Portugal sees euro zone’s third biggest debt drop

Portugal expects to post the euro zone’s third largest reduction in public debt in 2027, according to budget plans for the single-currency bloc reviewed by ECOnews, a sign of continued fiscal consolidation in a country closely watched by investors after its past sovereign debt crisis.

The Finance Ministry’s 2027 budget proposal puts Portugal’s public debt at 84.5% of GDP next year, down 3 percentage points from an estimated 87.5% this year. Among the 16 euro area countries that had already submitted their 2027 budget plans to Brussels, only Greece and Cyprus forecast larger declines.

Greece, still the most indebted country in the euro zone, expects its debt ratio to fall from 136.7% at the end of this year to 128.8% in 2027, a drop of 7.9 percentage points. Cyprus projects a decline from 48.9% to 45.1%, while Ireland, ranked behind Portugal, expects its ratio to fall from 34.1% to 32.9%.

More euro zone countries expect debt to rise rather than fall next year. Germany forecasts the largest annual increase, with debt rising by 3 percentage points to 68.75% of GDP in 2027, which its government said is mainly due to additional spending on defence, security and investment.

Portugal’s budget plans also point to a small fiscal surplus of 0.1% of GDP in 2027, placing it among a limited group of euro area countries expecting a positive budget balance next year. The government also forecasts economic growth of 2.1% in 2027, above the pace expected in larger economies such as Germany and Italy.

Originally published at Eco.pt