Portugal Battles Fiscal Storm Amid Natural Disasters

Portugal aims to balance its budget and reduce public debt, despite the economic impact of recent storms, according to Finance Minister Joaquim Miranda Sarmento. The government estimates over 4 billion euros in reconstruction costs. Future budgeting is challenged by EU loan expenditures, impacting the country's fiscal outlook.

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.

(With inputs from agencies.)