More investment, less revenue, more 23.2% for Defense. OE “zero margin” must pass

Socialists open doors to making the document viable, Chega says it is too early to say, but promises not to give in on the ISP. Defense Budget is unprecedented, with more troops abroad and investment in careers.

The State Budget proposal for 2026 (OE2026), this Thursday by the Minister of Finance, maintains forecasts of budget surpluses, but already close to zero. The Government had already warned that the macroeconomic forecasts would undergo few changes and the release of the proposal confirmed the scenario.

In the presentation, gross domestic product (GDP) growth is revised downwards this year (from 2.4% to 2%) and upwards for 2026 (from 2.2% to 2.3%). Forecasts for the budget balance remain unchanged, with Minister Miranda Sarmento pointing to a surplus of 0.3% this year and 0.1% next year.

O surplus “is short”assures the President of the Republic, and leaves little room for Joaquim Miranda Sarmento to open the “purse strings” too much. If the State Budget for 2025 predicted an impact of 2.6 billion euros from the main economic policy measures, the value for this year shrinks to 695 million euros (with an increase in expenditure or a reduction in revenue).

“If the country does not want to go back into deficit, the margin is close to zero.” This is the message that Joaquim Miranda Sarmento leaves to the opposition parties on the day the document was entered into parliament, showing little openness to accommodate proposals in the specialty that could reduce revenue or increase expenditure.

Carneiro: “Government fulfilled PS demands”

But not even Sarmento’s message stopped the Socialist Party from opening the door to making the document viable. The party’s general secretary defended that the proposal corresponds to the demands that were made to the prime minister, noting however that this would not be the document that the socialists would present.

“The Government responded to the demands made by the Socialist Party, particularly in relation to labor issues, the National Health Service, public social security and also the off-budget treatment of fiscal issues”, said the socialist leader.

Budget “to pass”, says Marcelo

The fact that some of the OE’s most controversial proposals – such as the reduction in IRC – were approved before the Budget was delivered, removes some pressure on the document.

According to the President of the Republic, this “is a very schematic budget, very reduced to the basics, to allow it to pass through parliament” and “everything that is more controversial is either in other laws that come next or is already known”.

Arrives uncompromising when it comes to fuel

Chega, the other party that alone can help the Democratic Alliance (AD) to make the OE viable, says that it is too early to reveal how its group will vote on the Budget, but warned the Government that the party “will not tolerate” an increase in taxes on fuels.

The Budget does not foresee an increase in the tax on petroleum and energy products (ISP), as per the European Commission, but the Finance Minister does not rule out a future increase in fuel taxation.

“We will look for moments to reduce prices, to be able to reverse these discounts [do ISP]”, stated the Minister of State and Finance.

“Not ambitious”

Still on the right, the PSD praised the maintenance of the budget balance and asked the remaining opposition not to distort the document, as did the CDS, which said it hoped that “the entire parliament is up to the task of its circumstances”.

The Liberal Initiative does not give up presenting proposals to change the Budget, a document that it classified as “not ambitious” for the Portuguese”, but “greedy for the State”.

On the left, there are also criticisms. Livre accuses the Government of “little political ambition”, the PCP states that the OE proposal worsens fiscal injustices, just like the Bloc that talks about “fiscal inequality”. The PAN mainly criticized the Government’s decision to bring forward the delivery of the State Budget.

An unprecedented defense budget

The proposal foresees an expenditure of 3,771.9 million in National Defense, a increase of 23.2% compared to the amount budgeted for this year. A value that, compared to the expected expenditure set out in the State Budget for 2025 (3,061.2 million euros), represents an increase of 706.8 million.

However, the Government estimates that the execution of this amount for 2025 will be 3,282.2 million euros, 221 million more than predicted in the current OE, which, compared to what was invested this year, represents a increase in investment in Defense predicted by 14.8% to 2026.

It’s a reinforcement historic and unprecedented of the National Defense budget, this one from OE2026, which brings Portugal closer to the target set by NATO — reaching 5% of GDP in defense spending by 2029 — with Portugal reaching 2% of national GDP.

The unprecedented reinforcement in Defense is “unavoidable” given the “current geopolitical conditions”, writes the Government in the OE document.

58% more investment in troops abroad

The Government wants to use this amount to invest in military careers, equipment and projection of forces abroad.

Looking for retention of personnel in the Armed Forces Portuguese, affected by the early departure of young volunteers and the departure of military personnel from the permanent staff, which often involves compensation to the State.

The budget increase will allow new acquisitions of military equipmentmodernization of infrastructures and increase of forces available for missions abroad, whose funding will increase by 58.4% compared to 2025 for a total of 148 million euros.

It is planned to modernize the national anti-aircraft defense within the framework of the European Sky Shield program, reinforce cyber defense and cyber security, continue the KC-390 transport program, acquire support helicopters, recover Arsenal do Alfeite, build two ocean patrol ships, modernize Vasco da Gama class frigates and manufacture ammunition. The Air Force will also receive 93.6 million euros for aerial firefighting resources within the scope of the Special Rural Fire Fighting Device (DECIR), lists the .

The financial reinforcement will be facilitated by the ReArm Europe plan of European Unionwhich grants greater flexibility to Member States in terms of defense spending. Portugal will have access to around 5.8 billion euros under the Action for Security Europe, allowing investments in strategic domains such as drones, missile defense and cybersecurity.

For the Armed Forces, the OE provides increases in military pay and supplements, including the military condition supplement, which will increase to 400 euros, and progressive increases for enlisted personnel, non-commissioned officers and junior officers between 2025 and 2026. Increases in air service and boarding supplements are also planned.

Os personnel expenses will represent 38.2% of the total, acquisitions of goods and services will occupy 24.6% and investment 26.1%.