Portugal expects stability following presidential election, says minister

Portugal’s Finance Minister Joaquim Miranda Sarmento has said the country is unlikely to experience political turbulence following the upcoming presidential run-off election. He expressed confidence that the centre-right minority government would remain stable, allowing it to sustain budget surpluses and continue reducing public debt despite growing political polarisation.

Run-off between moderates and far-right

The second round of the presidential election, set for February 8, will see a contest between Antonio Jose Seguro of the centre-left Socialist Party and Andre Ventura, leader of the far-right populist party Chega. Although the presidency in Portugal is largely ceremonial, the campaign has drawn considerable attention due to Ventura’s rising influence among disaffected voters.

Most analysts predict a victory for Seguro, though Ventura’s strong performance in the first round has unsettled the political landscape. His growing popularity could harden opposition in parliament to Prime Minister Luis Montenegro’s administration, which already governs without a majority and must rely on shifting alliances to pass legislation.

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Confidence in stability and investor outlook

In an interview with Reuters in Davos, Miranda Sarmento dismissed concerns of instability, emphasising that investors retain faith in Portugal’s economic and political steadiness. “Investors look at Portugal as a stable country. I speak to many of them, and I have never heard any concerns,” he said.

He pointed out that, despite being a minority government, the administration has managed to conduct business smoothly, passing legislation through cooperation with both the Socialist Party and Chega when necessary. This pragmatic approach, he argued, has preserved the country’s fiscal credibility and ensured effective governance.

Fiscal discipline and responsible governance

The minister credited parliament for showing restraint in spending, noting that both the left and right have refrained from introducing populist measures that could undermine financial discipline. “I think the opposition learnt their lesson in the May election,” he explained, referring to the Socialists’ decision to side with Chega in rejecting a confidence motion against the government.

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He added that fiscal caution remains the consensus across political lines. “No one in Portugal wants a return to deficits,” Miranda Sarmento said. The 2026 national budget was passed in November after the Socialist Party abstained, allowing its approval in the name of maintaining stability.

Focus on growth and debt reduction

Portugal has made significant progress since the austerity years that followed the 2011 financial crisis and international bailout. Miranda Sarmento predicted that the country will record a 0.1 per cent budget surplus this year, even after expanding tax relief and raising public salaries and pensions. This figure is slightly below the government’s earlier forecast of a 0.3 per cent surplus for 2025.

He reiterated the government’s commitment to reducing the national debt ratio from 90 per cent of GDP last year to 87.8 per cent by year-end. Public debt had peaked at over 134 per cent of GDP during the pandemic in 2020, but has since fallen steadily.

Path ahead for reforms

Looking forward, Miranda Sarmento said the government is engaged in discussions with trade unions and employer associations to finalise a new labour reform aimed at improving productivity and economic competitiveness. The goal, he added, is to raise annual growth to around three per cent by 2029, compared to 2.3 per cent projected for this year.

The minister concluded that the election results, whatever they may be, are unlikely to derail Portugal’s economic progress or fiscal discipline. “The fundamentals are strong, and the political system remains responsible,” he said, projecting confidence that the country will stay on track toward stability and growth.