The State Budget for 2027 enters Parliament in October with an Invariant Policies Framework showing 4,783 million euros in commitments already approved before any new measures. Pensions represent 1,993 million euros, debt interest rises by 776 million euros and public sector salaries by more than one billion. Chega demands lowering the retirement age as a red line, while the PS demands public guarantees on pensions. Public investment falls from 4.3% of GDP in 2026 to 2.8% in 2027, exactly the level needed to cover depreciation, because the Recovery and Resilience Plan ended on 31 August.
A study by economist Miguel Faria e Castro, from the Federal Reserve of St. Louis, reveals that Portugal's real public capital stock peaked in 2013 and fell 13.3% by 2024, returning to early 2000s levels for a larger economy. Between 2010 and 2024, public investment fell by half, while social benefits barely changed (from 16.6% to 16.0% of GDP). When the crisis forced cuts, the expenditure that does not protest, does not strike and does not vote was cut: investment. The calibrated consequence is a 2026 GDP 1.4% lower than it would be if the 2013 stock had been maintained.
Portugal invested 90% of its public investment with European funds between 2014 and 2020, against a European average of 14%, revealing dependence and abdication of its own strategy. Executed expenditure averaged 719 million euros below budgeted per year between 2019 and 2023, and in 2024 the deviation reached two billion euros, because the State does not have enough engineers, procurement lawyers and project managers. Public debt is at 92.9% of GDP, interest payments rise from over 6 billion in 2025 to over 7 billion in 2027, and the window where the interest rate was lower than nominal growth has closed.
The article proposes five fiscal rules: net public investment never negative, primary current expenditure growing less than nominal GDP, independent cost-benefit evaluation for projects above a threshold, publication of a State balance sheet certified by the Court of Auditors, and sunset clauses for all expenditures that compromise the future. The Budget Framework Law of 2015 ordered the creation of the State Accounting Entity, but eleven years later full implementation is rescheduled for 2027. The article concludes that the country needs to learn to count before it can carry the next bazooka, because there is something worse than having a deficit: becoming poorer with the right accounts.
