3%11.7%9.2%7.3%8.2%EU-born:u26.2%:u22.4%:u21.0%Non EU-born19.0%30.1%13.2%23.0%15.4%21.6%6Socio-economic gap (percentage points)35.8:32.429.537.2202237.220227Exposure of VET graduates to work-based learning≥ 60% (2025) ::: :74.1% 64.5%45%29.0%34.1%35.1%38.7%40.9%43.1%Men23.5%29.1%25.7%33.3%34.4%37.6%Women34.2%39.2%44.3%44.2%47.4%48.8%Cities34.3%b43.5%39.3%49.0%46.2%53.3%Rural areas21.2%b24.8%26.0%27.7%31.5%31.7%Native29.6%35.4%35.3%39.7%41.8%44.2%EU-born28.0%29.3%41.1%36.7%48.0%40.2%Non EU-born22.0%24.2%30.2%31.0%34.7%37.1%11Participation in adult learning (age 25-64)≥ 47% (2025) ::38.0%201637.4%201633.4%202239.5%202215.2%201322.7%201325.5%23.8%32.0%202124.5%2021201220182023IndicatorTargetPortugalEU-27PortugalEU-27PortugalEU-271Participation in early childhood education (age 3+)2Low-achieving 15-year-olds in:Early leavers from education and training(age 18-24)3Total3By gender4By degree of urbanisationTertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth12Share of school teachers (ISCED 1-3) who are 55 years or over 
 
 
 
  
 
ANNEX 16: HEALTH AND HEALTH SYSTEMS 

A  healthy  population  and  an  effective, 
accessible  and  resilient  health  system  are 
prerequisites  for  a sustainable  economy and 
society.  This  Annex  provides  a  snapshot  of 
in 
population  health  and  the  health  system 
Portugal. 

Life expectancy at birth in Portugal has been 
slightly  higher  than  in  the  EU  overall,  and 
remained  so  both  before  and  during  the 
COVID-19 pandemic. The onset of the pandemic 
in 2020 saw a fall in life expectancy in Portugal. It 
rebounded in 2021 and in 2022 it approached its 
pre-pandemic  level  as  mortality  from  COVID-19 
declined (137). Portugal  fares comparatively well  in 
avoiding  deaths  from  treatable  causes.  In  2021, 
diseases of the circulatory system (‘cardiovascular 
diseases’)  and  cancer  were  the  leading  causes  of 
death, followed by COVID-19. 

Graph A16.1: Life expectancy at birth, years 

Source: Eurostat 

healthcare in the EU (29%), twice the EU average. 
in  2022  total 
Provisional  data  suggest  that 
healthcare  spending  fell  back  to  10.5%  of  GDP. 
Based  on  the  age  profile  of  the  Portuguese 
population,  public  expenditure  on  health 
is 
projected  to  increase  by  1.3  percentage  points 
(pps) of GDP by 2070, compared to 0.6 pps for the 
EU overall (see Graph 16.2 and Annex 21). 

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2024-2070 

Baseline scenario 
Source: European Commission / EPC (2024) 

In  2021,  spending  on  prevention  in  Portugal 
amounted  to  3.2%  of  total  spending  on 
healthcare,  compared  to  6.0%  for  the  EU 
overall.  Between  2019  and  2021,  spending  on 
prevention  in  Portugal  increased  by  around  79%, 
compared  to  a  106%  increase  for  the  EU  overall. 
Proportionally, budget shares for prevention across 
the  EU  increased  most  for  emergency  response, 
disease detection and immunisation programmes. 

care, 

disease 

Health  spending  relative  to  GDP  in  Portugal 
was slightly above the average across the EU 
in 2021. Spending per capita on outpatient care is 
above  the  EU  average,  whereas  spending  on 
inpatient 
prevention, 
pharmaceuticals and medical devices is below the 
EU  average.  In  2021,  total  healthcare  spending 
increased  to  11.1%  of  GDP.  This  increase  is 
attributed to higher public spending for COVID-19-
related  care  and  also  to  higher  private  health 
expenditure for non-COVID-19-related care. Public 
total  health 
spending  as  a  proportion  of 
expenditure 
in  Portugal 
(63.2%  in  2021,  well  below  the  EU  average  of 
81.1%).  This  translates  into  one  of  the  highest 
for 
proportions  of  out-of-pocket  payments 

is  comparatively 

low 

(137)  Based  on  data  provided  directly  by  Member  States  to  the 
European  Centre  for  Disease  Prevention  and  Control,  under 
the European Surveillance System. 

67 

of 

health 

Portugal  faces  shortages  and  an  uneven 
professionals, 
distribution 
impacting  access  to  health  services.  Despite 
the  rise  in  recent  years,  the  number  of  practising 
nurses per 1 000 population (7.5 in 2021) remains 
below the level across the EU. This is partly due to 
a  comparatively  low  inflow  of  nursing  graduates 
and to difficulties retaining nurses in the National 
Health  Service  (NHS).  There  are  also  shortages  in 
other  medical  specialties  (such  as  gynaecology, 
obstetrics,  mental  health,  general  surgery  and 
general  practitioners)  and 
in  certain  regions, 
especially in the south. A significant proportion of 
active  doctors  (40%)  is  aged  over  55,  raising 
concerns  about  the  long-term  accessibility  of 
health  services.  Portugal  has  wide  income-related 
disparities  regarding  unmet  needs  for  medical 
care.  Furthermore,  comparatively  high  unmet 
needs for medical care are reported in rural areas. 
This  may  be  linked  to  the  average  travelling 
distance  to  healthcare  facilities  in  these  areas, 

81.681.581.981.181.581.880.981.081.380.480.180.6201720182019202020212022PortugalEU6.65.90.61.302468EUPortugal% of GDP20242070increase 
 
     
 
      
 
Table A16.1:Key health indicators 

(1)  The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used. Doctors’ density data refer to practising doctors in all countries except Greece, Portugal (licensed to practise) and 
Slovakia  (professionally  active). Nurses’  density  data  refer  to  practising nurses  in  all  countries except  Ireland,  France,  Portugal, 
Slovakia (professionally active) and Greece (hospital only). 
Source: Eurostat Database; except: * OECD, ** Joint Questionnaire on non-monetary healthcare statistics, *** ECDC, **** Council 
Recommendation on stepping up EU actions to combat antimicrobial resistance in a One Health approach. 

management 

healthcare,  combined  with  efficiency-oriented 
measures  to 
improve  the  governance,  cost-
effectiveness,  accessibility  and  quality  of  public 
is  also  geared 
Investment 
hospital  services. 
towards  digitalising  the  NHS  as  a  whole,  with 
specific measures targeting the outermost regions 
of Madeira and the Azores. On mental health, the 
legislation 
government  has  already  adopted 
setting out the principles for organising, managing 
and  evaluating  mental  health  services.  A  new 
performance-based 
contract 
template  has  been  introduced  for  managers  in 
state-owned  enterprises  in  the  NHS.  Furthermore, 
a  referral  mechanism  has  been  set  up  to  direct 
inappropriate  or  avoidable  cases  from  emergency 
services  in  NHS  hospitals  to  primary  healthcare 
services. Work on digitalising the health system is 
progressing too, for example in terms of upgrading 
technology  networks  and 
local 
implementing 
telemonitoring. 
telehealth  and 
Complementary  investments  are  planned  under 
the cohesion policy funds in 2021-2027. Portugal 
will  invest  around  EUR 316 million,  mainly  in 
medical  equipment,  development  and  renovation 
family  and 
of  NHS  healthcare 
community‑based 
the 
accessibility  of  health  services  in  less  developed 
regions (139). 

information 

facilities, 

services, 

care 

and 

exceeding  the  average  distance  reported  for  the 
EU.  On  several  occasions  in  2023,  emergency 
departments in NHS hospitals struggled to provide 
a normal service or even had to close down due to 
lack  of  staff.  Moreover,  a  shortfall  of  general 
practitioners  has  resulted  in  decreased  coverage 
of  primary  care.  Between  January  2020  and 
January  2023  the  proportion  of  NHS  users  not 
registered  with  a  general  practitioner  doubled  to 
15%,  corresponding  to  more  than  1.5  million 
individuals.  Specialist  services  for  mental  health 
are  also  affected  by  staff  shortages,  leading  to 
long waiting lists, which are reported as the most 
frequent  barrier  to  accessing  mental  health 
services (138).  Working  conditions 
for  health 
professionals are a significant issue, with low pay 
acting  as  a  deterrent  and 
the 
attractiveness of working in the NHS, in particular 
for nurses. A significant number of nurses choose 
to emigrate to countries that offer better pay and 
conditions.  In  an  attempt to  address  geographical 
disparities  in  the  availability  of  doctors,  Portugal 
announced the launch of ‘More Doctors in 2024’, a 
training  programme  offering  salary  and  housing 
incentives to medical professionals who choose to 
practise in hospitals in the less densely populated 
areas of inland Portugal. 

reducing 

plans 

Portugal 

Through  its  recovery  and  resilience  plan 
(RRP), 
invest 
EUR 1.719 billion  (7.7%  of  the  RRP’s  total 
value)  in  healthcare.  The  RRP  includes  a  set  of 
mutually  supporting  reforms  and 
investments 
aimed  at  strengthening  the  NHS’s  capacity  in  the 
long-term 
fields  of  primary,  mental  and 

to 

(138) https://europa.eu/eurobarometer/surveys/detail/3032 

2024. 

(139)  The EU cohesion policy data reflect the status as of 13 May 

68 

20182019202020212022EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)82,979,179,174,5NA93.3 (2021)Cancer mortality per 100 000 population243,4244,9240,5226,1NA235.4 (2021)Current expenditure on health, % GDP 9,49,510,611,110,510.9 (2021)Public share of health expenditure, % of current health expenditure61,260,964,363,2NA81.1 (2021)Spending on prevention, % of current health expenditure 1,81,81,93,2NA6.0 (2021)Available hospital beds per 100 000 population344351350351NA525 (2021)Doctors per 1 000 population5,25,35,55,6NA4.1 (2021)*Nurses per 1 000 population6,97,17,37,5NA7.9 (2021)Total consumption of antibacterials for systemic use, daily defined dose per       1 000 inhabitants per day ***19,119,315,215,318,819.4 (2022) 
 
 
 
  
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

Annex 17 showcases the economic and social 
regional  dynamics  in  Portugal.  It  provides  an 
analysis  of  economic,  social  and 
territorial 
cohesion  in  the  Portuguese  regions  and  assesses 
investment  and  subnational  reform 
emerging 
social 
needs 
development and competitiveness in the country. 

foster  economic  growth, 

to 

of 
Overview 
performance at regional level 

economic 

and 

social 

Portugal  continues  to  converge  with  the  EU 
in  terms  of  GDP  per  capita,  but  regional 
disparities remain significant. In 2022, GDP in 
all  regions  exceeded  the  pre-pandemic  levels 
registered  in  2019  and  the  metropolitan  area  of 
Lisbon  was  the  only  region  in  Portugal  with  GDP 
per  capita  above  the  EU  average.  In  4  out  of  7 
regions 
(including  Norte,  Centro,  Azores  and 
Alentejo) GDP per capita was less than 75% of the 
EU  average.  As  a  result  of  long  periods  of  low 
growth,  productivity  and  employment  between 
2001  and  2019,  the  capital  region,  Algarve,  and 
Alentejo are in a development trap (140).  

Disparities  in  GDP  per  capita  continue  to 
mirror important labour productivity gaps. In 
2022, labour productivity in Portugal  was 74% of 
the  EU  average.  It  varied  between  the  capital 
region which had a productivity (gross value added 
per  worker)  of  89%  of  the  EU  average  and  other 
regions.  For  example,  the  Azores  with  66.5%  and 
Norte  with  64.5%,  the  lowest  levels  of  labour 
productivity  in  Portugal.  In  2000-2022,  regional 
inequalities  in  labour  productivity  decreased  and 
particularly in the second half of the last decade. 

Map A17.1:  Portugal, Regional Competitiveness 
Innovation Sub-Index, 2022 edition 

Source: DG REGIO, JRC 

in 

Regional  disparities 
competitiveness 
persist,  but  positive  trends  in  innovation 
performance  show  a  potential  for  unlocking 
new  sources  of  growth  in  all  regions.  The 
capital  region  remains  the  most  competitive 
among the Portuguese regions and the only with a 
score  on  Regional  Competitiveness  Index  above 
the  EU  average (141).  From  2016  to  2022,  all 
Portuguese regions improved their performance on 
the  Regional  Competitiveness  Innovation  Sub-
Index, with the most dynamic changes observed in 
Norte  and  Centro.  The  capital  and  Norte  regions 
have  a  score  higher  than  the  EU  average 
(respectively  130%  and  102.5%)  while  Centro  is 
close 
(Table  A17.1). 
However,  the  capital  and  Norte  regions  are  the 
only  Portuguese  regions  with  business  R&D 
expenditure above 1% of GDP. Regional disparities 
in  competitiveness  are  also  related  to differences 
in  skilled 
labour  market 
efficiency. 

labour  force  and 

to  the  average 

(98%) 

Almost  all  Portuguese  regions  experienced 
demographic  decline  and  depopulation. 
the  population 
Between  2013  and  2021, 
decreased  in  almost  all  Portuguese  regions  with 
the  sharpest  decline  in  Alentejo,  with  8%.  The 
opposite trend was observed in the capital region, 
where  the  population  grew  by  1.7%.  The  decline 

(140)  European  Commission,  2021,  Cohesion  in  Europe  towards 
2050, 8th report on economic, social and territorial cohesion. 

(141)  The Regional Competitiveness Index – 2022. 

69 

 
 
 
 
 
 
 
 
 
Table A17.1:Selected indicators at regional level in Portugal 

Source: Eurostat, EDGAR database 

and ageing of population have shrunk the working 
age  population,  making  Alentejo  fall  into  a  talent 
development trap (142). 

The  autonomous  and  outermost  regions  of 
Azores  and  Madeira  continue 
to  face 
significant  challenges  due  to  their  specific 
territorial  characteristics.  The  Azores  and 
Madeira  record  the  lowest  values  in  the  country 
for Regional Competitiveness Index. The population 
at-risk-of-poverty  or  social  exclusion  (AROPE)  in 
these  regions  were  the  highest 
in  Portugal, 
exceeding  in  both  cases  30%  in  2022.  Similarly, 
the  rate  of  early  leavers  from  education  and 
training  stood  at  21.7%  in  the  Azores  in  2023 
against  an  average  rate  in  mainland  Portugal  of 
7.6%.  Between  2013  and  2021,  the  decline  in 
population  in  Madeira  was  4%  and  2.5%  in  the 
Azores.  Part  of  the  decline  is  caused  by  natural 
population  change,  in  particular  in  Madeira  (-
3.1%), but also by net out-migration in the Azores 
(-2.2%).  In  addition,  the  share  of  the  25-64  aged 
population  with  a  tertiary  education  degree  was 
significantly  lower  in  the  Azores  (17.2%)  and 
Madeira (23.7%) than in the metropolitan area of 
Lisbon 
(39.8%)  and  the  Portuguese  average 
(29.9%) in 2023. The combination of these factors 
put  these  regions  at  risk  of  falling  into  a  talent 
development trap. 

Portugal  is  performing  relatively  well  in 
terms  of  greenhouse  gas  emissions,  but 
there  are  significant  regional  differences.  In 
2022,  the  two  regions  with  CO2  emissions/person 
above  the  EU  average  were  Alentejo  (17  tonnes) 
and  Centro  (8  tonnes).  In  1990-2022,  Alentejo 
reduced CO2  emissions/person  by  28%  which  was 

(142)  Communication  Harnessing  talent 

in  Europe’s 

regions, 

COM(2023) 32 final. 

70 

the  closure  of 

induced  by 
the  coal-fired 
thermoelectric  plant  in  Sines  in  January  2021. 
Despite a closure of coal-fired power plant in Pego 
in  November  2021,  which  was  one  of  the  most 
emitting facilities in the country, Centro registered 
a growth in CO2 emissions/person by 36%. 

In  the  two  most  densely  populated  areas, 
namely  Norte  and  the  capital  region  there 
are  diverging  trends.  In  Norte,  the  increase  in 
CO2  emissions  is  driven  partly  by  the  growth  of 
industrial activities, in comparison to the decrease 
in 
the  growing 
region,  due 
importance  of  the  service  industries.  Both  regions 
are  facing  a  challenge  of  reducing  the  level  of 
nitrogen  dioxide  concentration,  as  they  accounted 
for  the  highest  level  in  the  country  as  well  as 
above the EU average. 

the  capital 

to 

Investment  and  subnational  reform  needs 
ahead 

transfer 

knowledge 

and 
Boosting 
valorisation  of  R&D  results  remains  a  key 
investment  priority 
in  Portugal.  Providing 
support for applied research and innovation, in the 
defined  areas  of  smart  specialisation,  based  on 
tailored  mechanisms  and  policy  instruments  is 
particularly  relevant.  Encouraging  collaboration  of 
between  all  actors  of  the  innovation  ecosystem 
and  diffusion  of  innovation,  particularly  in  SMEs, 
remains necessary (Annex 11). 

the 

operationalising 

At  the  same  time,  Portugal  could  benefit 
from 
innovation 
governance  structure,  in  order  to  ensure 
synergies  between  the  national  and  the 
regional strategies but also the coordination 
with other public policy instruments. However, 
the  governance  model  as  defined  in  the  national 
strategy  for  smart  specialisation  is  not  fully 

GDP per head (PPS)Productivity (GVA (PPS) per person employed)Real productivity growthGDP per head growthPopulation growthNatural population changeR&D expenditure in the business enterprise sector (BERD)Greenhouse Gas EmissionsGreenhouse Gas EmissionsEU Regional Competitiveness Index 2.0 - 2022 editionIndex, EU27 = 100, 2022Index, EU27 = 100, 2022Average % change on the preceding year, 2013-2022Average % change on the preceding year, 2013-2022Average annual change per 1000 residents, 2013-2021Average annual change per 1000 residents, 2013-2021% of GDP, 2021tCO2 equivalent per head, 2022Percent change per head (%), 1990-2022Index, EU27 = 100, 2022European Union100100.00.71.441.9-1.01.58.0100Portugal7973.90.71.74-2.2-2.71.05.7-394Norte6764.51.32.30-3.2-2.21.23.91292.1Algarve9077.6-0.31.79-2.3-2.30.25.2-281.9Centro (PT)6768.01.41.86-3.9-5.60.98.43689.0Área Metropolitana de Lisboa10289.3-0.21.111.70.01.13.4-16110.0Alentejo7370.40.51.36-8.0-7.30.616.8-2879.1Região Autónoma dos Açores7166.50.31.99-2.5-0.60.14.7866.2Região Autónoma da Madeira7973.30.52.24-4.0-3.10.21.84477.9Region name 
 
 
  
 
of 

the 

2021-2027 

responsible 
implementing 

operational,  yet.  There  is  also  a  need  for  further 
strengthening  the  capacity  of  the  managing 
authorities 
regional 
for 
programmes 
planning, 
coordinating, 
and  monitoring 
regional  smart specialisation strategies, especially 
in regions with emergent or less mature innovation 
ecosystems.  Ensuring  a 
sound  multi-level 
governance  of  innovation  policy  will  allow  fully 
exploiting  opportunities  for  the  future  economy 
and increasing the competitiveness the regions. 

through 

Along  with  reindustrialisation  and  regional 
competitiveness  efforts,  energy-efficiency 
investments  remain  important  to  build  up 
resilience  to  changes  in  energy  prices.  There 
are  major  investments  needs  to  upgrade  the 
energy  performance  of  the  Portuguese  building 
stock,  namely 
renovation  of  public 
buildings,  affordable  social  housing,  and  the 
incorporation  of  carbon-free  technologies  and 
productive  processes  at  the 
level  of  private 
beneficiaries.  Portugal  could  benefit  from  wider 
use  of  financial  instruments  to  leverage  private 
investment  on  energy  efficiency,  in  addition  to 
grant-schemes to tackle energy poverty and social 
housing 
energy 
investments  should  complement  these  measures. 
Portugal could also benefit from the opportunities 
of the Strategic Technologies for Europe  Platform 
(STEP)  initiative  to  boost  investments  in  critical 
technologies.  

renovations. 

Renewable 

In parallel to these investments, boosting the 
technical  and  administrative 
capacity, 
especially  at  regional  and  local  level,  to 
develop  and  implement  energy  efficiency 
measures  remains  key.  The  local  and  regional 
authorities  should  assume  a  pivotal  role  in  the 
design,  execution,  and  evaluation  of  such 
interventions.  Improving  the  capacity  is  required, 
in  regions  which  faced  significant 
especially 
challenges 
implementation  of  energy 
in  the 
the  2014-2020 
efficiency  measures  during 
programming  period.  This  will  allow  to  tailor 
solutions  to  the  unique  characteristics  of  the 
respective territories and maximise the benefits of 
energy efficiency investments.  

Despite  progress  in  recent  years  in  water 
management and climate change adaptation, 
further 
relevant 
infrastructure are  needed.  Portugal  ranks  near 
the  EU  average  in  terms  of  population  connected 
to  water  supply  and  sanitation,  but  there  are 

investments 

in 

significant  regional  differences.  Alentejo,  Algarve 
and  Madeira  face  common  challenges  in  water 
supply  due  to  irregular  rainfall  patterns  and 
frequent  droughts.  Investments  are  needed  in 
wastewater collection and treatment, water reuse, 
reduction  of  leaks  in  the  networks,  general  water 
supply and improving monitoring.  

Further mechanisms should be considered to 
encourage  consolidation  of  water  and 
sanitation service providers and streamlining 
the  governance  structure.  This  would  help  to 
achieve  effective  coordination  at  the  subnational 
level  between  a  vast  number  of  water  and 
sanitation  entities,  economies  of  scale  and  would 
improve efficiency. 

Reinforcing  investments  would  promote  the 
transition  towards  a  circular  economy. 
Portugal  shows  slow  progress  in  improving  the 
circular  material  use  and  continued  to  perform 
significantly below the EU average. In 2012-2022, 
it 
the 
'circularity  rate'  from  2%  to  2.6%;  however,  this 
rate continued to be well below the EU average of 
11.5%. 

recorded  only  marginal 

increase  of 

Improving  technical  capacity  and  expertise 
would  enable  to  improve  the  impact  of  the 
circular  economy  investments.  Developing  the 
capacity  of  local  and  regional  actors  responsible 
for  the  design  and  implementation  of  circular 
economy  related  investments,  especially  in  urban 
and  industrial  areas  is  important  for  effective 
investment. 

Decarbonising  urban  mobility  and  transport 
plays  a  key  role  in  fighting  climate  change. 
The  transport  sector  was  responsible  for  28%  of 
all  emissions  and  34%  of  the  total  energy 
consumption  in  Portugal  in  2021 (143).  Making 
railway  transport  more  attractive  and  supporting 
sustainable  urban  mobility,  in  particular  in  the 
metropolitan  areas,  including  by  increasing  the 
costs  of  less  environmentally  friendly  modes,  will 
maximise 
transport  decarbonisation  benefits, 
ensuring that investments have the highest return. 

on 

Delivering 
network 
investments  remains  a  priority.  Portugal  has 
financial 
throughout 

several  multiannual 

railway 

the 

(143) 2023 national energy and climate plan. 

71 

 
 
frameworks  highlighted  its  intention  to  invest  in 
railways,  mostly  through  the  electrification  and 
renewal  of  lines.  Most  of  these  investments  have 
encountered  varied  problems  to  be  completed  by 
their  expected  dates.  There  is  a  need  to  improve 
the  overall  context  in  which  these  projects  are 
carried  out,  from  conception  to  delivery.  This 
requires  a  thorough  assessment  to  determine 
constraints  and  the  reforms  needed  to  speed  up 
the delivery rates of railway projects. Some of the 
aspects that need to be improved include transport 
planning  capacity,  with  further  integration  with 
climate, 
policy-wide 
environment, energy, time-losses, safety, land-use, 
etc.),  opening  up  and  increasing  effective  public 
participation  in  investment  decisions,  ensuring 
transport 
financial  autonomy  of  all  public 
enterprises,  and  making  public  procurement 
procedures more flexible. 

objectives 

(such 

as 

The  investments  should  be  coupled  with 
support  for  upskilling  labour  reserves.  This 
will allow to increase employment rates and foster 
social  inclusion,  thus  also  supporting  fair  green 
and  digital  transitions.  Strengthening  education 
and training and active labour market policies will 
help  address  skills’  deficits  and  labour  shortages, 
while  raising  productivity  levels  against  a  rapidly 
ageing workforce (Annex 15). 

and 

new 

The 
reinforced  multi-level 
governance  model  needs  to  become  a 
catalysis  of  cross-sector  and  strategic 
approach  to  regional  development.  In  the 
context  of  the  ongoing  process  of  State  reform 
towards  decentralisation  that  was  initiated  in 
2008, Portugal took a decision in December 2022 
to  devolve  some  of  the  services  of  the  Central 
Public  Administration  to  the  Commissions  for 
Coordination  and  Regional  Development  (CCDRs), 
which  will  be  implemented  through  a  change  to 
their  organisational  structures,  redefinition  of 
missions  and  tasks.  The  CCDRs  will,  at  least, 
double  their  size  both  in  terms  of  the  number  of 
civil  servants  and  internal  units.  The  new  set  of 
competences  include,  notably,  the  reinforcement 
of  planning  and  coordination  function,  which  is 
expanded for planning and implementation of new 
policy  areas  such  as  agriculture,  biodiversity 
culture, education, health, education, and territorial 
planning.  The  challenges 
to  be 
addressed  are  related  to  the  capacity-building  of 
the  CCDRs  and  their  bodies,  considering  the  new 
institutional 
the  new 
set-up  as  well  as 
competences.  Moreover,  it  will  be  of  utmost 

that  need 

perspective, 

importance to ensure regulatory coherence from a 
regulatory 
multi-level 
frameworks  of  central,  regional,  and  local  bodies, 
to  overcome  constraints  that  undermine  the 
development of economic activities and attracting 
investment. 

covering 

72 

 
 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

continue 

Portuguese  banks  continue  to  strengthen 
their resilience. Geopolitical concerns continue to 
heighten  uncertainty,  while  monetary  policy 
normalisation  is  gradually  affecting  the  economy. 
This  in  turn  is  creating  a  set  of  risks  to  financial 
stability  and vulnerabilities  in the  financial  sector. 
Despite 
the  more  adverse  macro-financial 
to 
background,  Portuguese  banks 
strengthen  their  capital  levels  (capital  adequacy 
stood  at  19%  in  Q3  2023)  and  de-risk  their 
balance  sheets.  The  composition  of  Portugal’s 
banking  sector  has  not  noticeably  changed  since 
2017  as  there  has  not  been  any  major  M&A 
activity.  The  lending  market  is  already  highly 
consolidated  overall,  with  the  five  largest  banks 
accounting  for  about  three  quarters  of  banking-
sector  assets. Key  foreign  investors include major 
players  from  Spain,  and  local  lenders  themselves 
have  a  significant  international  presence,  mainly 
across  several 
in  Africa.  The 
jurisdictions 
Portuguese  banking  sector  is  smaller  than  the  EU 
average,  with  assets  equivalent  to  around  1.6 
times the country’s economic output. The state has 
a substantial presence in the banking industry as it 
owns the country’s largest credit institution.  

Higher  interest  rates  continue  to  lift  banks’ 
profitability.  Local  banks  have  returned  to 
healthy  recurring  profitability  levels.  The  major 
efforts  the  entire  sector  undertook  a  decade  ago 
to  start  improving  operational  efficiency  are  now 
paying off. Banks are leaner (in terms of branches 
and staff numbers) and more efficient than most 
of  their  European  peers.  The  cost-to-income  ratio 
remains  below  50%  margin  since  2022  with  a 
relevant  drop  in  2023  (from  48,8%  in  2022  to 
36,5%  in  2023).. Like  in  the  rest  of  the  European 
banking  system,  the  rise  in  short-term  interest 
rates,  which  began  in  2022,  has  substantially 
boosted banks’ net interest margins (NIM) and net 
interest  income  (NII).  Given  the  prevalence  of 
variable-interest-rate  loans  throughout  economy 
(and  in  particular  within  the  mortgages  segment, 
with  85%  of  all  housing  loans  contracted  at 
variable  rates),  the  tightening  of  monetary  policy 
had  a  positive  and  rapid  impact  on  NII.  This  was 
mainly  due  to  the  faster  pass-through  of  market 
interest rates to borrowers than to deposit interest 
rates, but also because of the limited relevance of 
market funding for local lenders. In 2023, NII was 
the  main  driver  behind  the  double-digit  returns 
generated by the banking system (Q3-2023 return 
on  equity  reached  13.3%  against  a  European 

rates, 

interest 

average  of  10.2%).  With  most  loans  already 
repriced  at  higher 
the  NIM 
expansion  process  has  reached  its  high  point  but 
kept  stable  still.  However,  given  the  higher-
interest-rate environment and the abundant retail 
deposits  that  comfortably  cover  lenders’  funding 
needs,  the  operating  performance  of  local  banks 
should  remain  relatively  strong  into  the  future. 
This  will  also  allow  banks 
continue 
strengthening  their  capital  ratios  (at  19%  CAR  in 
mid-2023)  and  enable  them  to  swiftly  deal  with 
non-performing loans (NPLs). 

to 

Graph A18.1: Credit growth 

Source: ECB 

The  issuance  of  new  credit  has  continued  to 
slow. The loan-to-deposit ratio stood at 72.3% in 
mid-2023,  indicating  that  lenders  have  further 
deleveraged  their  balance  sheets.  The  rising 
interest  rates  have  reduced  demand  for  credit  in 
both  the  corporate  and  household  segments.  The 
flow  of  new  lending  to  the  non-financial  private 
sector has been negative on a year-on-year basis 
since  mid-2023.  Local  firms  cite  high  interest 
rates  and  reduced  investment  needs  as  the 
loan  demand 
primary  factors  behind 
(according  to  the  Portuguese  Central  Bank's 
lending  survey).  In  an  environment  characterised 
by  heightened  uncertainty  and  lower  consumer 
confidence,  households  have  also  become  more 
taking  on  new  borrowing 
cautious  about 
commitments. 
In  particular,  demand  for  new 
mortgages  declined  significantly  (by  over  20%) 
over the first three quarters of 2023. 

lower 

Concerns  persist  over  soaring  real-estate 
investors, 
prices.  Strong  demand  by  foreign 

73 

-10-8-6-4-2024681012200920102011201220132014201520162017201820192020202120222023Total privateNFCHH% 
 
 
  
 
to  unprecedented 

continued housing shortages, and a decade of low 
interest  rates  have  propelled  local  real-estate 
prices 
levels.  Portuguese 
residential 
real  estate  has  never  been  as 
expensive  as  it  is  today,  in  particular  in  some  of 
the  major  cities.  In  parallel,  loans  for  house 
purchases 
real  estate 
that  are  backed  by 
constitute  a  significant  portion  of  banks’  loan 
portfolios  –  75%  of  the  loan  book  to  private 
individuals  and  26%  of  total  banks’  assets  (as  of 
December  2023) (144).  The  potential  risks  of 
housing-price  corrections (145)  are  therefore  an 
important consideration for local lenders. Similarly, 
a  possible  uptick  in  mortgagor  defaults  due  to 
rising  unemployment  could  expose  banks  to 
substantial  losses.  These  risks  related  to  real 
estate  were  recognised  by  the  central  bank  in  a 
recent  decision  to  activate  a  new  4%  sectoral 
systemic  risk  buffer  (sSyRB)  for  banks  using  the 
internal  ratings-based  approach.  This  measure 
residential 
targets 
properties in Portugal and aims to increase banks’ 
resilience against potential economic downturns or 
unexpected  declines 
in  residential  real-estate 
prices.  The  measure  complements  the  already-
existing  borrower-based  measures (146)  introduced 
in  2018.  These  borrower-based  measures  include 
limits  on  the  loan-to-value  ratio,  on  the  debt-
service-to-income  ratio,  and  on  loan  maturities. 
Furthermore,  mortgage  credit  saw  a  year-on-year 
decline  of  1.2%  in  November  2023,  and  this 
declining  trend  is  likely  to  continue  in  the  coming 
months  exerting  some  downward  pressure  on 
housing prices. 

loans  secured  by 

retail 

robust 
job  market.  Additionally,  government 
measures,  and  bank  solutions  that  align  loan 
repayments/instalments  with  borrowers’  payment 
capacity have also helped to keep credit risk under 
control. Nevertheless, credit-quality trends need to 
be  monitored  closely,  particularly  for:  (i)  more 
vulnerable  borrowers  with  variable  interest  rates; 
and  (ii)  non-financial  corporations  in  sectors  that 
were more structurally impacted by the COVID-19 
pandemic. 

the 

from 

arising 

Banks  are  continuing  on  their 
journey 
towards  climate  transition  and  increased 
digitalisation.  Understanding  the  challenges  and 
growing 
opportunities 
digitalisation  of  financial  activities  and 
the 
is  of  paramount 
transition 
ongoing  climate 
importance.  As  emphasised  by  the  Portuguese 
Central Bank, Portuguese banks need to tackle the 
implications  of  relying  increasingly  on  digital 
platforms  and  artificial  intelligence  tools  and 
therefore  bolster  their  operational  resilience  and 
management  of  cyber  incidents.  Furthermore,  the 
Portuguese  Central  Bank’s  first  annual  report  on 
the  banking  sector’s  exposure  to  climate  risk (147) 
has  analysed  the  impact  of  climate-related  risks 
on  the  Portuguese  banking  system.  The  report 
highlights  that  banks  are  especially  exposed  to 
areas  at  medium  to  severe  risk  for  droughts, 
extreme heat and wildfires, with over 90% of total 
bank  credit  directed  to  such  regions.  Additionally, 
firms  in  flood-prone  areas  account  for  38%  of 
total credit, while exposure to risks related to sea-
level rise or hurricanes is low. 

In  spite  of  headwinds,  asset-quality  erosion 
has  been  manageable  so  far.  The  rapid 
increase  in  interest  rates  has  not  led  to  asset-
quality  issues  on  the  banks’  balance  sheets. 
Overall, both households and firms have managed 
well  the  rise  in  their  credit  repayments.  The  NPL 
ratio rose to 3.1% in mid-2023, just 10 bps higher 
than  the  level  at  the  end  of  2022,  and  Stage  2 
loans  (i.e.  loans  which  featured  a  significant 
increase  in  credit  risk)  have  been  quite  stable 
throughout the past year, with a small increase in 
the  household  segment.  The  key  factors  behind 
the  steady  quality  of  the  balance  sheet  are:  (i) 
relatively  dynamic  economic  activity;  and  (ii)  the 

(144)  Banco de Portugal. 

(145)  Banco de Portugal macroprudential measures. 

Despite  facing  profitability  challenges  in 
2023,  insurance  companies  maintain  robust 
solvency  levels.  The  local  insurance  market  is 
less  developed  in  terms  of  insurance  density  and 
insurance penetration than some larger and more 
mature  European  markets.  Nevertheless, 
the 
product offering is quite comprehensive. In the life 
sector, there was a notable decline in gross written 
likely 
premiums  from  Q2-2022  to  Q2-2023, 
influenced  by  a  reduction  in  consumers’  real 
purchasing  power  due  to  inflation.  Conversely, 
claims  incurred  from  life-insurance  products  also 
increased  significantly  as  inflation  persisted  in 
Portugal. Overall, insurance companies in Portugal 
still  exhibit  a  solid  solvency  profile,  showing  a 
slight improvement in recent quarters, although it 

(147)  Banco  de  Portugal,  2023,  Annual  Report  on  the  Banking 

(146)  Banco de Portugal Behavioral Supervision Recommendation 

Sector’s Exposure to Climate Risk (bportugal.pt). 

74 

 
 
 
Table A18.1:Financial Soundness Indicators 

(1) Last data: Q3 2023 
(2) Data are annualised 
(3) Data available for EA countries only, EU average refers to EA area 
Source: ECB, Eurostat 

remains below the solvency levels reached 2 years 
ago. Moreover, it is worth noting that, as indicated 
by  the  EIOPA,  Portugal  has  a  considerable 
insurance-protection 
natural 
gap 
catastrophes based on EU standards (148). This can 
be attributed to elevated hazard levels, particularly 
for  wildfires,  and  a  remarkably  underdeveloped 
insurance sector. 

against 

(148)  EIOPA,  Dashboard  on  insurance  protection  gap  for  natural 

catastrophes 

75 

2017201820192020202120222023EUMedianTotal assets of the banking sector (% of GDP)200.8190.8181.2206.3203.0178.0161.0257.0184.6Share (total assets) of the five largest banks (%)73.173.073.373.673.972.2--69.6Share (total assets) of domestic credit institutions (%)169.768.368.468.569.368.568.6-62.9NFC credit growth (year-on-year % change)-0.31.80.99.54.50.8-1.2-2.4HH credit growth (year-on-year % change)-0.20.91.21.63.83.4-0.7-1.4Financial soundness indicators:1        - non-performing loans (% of total loans)13.39.46.14.93.63.02.91.81.8- capital adequacy ratio (%)15.215.216.718.118.018.118.919.620.1- return on equity (%)2-0.82.74.30.04.98.714.19.913.2Cost-to-income ratio (%)152.960.259.256.051.648.836.552.844.9Loan-to-deposit ratio (%)178.976.276.472.168.971.873.293.380.2Central bank liquidity as % of liabilities6.95.85.39.211.04.30.9-0.7Private sector debt (% of GDP)163.0155.1149.5163.7156.6141.1-133.0118.4Long-term interest rate spread versus Bund (basis points)273.5144.2100.992.566.9102.880.4107.7104.2Market funding ratio (%)42.843.745.245.845.946.4-50.839.8Green bonds outstanding to all bonds (%)3---1.11.92.22.54.02.71-34-1011-1718-2424-27Colours indicate performance ranking among 27 EU Member States. 
 
 
  
 
ANNEX 19: TAXATION 

This  annex  provides  an 
indicator-based 
overview of Portugal’s tax system.  It includes 
information on the tax structure (the types of tax 
that  Portugal  derives  most  of  its  revenue  from), 
the  tax  burden  on  workers,  and  the  progressivity 
and redistributive effect of the tax system. It also 
provides 
tax  collection  and 
compliance.  

information  on 

The tax burden in Portugal remains below the 
EU average, despite recent increases. In 2022, 
tax revenues in Portugal increased by 0.8 pps and 
reached 36.0% of GDP, following an upward trend 
since  2019  that  could  have  been  halted  in  2023 
(35.8% of GDP, Table A19.1). The gap with the EU 
aggregate  reached  4.2 pps  in  2022.  The  increase 
in  tax  revenues  in  2022  was  largely  due  to  an 
increase in receipts from capital taxes (from 6.5% 
of GDP to 7.4%) and, within them, from corporate 
income taxes (from 2.4% to 3.3% of GDP), helped 
by the increase in businesses’ profits on the back 
of  the  economic  recovery  and  high  inflation.  The 
effective average tax rate of corporate income tax 
in  Portugal  remained  comparatively  high  in  2022 
(28.4%,  9.4 pps  above  the  EU  average).  In  terms 
of  tax  mix  (Graph A19.1),  the  share  of  revenues 
from  labour  taxes  is  relatively  low  in  Portugal 
(44.2% of the total, against 50.6% in the EU) due 
to a comparatively low level of wages. By contrast, 
at  35.2%,  revenue  share  from  consumption  taxes 
is well above the EU aggregate (27.3%). 

Table A19.1:Taxation indicators 

revenues 

Extraordinary  measures  adopted  to  contain 
from 
inflation  pushed  down 
environmental  taxes  in  2022.  The  decrease 
from 2.3% to 1.9% of GDP was roughly in line with 
the  EU  aggregate.  In  particular,  the  reductions  in 
the fuel tax and the carbon rate under the fuel tax 
introduced  in  2021  are  still  in  force.  The  limited 
size of pollution and resources taxes (less than 2% 
of  revenues  from  environmental  taxes)  suggests 
potential  to  strengthen  the  application  of  the 
‘polluter  pays’  principle  and  scope  to  implement 
some  types  of  taxes  such  as  on  NOx  emissions, 
waste loadings to water, fertilisers and pesticides. 

The planned reform to reduce the number of 
tax  benefits  could  help  to  bring  the  tax 
burden in Portugal closer to the EU average. 
As  part  of  the  Addendum  to  the  RRP,  Portugal  is 
expected  to  revise  the  legal  framework  of  a 
substantial  set  of  tax  benefits  by  2026.  The 
simplification  of  the  system  and  the  reduction  in 
the  number  of  tax  benefits  shall  be  done  on  the 
grounds  of  a  technical  assessment  carried  out  by 
the  newly  created  ‘U-TAX’  tax  policy  unit.  This 
reform  is  expected  to  curtail  the  associated 
forgoing  of  revenue  and  to  strengthen  the  cost-
efficiency  of  the  remaining  tax  benefits.  In  2021, 
the VAT policy gap in Portugal continued to be well 
above  the  EU  average  (52.2%  of  notional  ideal 
revenue), a reflection of the many existing VAT tax 
benefits (i.e. reduced rates and exemptions). 

(1) Forward-looking Effective Tax Rate (OECD) 
(2) A higher value indicates stronger redistributive impact of taxation 
(*) EU-27 simple average 
** Forecast value for 2022 For more details on the VAT gap, see European Commission, Directorate-General for Taxation and 
Customs Union, 2023, VAT gap in the EU, https://data.europa.eu/doi/10.2778/911698. 
For more data on tax revenues as well as the methodology applied, see the Data on Taxation webpage, 
https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en. 
Source: European Commission and OECD 

76 

PT2010202020212022202320102020202120222023Total taxes (including compulsory actual social contributions) (% of GDP)30.435.235.236.035.837.940.040.440.2Labour taxes (as % of GDP)12.616.316.115.920.021.320.720.3Consumption taxes (as % of GDP)11.412.112.612.710.810.711.211.0Capital taxes (as % of GDP)6.46.76.57.47.18.08.68.9Of which, on income of corporations (as % of GDP)2.72.82.43.32.42.53.03.4Total property taxes (as % of GDP)1.72.32.42.31.92.32.22.1Recurrent taxes on immovable property (as % of GDP)0.60.80.70.71.11.21.11.0Environmental taxes as % of GDP2.42.42.31.92.42.22.32.0Tax wedge at 50% of average wage (Single person) (*)28.128.135.235.435.933.931.732.131.831.7Tax wedge at 100% of average wage (Single person) (*)37.141.542.042.142.341.040.139.940.040.2Corporate income tax - effective average tax rates (1) (*)28.428.428.419.519.019.0Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)8.48.58.48.38.68.18.27.9Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)45.945.640.935.5VAT Gap (% of VAT total tax liability, VTTL)(**)12.97.03.69.75.4Tax structureProgressivity & fairnessTax administration & compliancePortugalEU-27 
 
 
 
       
 
Graph A19.1: Tax revenues from different tax types as % of total taxation 

Values for EU are GDP-weighted EU averages (EU aggregates). 
Source: European Commission 

Graph A19.2: Tax wedge for single and second 
earners as a % of total labour costs, 2023 

taxes and benefits, see Table A19.1) by more than 
the EU average in 2022. 

in  2021.  Outstanding 

Effectiveness of tax collection showed mixed 
results 
tax  arrears 
remained very high at the end of 2021 (45.6% of 
total  revenues),  so  did  not  reflect  the  gradual 
return  to  pre-COVID-19  values  observed  in  many 
other  Member  States.  The  VAT  compliance  gap 
improved  further  in  2021  (Table  A19.1),  in  line 
with  a  majority  of  EU  countries  that  also  saw  a 
reduction  of  the  compliance  gap  which  was  at 
least  partly  due 
the  COVID-19-induced 
economic  crisis.  As  regards  corporate  income  tax, 
its  complex  structure,  with  state  and  municipal 
surcharges, limits tax collection effectiveness. 

to 

for 

the 

relatively  old  age  of 

tax 
The 
administration’s  staff  remains  a  challenge. 
Portugal’s tax administration has one of the most 
aged  profiles  in  the  world  (53.2%  of  its  staff  are 
older  than  54  and  only  0.8%  have  fewer  than  5 
years  of  service).  The  lack  of  replacement  of  the 
staff and the retirement of half of them over the 
coming  decade  are  problematic 
the 
effectiveness of the tax administration. In order to 
partly  address 
this  challenge,  Portugal  has 
developed a strategy for digital transformation of 
the  tax  administration,  but  further  action 
is 
the  governance 
pending 
structures,  skills  management  and  the  digital 
culture  among  staff 
the  challenges  of 
digitalising  the  tax  administration.  The  ongoing 
implementation  of  different  measures  within  the 
context  of  the  RRP  (such  as  digitalisation  of  all 
processes  related  to  rural  property  taxation, 
digitalisation  of  social  security  services  and 

to  adapt 

in  order 

to 

The second earner tax wedge assumes a first earner at 100% 
of the average wage and no children. For the methodology of 
the tax wedge for second earners, see OECD, 2016, Taxing 
Wages 2014-2015. 
Source: European Commission 

Portugal’s 
labour  tax  wedge  reflects  a 
progressivity  that  is  in  line  with  the  EU 
average.  Graph  A19.2  shows  that  the  labour  tax 
wedge  for  Portugal  in  2023  was  considerably 
higher  than  the  EU  average  not  only  for  single 
people  at  the  average  wage,  but  also  for  low-
income  earners  at  50%  and  67%  of  the  average 
wage  and  high-income  earners  at  167%  of  the 
average wage. Second earners at a wage level of 
67%  of  the  average  wage,  whose  spouses  earn 
the  average  wage,  were  subject  to  a  tax  wedge 
that was significantly higher than the EU average, 
too. In addition, the tax wedge for second earners 
in  Portugal  was  clearly  higher  than  the  one  for 
single  persons at the same wage level. Portugal’s 
system of tax benefits under personal income tax 
helped  reduce  inequality  (as  measured  by  the 
difference  in  GINI  coefficients  before  and  after 

77 

35.938.342.348.043.12025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - PTSingle earner - EU averageSecond earner -  PTSecond earner -  EU average50.627.322.144.235.220.5Tax revenue shares in 2022, Portugal (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital3.83.91.40.90.10.21.92.54.62.701234567Portugal -environmentaltaxationEU -environmentaltaxationPortugal -propertytaxationEU - propertytaxationEnvironmental and property taxation as % of total tax revenue, Portugal and the EUEnergy taxesTransport taxesResource/pollution taxesRecurrent property taxesOther property taxes 
 
        
        
creation  of  specialised  chambers 
superior  courts) 
performance of Portugal’s tax administration. 

is  expected  to 

in  the  tax 
improve  the 

78 

 
 
ANNEX 20: TABLE WITH ECONOMIC AND FINANCIAL INDICATORS 

Table A20.1:Key economic and financial indicators 

(1) domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled 
branches. 
(2) NIIP excluding direct investment and portfolio equity shares. 
Source: Eurostat and ECB as of 2024-5-17, where available; European Commission for forecast figures (Spring forecast 2024). 

79 

2004-072008-122013-2020212022202320242025Real GDP (y-o-y)1.7-1.40.75.76.82.31.71.9Potential growth (y-o-y).-0.41.12.11.92.12.22.2Private consumption (y-o-y)2.0-1.61.14.75.61.71.81.9Public consumption (y-o-y)1.4-1.10.64.51.41.02.11.2Gross fixed capital formation (y-o-y)0.6-7.74.48.13.02.53.93.7Exports of goods and services (y-o-y)5.61.51.512.317.44.12.82.5Imports of goods and services (y-o-y) 5.7-2.63.712.211.12.24.13.2Contribution to GDP growth:Domestic demand (y-o-y)1.8-2.81.55.44.41.82.22.1Inventories (y-o-y)0.3-0.10.00.60.1-0.30.00.0Net exports (y-o-y)-0.41.5-0.8-0.22.30.9-0.6-0.3Contribution to potential GDP growth:Total Labour (hours) (y-o-y).-1.10.40.50.30.70.80.7Capital accumulation (y-o-y).0.3-0.10.10.10.10.20.2Total factor productivity (y-o-y).0.40.71.51.61.41.31.2Output gap-0.9-1.6-1.0-3.41.31.40.90.6Unemployment rate8.912.69.96.76.26.56.56.4GDP deflator (y-o-y)3.00.61.61.95.07.12.62.1Harmonised index of consumer prices (HICP, y-o-y)2.51.90.60.98.15.32.31.9HICP excluding energy and unprocessed food (y-o-y)2.21.40.60.36.26.32.52.1Nominal compensation per employee (y-o-y)3.30.41.75.15.78.13.32.8Labour productivity (real, hours worked, y-o-y)1.71.10.23.03.11.10.20.1Unit labour costs (ULC, whole economy, y-o-y)1.4-0.22.31.30.56.62.61.8Real unit labour costs (y-o-y)-1.5-0.80.7-0.6-4.3-0.50.0-0.3Real effective exchange rate (ULC, y-o-y)-0.2-1.90.71.0-2.70.1-1.6-0.5Real effective exchange rate (HICP, y-o-y)0.6-0.5-0.2-1.6-1.40.9..Net savings rate of households (net saving as percentage of net disposable income)1.81.5-1.20.4-4.9-5.0..Private credit flow, consolidated (% of GDP)13.84.40.14.53.50.9..Private sector debt, consolidated (% of GDP)173.6203.4167.1156.6141.8130.3..of which household debt, consolidated (% of GDP)81.590.671.366.360.955.2..of which non-financial corporate debt, consolidated (% of GDP)92.1112.895.890.380.975.1..Gross non-performing debt (% of total debt instruments and total loans and advances) (1)1.24.110.03.02.5...Corporations, net lending (+) or net borrowing (-) (% of GDP)-4.5-1.71.8-0.4-0.70.50.50.4Corporations, gross operating surplus (% of GDP)19.820.921.619.420.921.922.322.4Households, net lending (+) or net borrowing (-) (% of GDP)1.33.02.53.90.61.01.20.9Deflated house price index (y-o-y)-1.6-2.96.57.34.83.0..Residential investment (% of GDP)5.73.72.93.93.93.7..Current account balance (% of GDP), balance of payments-9.4-8.00.4-0.8-1.11.41.00.8Trade balance (% of GDP), balance of payments-7.8-5.40.7-2.6-1.91.2..Terms of trade of goods and services (y-o-y)-0.10.00.9-1.0-3.64.80.30.3Capital account balance (% of GDP)1.41.51.01.70.91.4..Net international investment position (% of GDP)-77.1-107.8-110.6-94.4-83.6-72.5..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2)-44.3-71.3-60.2-36.3-29.6-20.2..IIP liabilities excluding non-defaultable instruments (% of GDP) (2)175.7213.4186.3169.4147.8133.6..Export performance vs. advanced countries (% change over 5 years)..3.8-2.11.45.7..Export market share, goods and services (y-o-y)-2.4-3.7-0.2-0.47.33.0-0.6-1.1Net FDI flows (% of GDP)0.6-2.4-2.8-3.4-2.3-1.3..General government balance (% of GDP)-4.8-7.8-3.2-2.9-0.31.20.40.5Structural budget balance (% of GDP)..-1.5-1.4-0.90.90.00.2General government gross debt (% of GDP)71.4101.4127.8124.5112.499.195.691.5forecast 
 
 
 
  
 
 
 
ANNEX 21: DEBT SUSTAINABILITY ANALYSIS 

This  annex  assesses  fiscal  sustainability 
risks  for  Portugal  over  the  short,  medium 
and  long  term.  It  follows  the  multi-dimensional 
approach  of  the  European  Commission’s  2023 
Debt Sustainability Monitor, updated based on the 
Commission 2024 spring forecast. 

1  –  Short-term  risks  to  fiscal  sustainability 
low.  The  Commission’s  early-detection 
are 
indicator  (S0)  does  not  point  to  any  major  short-
term  fiscal  risks  (Table A21.2) (149).  Government 
gross  financing  needs  are  expected  to  decrease 
and stabilise at around to 5% of GDP on average 
over  2024-2025  (Table A21.1, Table 1).  Financial 
markets’  perceptions  of  sovereign 
risk  are 
investment  grade,  as  confirmed  by  main  rating 
agencies.  

2  –  Medium-term  fiscal  sustainability  risks 
appear high.   

The DSA baseline shows that the government 
debt  ratio  is  expected  to  decline  but  remain 
at  a  high  level  in  the  medium  term  (at  77% 
of  GDP  in  2034)  (Graph 1,  Table  1) (150).Debt 
reduction  is  supported  by  the  assumed  structural 
primary  surplus  (excluding  changes  in  cost  of 
ageing) of 2.2% of GDP as of 2024. This appears 
fairly  ambitious 
fiscal 
compared 
performance  (Table  A21.2) (151).    The  debt  decline 

to  past 

(149)  The  S0 is  a  composite  indicator  of  short-term  risk  of  fiscal 
stress.  It  is  based  on  a  wide  range  of  fiscal  and  financial-
competitiveness  indicators  that  have  proven  to  be  a  good 
predictor of emerging fiscal stress in the past.  

to 

refers 

(which 

the  10-year 

(150)  The  assumptions  underlying  the  Commission’s  ‘no-fiscal 
policy  change’  baseline  include  in  particular:  (i)  a  structural 
primary surplus, before changes in ageing costs, of 2.2% of 
GDP  from  2024  onwards;  (ii)  inflation  converging  linearly 
towards  the  10-year  forward  inflation-linked  swap  rate  10 
years  ahead 
inflation 
expectations  10  years  ahead);  (iii)  the  nominal  short-  and 
long-term  interest  rates  on  new  and  rolled  over  debt 
converging  linearly  from  current  values  to  market-based 
forward  nominal  rates  by  T+10;  (iv)  real  GDP  growth  rates 
from the Commission 2024 spring forecast, followed by the 
EPC/OGWG ‘T+10 methodology projections between T+3 and 
T+10  (average  of  0.9%);  (v)  ageing  costs  in  line  with  the 
2024  Ageing  Report  (European  Commission,  Institutional 
Paper 279, April 2024). For information on the methodology, 
see  the  2023  Debt  Sustainability  Monitor 
(European 
Commission, Institutional Paper 271, March 2024). 

(151)  This assessment is based on the fiscal consolidation space 
indicator, which measures the frequency with which a tighter 
fiscal  position  than  assumed  in  a  given  scenario  has  been 
observed  in  the  past.  Technically,  this  consists  in  looking  at 
the  percentile  rank  of  the  projected  SPB  within  the 

80 

also benefits from a still favourable but declining 
snowball effect, notably thanks to is supported by 
the 
impact  of  Next  Generation  EU.  Finally, 
government gross financing needs are expected to 
slightly  increase  by  the  end  of  the  projection 
period  in  2034  around  7%  of  GDP,  above  the 
average over 2024-2025.  

to 

four 

The  baseline  projections  are  stress-tested 
deterministic 
alternative 
against 
scenarios to assess the impact of changes in 
key  assumptions  relative  to  the  baseline 
(Graph 1).  For  Portugal,  all  the  stress  tests 
scenarios would lead to higher debt ratios in 2034 
the  baseline,  with  particularly 
compared 
adverse  developments  under 
the  historical 
structural  primary  balance  (SPB)  scenario  (i.e.  the 
SPB  returns  to  its  historical  15-year  average  of 
0.5% of GDP). Under this stress scenario, the debt 
ratio  would  be  higher  than  under  the  baseline  by 
about 13 pps. of GDP in 2034. Under the  adverse 
interest-growth  rate  differential  scenario  (i.e.  the 
interest-growth 
rate  deteriorates  by  1  pp. 
compared with the baseline), the debt ratio would 
be higher than under the baseline by around 7 pps. 
of  GDP  in  2034.  A  similar  adverse  impact  on  the 
debt  ratio  (about  5  pps)  is  projected  for  2034 
lower  structural  primary  balance 
under 
cumulative 
projected 
scenario 
improvement  in  the  SPB  over  2023-2024  is 
halved).  The  smaller  adverse  impact  is  projected 
under  the  financial  stress  scenario  (i.e.  interest 
rates  temporarily  increase  by  1.1  pps.  compared 
with  the  baseline)  with  debt  ratio  that  would  be 
higher by only around 1 pp. in 2034.  

(i.e. 

the 

the 

These 

The  stochastic  projections  indicate  medium 
risk,  pointing  to  the  moderate  sensitivity  of 
these  projections  to  plausible  unforeseen 
events  (152). 
simulations 
indicate a 20% probability that the debt ratio will 
be higher in 2028 than in 2023, implying medium 
risks given the current high debt level. In addition, 
the  uncertainty  surrounding  the  baseline  debt 
projections is high (as measured by the difference 
between  the  10th  and  90th  debt  distribution 

stochastic 

distribution  of  SPBs  observed  in  the  past  in  the  country, 
taking into account all available data from 1980 to 2022. 

(152)  The stochastic projections show the joint impact on debt of 
the  government’s 
10.000  different  shocks  affecting 
budgetary  position,  economic  growth,  interest  rates  and 
exchange  rates.  This  covers  80%  of  all  the  simulated  debt 
paths and therefore excludes tail events. 

 
 
 
 
 
 
 
 
 
 
percentiles, reaching around 46 pps of GDP in five 
years’ time) (Graph 2).  

and 
the  debt 
A21.1, Table 2).  

requirement 

(0.7 pp.). 

(Table 

financial 

4  –  Finally,  several  additional  risk  factors 
need to be considered in the assessment.  On 
the one hand, risk-increasing factors are related to 
country-specific  factors  as  the  ongoing  requests 
for  a 
rebalancing  of  PPPs  and 
vulnerabilities  in  some  public  corporations,  and 
Portugal’s  negative  net  international  investment 
position. On the other hand, risk-mitigating factors 
include  Portugal’s  comfortable  cash  buffer,  the 
maturity structure of its debt , most of which with 
fixed  rates,  relatively  stable  financing  sources 
(with a diversified and large investor base) and the 
large  share  of  debt  denominated 
in  euro. 
Portugal’s  debt  management  strategy  targeting 
the  smoothening  of  the  debt  redemption  profile 
also contributes to mitigate risks. 

3  –  Long-term  fiscal  sustainability  risks 
appear overall low. This assessment is based on 
the  combination  of  two  fiscal  gap  indicators, 
capturing  the  required  fiscal  effort  to  stabilise 
debt  (S2  indicator)  and  bring  to  60%  of  GDP  (S1 
indicator) over the long term (153). This assessment 
is mainly driven by the favourable initial budgetary 
position, partly offsetting the projected increase in 
ageing  costs.. Hence,  these  results  are  conditional 
on the country maintaining a sizeable SPB over the 
long  term,  and  duly 
legislated 
pension reforms. 

implementing 

indicator  points  to 

low  fiscal 
The  S2 
sustainability  risks.  The  indicator  shows  that, 
relative  to  the  baseline,  the  SPB  could  relax  its 
fiscal  position by 1.5 pps. of GDP and still ensure 
debt stabilisation over the long term. This result is 
underpinned  by  the  favourable  initial  budgetary 
position  (contribution  of  -1.7 pps.  of  GDP),  partly 
offset the increase in the projected ageing-related 
costs’ 
public 
developments  are  primarily  driven  by  a  projected 
increase 
long-term  care 
spending (+1.6 pps. of GDP), which is partly offset 
in  public  pension 
by  a  projected  decrease 
expenditure (-1.5 pps.) (Table A21.1, Table 2).  

in  health-care  and 

pp.).  Ageing 

spending 

(0.2 

indicator  points  to 

low  fiscal 
The  S1 
sustainability risks. The indicator shows that the 
country only need to improve its fiscal position by 
0.4  pp.  of  GDP  in  2025  and  still  ensure  that  the 
debt  ratio  will  not  exceed  60%  of  GDP  in  2070. 
This  result  is  mainly  driven  by  the  favourable 
initial  budgetary  position 
(contribution  of  -
2.2 pps.), which is partially offset by the projected 
increase  in  age-related  public  spending  (1.9  pps.) 

(153)  The  S2  fiscal  sustainability 

indicator  measures  the 
permanent  SPB  adjustment  in  2025  that  would  be  required 
to stabilise public debt in the long term. It is complemented 
by  the  S1  indicator,  which  measures  the  permanent  SPB 
adjustment in 2025 to bring the debt ratio to 60% by 2070. 
For  both  the  S1  and  S2  indicators,  the  risk  assessment 
depends on the amount of fiscal consolidation needed: ‘high 
risk’ if the required effort exceeds 6 % of GDP, ‘medium risk’ 
if it is between 2% and 6% of GDP, and ‘low risk’ if the effort 
is  negative  or  below  2%  of  GDP.  The  overall  long-term  risk 
classification  combines  the  risk  categories  derived  from  S1 
and S2. S1 may notch up the risk category derived from S2 if 
it  signals  a  higher  risk  than  S2.  See  the  2023  Debt 
Sustainability Monitor for further details. 

81 

 
 
Table A21.1:Debt sustainability analysis - Portugal 

Source: European Commission services. 

Table A21.2:Heatmap of fiscal sustainability - Portugal 

(1)  Debt  level  in  2034.  Green:  below  60%  of  GDP.  Yellow:  between  60%  and  90%.  Red:  above  90%.  (2)  The  debt  peak  year 
indicates whether debt is  projected to increase overall over the next decade. Green: debt peaks early. Yellow: peak towards the 
middle of the projection period. Red: late peak. (3) Fiscal consolidation space measures the share of past fiscal positions in the 
country  that  were  more  stringent  than  the  one  assumed  in  the  baseline.  Green:  high  value,  i.e.  the  assumed  fiscal  position  is 
plausible by historical standards and leaves room for corrective measures if needed. Yellow: intermediate. Red: low. (4) Probability 
of debt ratio exceeding in 2028 its 2023 level. Green: low probability. Yellow: intermediate. Red: high (also reflecting the initial 
debt level). (5) the difference between the 90th and 10th percentiles measures uncertainty, based on the debt distribution under 
10000  different  shocks.  Green,  yellow  and  red  cells  indicate  increasing  uncertainty.  (For  further  details  on  the  Commission's 
multidimensional approach, see the 2023 Debt Sustainability Monitor) 
Source: European Commission services. 

82 

Table 1. Baseline debt projections20212022202320242025202620272028202920302031203220332034Gross debt ratio (% of GDP)124.5112.499.195.691.688.586.083.781.780.178.877.977.377.0Changes in the ratio-10.3-12.1-13.3-3.5-4.0-3.2-2.5-2.2-2.0-1.6-1.3-0.9-0.6-0.3of whichPrimary deficit0.5-1.6-3.4-2.6-2.4-2.2-1.9-1.6-1.4-1.2-0.9-0.6-0.4-0.2Snowball effect-7.3-11.6-7.6-2.0-1.7-1.0-0.7-0.6-0.6-0.5-0.4-0.3-0.2-0.1Stock-flow adjustments-3.51.1-2.31.10.10.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)12.110.74.05.45.15.55.75.75.65.27.57.57.36.6S1S2Overall index  (pps. of GDP)0.4-1.5of which Initial budgetary position-2.2-1.7Debt requirement0.7Ageing costs1.90.2of which    Pensions0.6-1.5     Health care1.01.2     Long-term care0.30.4Education0.00.1Table 2. Breakdown of the S1 and S2 sustainability gap indicators6070809010011012013020212022202320242025202620272028202920302031203220332034Graph 1. Deterministic debt projections Historical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioBaseline% of GDP45556575859510511512513520212022202320242025202620272028% of GDPGraph 2. Stochastic debt projections 2024-2028MedianBaselineBaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallMEDIUMHIGHMEDIUMMEDIUMMEDIUMMEDIUMDebt level (2034), % GDP77.090.481.683.677.6Debt peak year20242024202420242024Fiscal consolidation space19%45%27%19%19%Probability of debt ratio exceeding in 2028 its 2023 level20%Difference between 90th and 10th percentiles (pps. GDP)46.0LOWHIGHLOWLOWLOWShort termMedium term - Debt sustainability analysis (DSA)Long termOverall                               (S0)Overall Deterministic scenariosStochastic projectionsS2S1Overall(S1 + S2)