Portugal Battles Fiscal Storm Amid Natural Disasters

Portugal will strive to maintain a balanced budget and reduce public debt, even as recent storms strain its economy, Finance Minister Joaquim Miranda Sarmento announced. Damage assessments to homes and infrastructure will take weeks, he noted at a Eurogroup meeting in Brussels.

"It's crucial to assist those affected with emergency aid and reconstruction," Sarmento stated. Initially, the government estimated direct reconstruction costs at over 4 billion euros and has provided 2.5 billion euros in loans and incentives for rebuilding efforts following Storm Kristin. Further weather disruptions continued through the weekend.

The budget surplus is forecasted to drop from 0.3% of GDP in 2025 to 0.1% this year, marking Portugal's fourth straight year of surplus—a rare feat in the euro zone. Sarmento warned that 2026 would be challenging due to 2.5 billion euros from EU recovery funds now classified as expenditures rather than grants, limiting fiscal flexibility.