Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Portugal
Date: 2024-11-26
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Portugal, budget deficit, coordination of EMU policies, economic reform, fiscal policy, investment, macroeconomics, national planning, public debt, structural adjustment

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   EUROPEAN COMMISSION  Strasbourg, 26.11.2024  COM(2024) 724 final  Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Portugal  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

endorsing the national medium-term fiscal-structural plan of Portugal 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121 thereof, 

Having regard to Regulation (EU) 2024/1263, and in particular Article 17 thereof, 

Having regard to the recommendation from the Commission, 

Whereas: 

GENERAL CONSIDERATIONS 

(1) 

(2) 

1 

2 

3 

4 

A reformed EU economic governance framework entered into force on 30 April 2024. 
Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary 
surveillance1,  together  with  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure2,  and  the  amended  Council 
Directive  2011/85/EU  on  the  budgetary  frameworks  of  Member  States3  are  the  core 
elements of the reformed EU economic governance framework. The framework aims 
at  ensuring  public  debt  sustainability  and  sustainable  and  inclusive  growth  through 
reforms  and  investments.  It  promotes  national  ownership  and  has  a  medium-term 
focus, combined with an effective and coherent enforcement of the rules.  

The  national  medium-term  fiscal-structural  plans  that  Member  States  submit  to  the 
Council  and  to  the  Commission  are  at  the  centre  of  the  new  economic  governance 
framework. The plans are to deliver on two objectives: i) ensuring that, by the end of 
the adjustment period, general government debt is on a plausibly downward trajectory, 
or stays at  prudent  levels,  and that the government  deficit is  brought and maintained 
below the reference value of 3% of GDP over the medium term, and ii) ensuring the 
delivery  of  reforms  and  investments  responding  to  the  main  challenges  identified  in 
the context of the European Semester and addressing the common priorities of the EU. 
To that end, each plan is to present a medium-term commitment to a net expenditure4 

(OJ 

1466/97 

Regulation 

(EC)  No 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29  April  2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1264/oj). 
Council Directive (EU) 2024/1265 of 29 April 2024 amending Directive 2011/85/EU on requirements 
for  budgetary 
(OJ  L,  2024/1265,  30.4.2024,  ELI: 
http://data.europa.eu/eli/dir/2024/1265/oj). 
Net expenditure as defined in Article 2 of Regulation (EU) 2024/1263, namely government expenditure 
net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii)  expenditure  on  Union 

the  Member  States 

frameworks  of 

2024/1263, 

30.4.2024, 

L, 

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path, which effectively establishes a budgetary constraint for the duration of the plan, 
covering four or five years (depending on the regular term of legislature in a Member 
State).  In  addition,  the  plan  is  to  explain  how  the  Member  State  will  ensure  the 
delivery  of  reforms  and  investments  responding  to  the  main  challenges  identified  in 
the  context  of  the  European  Semester,  in  particular  in  the  country-specific 
recommendations  (including  those  pertaining  to  the  macroeconomic  imbalances 
procedure (MIP), if applicable), and how the Member State will address the common 
priorities of the Union. The period for fiscal adjustment covers a period of four years, 
which  may  be  extended  by  up  to  three  years  if  the  Member  State  commits  to 
delivering a set of relevant reforms and investments that satisfies the criteria set out in 
Regulation (EU) 2024/1263. 

(4) 

(5) 

Following the submission of the plan, the Commission is to assess whether it complies 
with the requirements of Regulation (EU) 2024/1263.  

Upon  a  recommendation  from  the  Commission,  the  Council  is  to  then  adopt  a 
recommendation to set the net  expenditure path  of the Member State concerned and, 
investment  commitments 
the  set  of  reform  and 
where  applicable,  endorses 
underpinning an extension of the fiscal adjustment period. 

CONSIDERATIONS  CONCERNING  THE  NATIONAL  MEDIUM-TERM  FISCAL-
STRUCTURAL PLAN OF PORTUGAL 

(6) 

On  11  October  2024,  Portugal  submitted  its  national  medium-term  fiscal-structural 
plan to the Council and to the Commission. The submission took place following an 
extension  of  the  deadline  set  out  in  Article  36  of  Regulation  (EU)  2024/1263,  as 
agreed with the Commission in view of the reasons provided by Portugal. 

Process prior to the submission of the plan  

(7) 

On  21  June  2024  the  Commission  sent,  according  to  Article  9  of  Regulation  (EU) 
2024/1263,  the  reference  trajectory5  to  Portugal.  The  Commission  published  the 
reference  trajectory  on  11  October  20246.  The  reference  trajectory  is  risk-based  and 
ensures that, by the end of the fiscal  adjustment period and in the absence of further 
budgetary  measures  beyond  the  adjustment  period,  general  government  debt  is  on  a 
plausibly  downward  trajectory  or  stays  at  prudent  levels  over  the  medium  term,  and 
the  general  government  deficit  is  brought  below  3%  of  GDP  over  the  adjustment 

programmes fully matched by revenue from Union funds,  (iv) national expenditure on co-financing of 
programmes funded by the Union, (v) cyclical elements of unemployment benefit expenditure and (vi) 
one-offs and other temporary measures.  
Prior  guidance  transmitted  to  the  Member  States  and  Economic  and  Financial  Committee  includes 
trajectories  without  and  with  an  extension  of  the  adjustment  period  (covering  4  and  7  years, 
respectively).  It  also  includes  the  main  initial  conditions  and  underlying  assumptions  used  in  the 
Commission’s  medium-term  government  debt  projection  framework.  The  reference  trajectory  was 
calculated on the basis of the methodology described in the Commission’s Debt Sustainability Monitor 
2023  (https://economy-finance.ec.europa.eu/publications/debt-sustainability-monitor-2023_en).  It 
is 
based on the European Commission Spring 2024 Forecast and its medium-term extension up to 2033, 
and  long-term  GDP  growth  and  ageing  costs  are  in  line  with  the  joint  Commission-Council  2024 
Ageing  Report  (https://economy-finance.ec.europa.eu/publications/2024-ageing-report-economic-and-
budgetary-projections-eu-member-states-2022-2070_en). 
https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/national-medium-term-fiscal-
structural-plans_en#portugal  

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period and maintained below that reference value over the medium term. The medium 
term  is  defined  as  the  ten-year  period  after  the  end  of  the  adjustment  period.  In 
accordance  with  Articles  7  and  8  of  Regulation  (EU)  2024/1263,  the  reference 
trajectory  is  also  consistent  with  the  debt  sustainability  safeguard  and  the  deficit 
resilience  safeguard.  The  reference  trajectory  of  Portugal  sets  out  that,  based  on  the 
Commission’s assumptions and assuming a 4-year adjustment period, net expenditure 
should  not  grow  by  more  than  the  values  provided  in  Table  1.  This  corresponds  to 
average net expenditure growth of 3.6% over the adjustment period (2025-2028).  

Table 1: Reference trajectory provided by the Commission to Portugal on 21 June 2024 

2025 

2026 

2027 

2028 

Average 2025-
2028 

Maximum net 
expenditure growth 
(annual, %) 

4.1 

3.6 

3.4 

3.3 

3.6 

Source: Commission’s calculations. 

(8) 

(9) 

In line with Article 12 of Regulation (EU) 2024/1263, Portugal and the Commission 
engaged in  a technical dialogue from July to  October 2024. The dialogue centred on 
the  net  expenditure  path  envisaged  by  Portugal  and  its  underlying  assumptions  (in 
particular  on  potential  growth  estimates),  the  exception  to  the  no-backloading 
safeguard, as well as the envisaged delivery of reforms and investments responding to 
the  main  challenges  identified  in  the  context  of  the  European  Semester  and  the 
common  priorities  of  the  Union  in  fair  green  and  digital  transition,  social  and 
economic resilience, energy security and the build-up of defence capabilities. 

According to the information provided by Portugal in its plan, a consultation process 
with  relevant  national  stakeholders  (including  social  partners)  prior  to  submission  as 
foreseen in Article 11(3) of Regulation (EU) 2024/1263 did not take place, in line with 
the  transitional  provisions  foreseen  in  Article  36(1),  point  (c),  of  Regulation  (EU) 
2024/1263. 

(10)  The national Fiscal Council (‘Conselho das Finanças Públicas’) delivered an opinion 
on the macroeconomic forecast and the macroeconomic assumptions underpinning the 
multi-annual net expenditure path. The Fiscal Council concluded that the projections 
for economic growth and the GDP deflator appear plausible but expressed reservations 
on  potential  growth  and  output  gap  estimates,  related  to  their  plausibility  in  view  of 
the plan’s overall macroeconomic scenario. 

(11)  The plan was presented to the national parliament on 11 October 2024. 

Other related processes  

(12)  On 15 October 2024, Portugal submitted its Draft Budgetary Plan for the year 2025. 
The Commission adopted an opinion on this Draft Budgetary Plan on  [26 November 
2024]7.  

7 

Commission Opinion on the Draft Budgetary Plan of Portugal, 26.11.2024, C(2024)9063 final. 

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(13)  On  21  October  2024,  the  Council  addressed  to  Portugal  a  series  of  country-specific 

recommendations (CSRs) in the context of the European Semester8.  

SUMMARY OF THE PLAN AND THE COMMISSION’S ASSESSMENT THEREOF 

(14) 

In  line  with  Article  16  of  Regulation  (EU)  2024/1263,  the  Commission  assessed  the 
plan as follows: 

Context: macroeconomic and fiscal situation and outlook  

(15)  Economic activity in Portugal grew by 2.5% in 2023, driven by domestic demand and 
exports  of  services.  According  to  the  European  Commission  Autumn  2024  Forecast, 
the economy is expected to grow by 1.7% in 2024, mainly on the back of private and 
public consumption. In 2025, real GDP is set to increase by 1.9%, as investments are 
expected  to  accelerate.  In  2026,  real  GDP  is  expected  to  increase  by  2.1%,  further 
supported by investments as well as private and public consumption. Over the forecast 
horizon  (i.e.  2024-2026),  potential  GDP  growth  in  Portugal  is  expected  to  decrease 
from 2.5% in 2023 to 1.9% in 2026, driven by a lower labour contribution reflecting 
the forecast decrease in the working-age population. The unemployment rate stood at 
6.5% in 2023 and is projected by the Commission to amount to 6.4% in 2024, 6.3% in 
2025, and 6.2% in 2026. Inflation (GDP deflator) is projected to decrease from 6.9% 
in 2023 to 3.8% in 2024, and to reach 2.5% in 2025, and 2.2% in 2026.  

(16)  Regarding  fiscal  developments,  in  2023  Portugal’s  general  government  surplus 
amounted  to  1.2%  of  GDP.  According  to  the  European  Commission  Autumn  2024 
Forecast, it is set to reach 0.6% of GDP in 2024 and to decline further to 0.4% of GDP 
in 2025 and, on a no-policy change basis, to 0.3% in 2026. The European Commission 
Autumn 2024 Forecast includes Portugal’s draft budget for 2025 that the government 
proposed to the national parliament in October. General government debt was 97.9% 
of GDP at end-2023. According to the European Commission Autumn 2024 Forecast, 
the debt ratio is expected to decline to  95.7% of GDP at end-2024. It is projected to 
decline  further  to  92.9%  of  GDP  at  end-2025  and  90.5%  at  end-2026.  The  fiscal 
forecast by the Commission does not consider the policy commitments in the medium-
term plans as such until they are underpinned by credibly announced and sufficiently 
specified concrete policy measures. 

Net expenditure path and main macroeconomic assumptions in the plan  

(17)  Portugal’s  national  medium-term  fiscal-structural  plan  covers  the  period  2025-2028 

and presents a fiscal adjustment over four years.  

(18)  The  plan  contains  all  information  required  by  Article  13  of  Regulation  (EU) 

2024/1263.  

(19)  The  plan commits  to the net  expenditure path  indicated in  Table 2, corresponding to 
average  net  expenditure  growth  of  3.6%  over  the  years  2025-2028.  The  average  net 
expenditure  growth  reported  in  the  plan  over  the  adjustment  period  (2025-2028)  is 
broadly  in  line  with9  the  reference  trajectory  transmitted  by  the  Commission  on  21 

8 

9 

Council Recommendation on economic, budgetary, employment and structural policies of Portugal, not 
yet published. 
The difference is not visible due to rounding. 

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June 2024. The plan assumes potential GDP growth to gradually decrease from 2.4% 
in  2024  to  1.6%  by  2028.  In  addition,  the  plan  expects  the  growth  rate  of  the  GDP 
deflator to decrease from 3.1% in 2024 to  2.6% in 2025 and to 2.0% thereafter until 
2028. 

Table 2: Net expenditure path and main assumptions in Portugal’s plan  

2024 

2025 

2026 

2027 

2028 

Average over 
the period of 
validity of the 
plan 

 2025-2028 

Net expenditure 
growth 
(annual, %) 

Net expenditure 
growth 
(cumulative, from 
base year 2023, %) 

Potential GDP 
growth (%) 

Inflation (GDP 
deflator growth) 
(%) 

11.8 

5.0 

5.1 

1.2 

3.3 

3.6 

11.8 

17.4 

23.4 

24.8 

28.9 

n.a. 

2.4 

2.1 

2.0 

1.7 

1.6 

3.1 

2.6 

2.0 

2.0 

2.0 

1.8 

2.2 

Source: Medium-term fiscal-structural plan of Portugal and Commission calculations.  

Implications of the plan’s net expenditure commitments for general government debt  

(20) 

If the net  expenditure path  committed to  in  the plan and the underlying assumptions 
materialise, general government debt would, according to the plan, gradually decrease 
from 95.9% in 2024 to 83.2% of GDP at the end of the adjustment period (2028), as 
per the following table. After the adjustment, over the medium term, the debt ratio is 
projected to steadily decline according to the plan, to 64.8% by 2038. 

Table 3: General government debt and balance developments in Portugal’s plan  

2023 

2024 

2025 

2026 

2027 

2028 

2038 

Government debt 

(% of GDP) 

Government 
balance 

(% of GDP) 

97.9 

95.9 

93.3 

90.4 

87.2 

83.2 

64.8 

1.2 

0.4 

0.3 

0.1 

1.1 

1.3 

-1.2 

Source: Medium-term fiscal-structural plan of Portugal. 

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Thus,  according  to  the  plan,  the  general  government  debt  ratio  would  remain  on  a 
downward path by the end of the adjustment period (2028). This is plausible as, based 
on the plan’s assumptions, debt is projected to decline over the ten years following the 
adjustment  period  under  all  deterministic  stress  tests  of  the  Commission’s  Debt 
Sustainability Analysis, and the stochastic projections indicate that debt would decline 
with  a  sufficiently  high  probability.  Therefore,  based  on  the  plan’s  policy 
commitments and macroeconomic assumptions, the net expenditure path  put forward 
in the plan is consistent with the requirement for debt as set out in Articles 6, point (a), 
and 16(2) of Regulation (EU) 2024/1263.  

Implications  of  the  plan’s  net  expenditure  commitments  for  the  general  government 
balance 

(21)  Based  on  the  plan’s  net  expenditure  path  and  assumptions,  the  general  government 
surplus  would  increase  from  0.3%  of  GDP  in  2025  to  1.3%  of  GDP  in  2028.  Thus, 
according  to  the  plan,  the  general  government  balance  would  not  exceed  the  3%  of 
GDP reference value at the end of the adjustment period (2028). In addition, in the ten 
years following the adjustment period (i.e. until 2038), the government deficit would 
not  exceed  3%  of  GDP.  Therefore,  based  on  the  plan’s  policy  commitments  and 
macroeconomic  assumptions,  the  net  expenditure  path  put  forward  in  the  plan  is 
consistent  with  the requirement for the deficit as set  out  in  Articles 6, point  (b),  and 
16(2) of Regulation (EU) 2024/1263.  

Time profile of the fiscal adjustment 

(22)  The  time  profile  of  the  fiscal  adjustment,  measured  as  the  change  in  the  structural 
primary balance, as described in the plan, is backloaded, compared to the linear path 
referred  to  as  a  rule  under  Article  6,  point  (e),  of  Regulation  (EU)  2024/1263. 
According  to  the  plan,  this  fiscal  adjustment  profile  is  driven  by  the  impact  on 
expenditure  of  projects  financed  by  Recovery  and  Resilience  Facility  loans.  Table  4 
shows  the  structural  primary  balance  developments  according  to  the  plan.  The 
decrease in 2025 and 2026 in the structural primary surplus, and the increase in 2027, 
are mainly explained by this type of expenditure (estimated to increase by 0.2 and 0.6 
percentage  points  of  GDP  in  2025  and  2026,  respectively).  Without  taking  into 
account  the  expenditure  related  to  projects  financed  by  Recovery  and  Resilience 
Facility loans, the fiscal adjustment would remain broadly linear over the adjustment 
period  (2025  to  2028).  Therefore,  based  on  the  plan’s  policy  commitments  and 
macroeconomic  assumptions,  the  net  expenditure  path  put  forward  in  the  plan  is 
consistent with the no-backloading safeguard clause set out in Article 6, point (c), and 
the transitional provision in Article 36(1), point (e), of Regulation (EU) 2024/1263.  

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Table 4: Structural primary balance developments in Portugal’s plan 

2023 

2024 

2025 

2026 

2027 

2028 

Structural primary 
balance 

(% of GDP) 

Change in structural 
primary balance 

(pps.) 

3.2 

2.3 

2.1 

1.7 

2.8 

2.9 

n.a. 

-0.9 

-0.1 

-0.5 

1.1 

0.1 

Source: Medium-term fiscal-structural plan of Portugal 

Consistency of the plan with the deficit resilience safeguard 

(23) 

If  the  plan’s  assumptions  and  commitments  materialise,  the  structural  deficit  would 
remain below 1.5% of GDP throughout the adjustment period. Therefore, based on the 
plan’s  policy  commitments  and  macroeconomic  assumptions,  the  common  resilience 
margin  referred  to  in  Article  8(1)  of  Regulation  (EU)  2024/1263  will  continue  to  be 
respected, and therefore the additional improvement in the structural primary balance 
referred to in Article 8(2) of Regulation (EU) 2024/1263 is not required.  

Consistency of the plan with the debt sustainability safeguard 

(24) 

In  accordance  with  Article  7  of  Regulation  (EU)  2024/1263,  as  general  government 
debt will be above 90% of GDP in 2025 and 2026 according to the plan, the debt ratio 
is  required to  decline by at  least  1 percentage point on average per year  until  it  falls 
below  90%,  after  which  it  should  decline  by  0.5  percentage  points  on  average.  This 
average decline is calculated over the period 2024-2028 and amounts to 3.0 percentage 
points.  Therefore,  based  on  the  plan’s  policy  commitments  and  macroeconomic 
assumptions,  the  net  expenditure  path  put  forward  in  the  plan  is  consistent  with  the 
debt sustainability safeguard.  

Macroeconomic assumptions of the plan 

(25)  The  plan  is  based  on  a  set  of  assumptions  which  differs  from  the  Commission’s 
assumptions  transmitted  to  Portugal  on  21  June  2024.  In  particular,  the  plan  uses 
different assumptions for six variables, namely: the starting position (i.e. the structural 
primary  balance  in  2024),  potential  GDP  growth,  GDP  deflator  growth,  real  GDP 
growth,  the  nominal  implicit  interest  rate,  and  the  stock-flow  adjustment.  Moreover, 
the fiscal adjustment is backloaded. An assessment of the differences in assumptions is 
provided  below.  The  differences  in  assumptions  with  the  most  significant  impact  on 
average net expenditure growth are listed below, together with an assessment of each 
difference considered in isolation.  

• 

The  plan  assumes  the  potential  GDP  growth  to  be  slightly  higher,  by  an 
average of 0.1 percentage point over the adjustment period (until 2028). After 
the  end  of  the  adjustment  period,  i.e.  from  2028,  the  potential  growth  series 
converges towards the Commission’s prior guidance. This contributes to higher 
average  net  expenditure  growth  over  the  adjustment  period  in  the  plan  than 

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• 

according to the Commission’s assumptions. Overall, this difference until 2028 
results  from  the  updated  potential  GDP  series,  performed  by  Portugal  and 
based on the EU commonly agreed methodology. It is deemed plausible as it is 
explained by Portugal’s short-term macroeconomic projections in the medium-
term fiscal-structural plan, which are slightly more favourable than in the prior 
guidance but in line with the European Commission Autumn 2024 Forecast, by 
a slight upward real GDP growth revision for 2022-2023 and by the update of 
Eurostat population projections. Consequently, this assumption is deemed to be 
duly justified. 

The  plan  assumes  a  time  profile  of  the  fiscal  adjustment,  measured  as  the 
change in the structural primary balance, that is backloaded to 2027 and 2028, 
compared  with  the  Commission’s  assumption  of  a  linear  adjustment.  This 
contributes to lower average net expenditure growth over the adjustment period 
in the plan than according to the Commission’s assumptions. This difference is 
driven  by  the  projected  impact  on  expenditure  of  projects  financed  by 
Recovery and Resilience Facility loans, expected to increase to  1.0% of GDP 
in  2026,  compared  to  a  0.1%  of  GDP  in  2024.  Backloading  the  fiscal 
adjustment is in line with Article 6(c) and the transitional provision in Article 
36(e) of Regulation (EU) 2024/1263. Consequently, this assumption is deemed 
to be duly justified. 

The remaining differences do not have a significant impact on average net expenditure 
growth  compared  to  the  Commission’s  assumptions.  Overall,  all  the  differences  in 
assumptions taken together lead to an average net expenditure growth in the plan that 
is broadly in line with the reference trajectory. The Commission will take into account 
the  above  assessment  of  the  plan’s  assumptions in  future  assessments  of  compliance 
with the net expenditure path. 

Fiscal strategy of the plan  

(26)  According  to  the  indicative  fiscal  strategy  in  the  plan,  the  commitments  on  net 
expenditure  will  be  delivered  through  both  expenditure  restraint  and  discretionary 
revenue increases. While the plan presents revenue-decreasing fiscal policy measures, 
such  as  the  planned  update  of  the  youth  personal  income  tax  regime,  these  are 
expected  to  be  compensated  with  the  unwinding  of  emergency  energy  measures  in 
2025, such as the unfreezing of the carbon rate under the fuel tax and the phase-out of 
projects financed by Recovery and Resilience Facility loans in 2027. The specification 
of the policy measures to be adopted is to be confirmed or adjusted and quantified in 
the  annual  budgets.  There  are  risks  to  the  implementation  of  the  indicative  fiscal 
strategy in the plan, which stem from risks linked to increasing spending pressures on 
public  wages  and  social  transfers.  In  addition,  the  Draft  Budgetary  Plan  for  2025 
specifies the policy measures through which the net expenditure commitment for 2025 
will be achieved10. 

10 

See Commission Opinion on the Draft Budgetary Plan of Portugal, 26.11.2024, C(2024)9063 final. 

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Reform  and  investment  intentions  in  the  plan  responding  to  the  main  challenges 
identified in the context of the European Semester and addressing the common priorities 
of the Union  

(27)  The plan describes policy intentions concerning reforms and investments to respond to 
the main challenges identified in the context of the European Semester, especially the 
CSR,  and  to  address  the  common  priorities  of  the  EU.  The  plan’s  reforms  and 
investments  are  based  on  an  existing  government  strategy  document  (‘Grandes 
Opções  2024-2028’).  The  plan  presents  more  than  60  reforms  and  investments,  of 
which 27 are classified as being financially supported by the Recovery and Resilience 
Facility and cohesion policy funds. 

(28)  Concerning  the  common  priority  of  a  fair  green  and  digital  transition,  including  the 
climate  objectives  set  out  in  Regulation  (EU)  2021/1119,  the  plan  includes  the 
development  and  implementation  of  a  Water  Strategic  Plan  and  the  development  of 
specific programmes to promote water use efficiency (2024 CSR on water efficiency); 
measures  on  the  improvement  of  waste  management  and  promotion  of  circular 
economy  (CSR  2022  and  2023  on  circular  economy);  the  investment  in  high-speed 
mobile  internet  networks  for  low-density  territories  and  a  National  Digital  Strategy 
(CSR  2019  on  improving  digital  literacy);  the  construction  of  railway  infrastructure 
(rail  and  TGV)  (CSR  2020  and  2019  on  rail  infrastructure);  and  strengthening 
programmes  to  support  energy  efficiency  investments  in  buildings,  notably  in 
residential buildings as included in the recovery and resilience plan (RRP; CSR 2023 
and 2022 on energy efficiency in buildings). Regarding this common priority, Portugal 
also  includes  increasing  data  interconnections  between  tax  and  social  security 
authorities, registries and notaries, which intend to address CSR 2024, 2023 and 2022 
on the efficiency of the tax and social protection systems. 

(29)  Concerning  the  common  priority  of  social  and  economic  resilience,  including  the 
European  Pillar  of  Social  Rights,  the  plan  includes  an  increase  in  the  national 
minimum wage (CSR 2020 and 2019 on the labour market and social protection) and a 
measure to guarantee the universal and free access to childcare and pre-school (CSR 
2020  and  2019  and  2019  on  the  effectiveness  and  adequacy  of  social  protection); 
actions related to labour market policies, including upskilling and reskilling programs 
as included in the RRP (CSR 2020 and 2019 on skills and education); the creation of 
an investment line for start-ups and venture capital through the creation of a fund for 
hybrid equity investments (CSR 2020 on innovation); a reform on insolvency regimes 
to speed up the processing and judicial decisions also included in the RRP (CSR 2019 
on  increasing  the  efficiency  of  insolvency  and  recovery  proceedings);  a  reform  on 
company  reporting  related  to  state  compensation  (CSR  2019  on  State  owned 
enterprises); a multi-annual investment plan for the national health service and a plan 
for physical activity and sport (CSR 2020 on healthcare); and the simplification of the 
tax regime associated with corporate restructuring and merger operations (CSR 2024 
on improving the effectiveness of the tax system). The plan does not include measures 
to  address  the  medium-term  fiscal  sustainability  of  Portugal’s  pension  system  (CSR 
2024 on fiscal-structural reforms). 

(30)  Concerning  the  common  priority  of  energy  security,  the  plan  includes  a  reform  to 
streamline  the  licensing  of  renewable  energy  projects  (Mission  Structure  for  the 
Licensing  of  Renewable  Energy  Projects  -  EMER  2030)  that  is  also  part  of  the 
REPowerEU chapter in the RRP (CSR 2023 and 2022 on simplifying and digitalising 
permitting  for  the  deployment  of  renewable  energy);  measures  to  ensure  a  more 
integrated,  coordinated  and  efficient  planning  of  energy  networks;  and  a  national 

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strategy  for  the  knowledge,  identification  and  sustainable  exploitation  of  critical  and 
strategic  raw  materials.  The  plan  does  not  include  measures  to  address  the 
strengthening  of  the  electricity  transmission  and  distribution  grid  (CSR  2024  on 
renewable energy, energy infrastructure and networks). 

(31)  Concerning  the  common  priority  of  defence  capabilities,  the  plan  includes  the 
strengthening  of  capabilities  in  the  defence  industry  by  reinforcing  investment  in  re-
equipment,  materials  and  modernisation  of  military  installations;  and  reviewing  the 
procedures for specific public procurement in defence areas. 

(32)  The  plan  also  provides  information  on  the  consistency  and,  where  appropriate, 
complementarity,  with  the  cohesion  policy  funds  and  Portugal’s  RRP.  Portugal 
includes  links  between  reforms  and  investments  within  the  national  strategic 
challenges,  the  RRP  and  the  partnership  agreement,  including  linking  where 
appropriate,  the  relevant  cohesion  policy  programmes,  RRP  measures  and  the 
European Pillar of Social Rights. 

to 

(33)  The plan aims to contribute to meet the public investment needs of Portugal related to 
the  common  priorities  of  the  EU.  For  the  common  priority  on  fair  green  and  digital 
transition,  Portugal  identifies  the  need  for  an  interconnected  infrastructure  network 
plan 
improve  water-use  efficiency,  measures  for  restoration  and  nature 
conservation, the need for a national pact for the forest and more resilience measures 
in coastal areas to adapt to the impacts of climate change, and the necessity to invest in 
digitalization  and  technological  innovation.  For  the  common  priority  on  social  and 
economic  resilience,  Portugal  identifies  the  need  for  more  support  measures  for 
victims  of  domestic  violence  and  human  trafficking.  For  energy  security,  Portugal 
identifies the need for continued efforts on diversifying the energy mix and reducing 
dependence on fossil fuels and better management of geological resources and critical 
raw  materials.  Finally,  for  strengthening  defence  capabilities,  Portugal  identifies 
funding  and  investment  gaps  in  the  military  and  the  need  for  improving  the 
attractiveness of military careers.  

Conclusion of the Commission’s assessment 

(34)  Overall, the Commission is of the view that Portugal’s plan fulfils the requirements of 

Regulation (EU) 2024/1263. 

OVERALL CONCLUSION 

(35) 

In accordance with Article 17 of Regulation (EU) 2024/1263, the net expenditure path 
as set in the plan should be recommended by the Council to Portugal. 

HEREBY RECOMMENDS that Portugal 

1. 

Ensure that net expenditure growth does not exceed the maxima established in Annex 
I to this Recommendation. 

In  addition,  the  Council  invites  Portugal  to  ensure  the  delivery  of  reforms  and  investments 
responding  to  the  main  challenges  identified  in  the  context  of  the  European  Semester,  in 
particular in the country-specific recommendations, and addressing the common priorities of 
the Union.  

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ANNEX I 
Maximum growth rates of net expenditure 
(annual and cumulative growth rates, in nominal terms) 
Portugal 

Years 

2025 

2026 

2027 

2028 

Growth rates (%) 

Annual 

5.0 

5.1 

1.2 

3.3 

Cumulative (*) 

17.4 

23.4 

24.8 

28.9 

(*) The cumulative growth rates are calculated by reference to the base year of 2023. 

Done at Strasbourg, 

For the Council 
The President 

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