Miranda Sarmento has two secret weapons to ensure a budgetary surplus

The finance minister should use the reduction in IRS reimburses and PRR to get a budget surplus.

Despite the warnings of various institutions for Portugal to be close to returning to the deficit, Finance Minister Joaquim Miranda Sarmento has a plan to hold a slight budget surplus this year.

According to the, there is Two factors that explain the margin: The correction of retention at the source of IRS and the execution of loans of the Plan of Recovery and Resilience (PRR).

The Public Finance Council (CFP) currently estimates a budget balance of 0% of GDP in 2025, but admits that the evolution of the IRS collection can turn the value into surplus. The body’s president, Nazaré Costa Cabral, said that there would be an additional revenue of about 300 million euros for public accounts to record a 0.1%surplus.

At stake is the extraordinary descent of retention at the source in 2024, which temporarily increased the available income of families, but has transferred tax revenue to this year. Many contributors received fewer refunds Or they faced higher charge notes, which made the recipe trigger. By July, paid reimbursements were 780 million below the registered in 2024, while IRS revenue has grown 1.2 billion euros (plus 14.4%).

The full impact of these measures, however, will only be felt in 2027. At that time, according to the CFP, the reduction of retentions in the source will represent a structural loss of about billion from euros to the state. The government repeated in 2025 the strategy of temporarily downloading discounts, again transferring recipe to the future.

Another factor that plays in favor of the executive is the reprogramming of PRR. The National Institute of Statistics (INE) reviewed the surplus from 2024, from 0.7% to 0.5% of GDP, by accounting for 369 million euros of Expenses initially funded by grants as loans of the PRR and funds of the state budget. This change gives 0.1% of GDP off to 2025 accounts.

Despite these margins, institutions continue to warn of pressure that budgetary measures represent in the medium term. This year’s equilibrium may only be conjuncture, leaving the invoice of these fiscal tricks to 2027.

At the most structural level, there is still the problem of increasing dependence on social security to the state budget. In recent years, the budgetary surplus has been riding the surplus of Social Security, however, forecasts point to the accounts start to enter the negative from 2030.