Government Scraps Court of Auditors Prior Approval for 90% of Public Contracts — Watchdog Warns of Weakened Oversight

Portugal's Council of Ministers approved on Thursday a sweeping reform of the Tribunal de Contas — the country's supreme audit institution — that will exempt more than 90 percent of all public contracts from mandatory prior approval. The change marks the most significant restructuring of public financial oversight in decades, and it carries real implications for how public money is spent, how quickly government projects move, and whether Portugal's institutional watchdogs remain credible to the outside world.

What the Tribunal de Contas Actually Does

The Tribunal de Contas occupies a somewhat unusual space in the Portuguese state — it is both a court and an audit body, with the power to block public contracts before they take effect. The mechanism at issue is the visto prévio, or prior approval: any public contract above the current threshold of EUR 750,000 (EUR 950,000 for framework agreements) must pass through the Tribunal before it can be executed. In practice, this means civil servants, municipal authorities, and state-owned enterprises wait for a judicial stamp before signing anything significant. The system was designed to catch irregularities early, before public money flows out the door.

For expats navigating Portugal's bureaucratic rhythms, the Tribunal de Contas is less a visible presence than a structural feature of how slowly things get done. Infrastructure projects, hospital equipment tenders, and IT system upgrades have all, at various points, been held up while awaiting a visto. Defenders of the system argue that this friction is the point — that it catches problems before they become scandals.

What Changes Under the Reform

Under the legislation approved on Thursday, the mandatory prior approval threshold rises dramatically — from EUR 750,000 to EUR 10 million. The government says this single change will remove more than 90 percent of public contracts from mandatory Tribunal de Contas oversight entirely. For contracts above EUR 10 million, public entities will have a choice: submit to the traditional visto prévio process, or instead establish robust internal controls certified by the Inspeção-Geral de Finanças, the government's own inspectorate.

The reform also changes the liability rules for public managers. Under the new framework, financial sanctions will apply only in cases of proven intent — dolo — bringing public sector accountability broadly in line with private sector standards. The stated logic is to reduce the chilling effect of open-ended liability, which the government argues discourages officials from making necessary decisions.

Adjunct Minister for State Reform Gonçalo Matias described the package as "a new law, designed from scratch, a deep reform," aimed at making public administration "more agile with more oversight." The formulation is deliberately paradoxical — the government is arguing that removing external checks will, through better internal controls, produce more genuine accountability.

The Case For and the Case Against

The efficiency argument is not without substance. Portugal's public procurement system has long been criticised for delays that inflate costs and discourage qualified contractors from competing for government work. The European Commission's country reports have repeatedly flagged administrative bottlenecks, and the pace of spending under the Recovery and Resilience Plan has been a source of quiet alarm in Lisbon and Brussels alike.

But the concerns raised by Tribunal de Contas president Filipa Urbano Calvão deserve more than a dismissal. Her warning that the measure risks becoming an "invitation" to weaken the state and Portugal's external credibility goes to the heart of a genuine tension. The visto prévio system, however cumbersome, is precisely the kind of external, independent check that international creditors, bond markets, and EU institutions treat as a signal of institutional quality. Replacing it with internal controls — certified by a body that sits within the executive — is a structurally different proposition, even if the paperwork looks similar.

The revised liability rules compound the concern. Limiting sanctions to cases of proven intent lowers the practical risk for public managers of approving questionable contracts. In a system with weaker external review, that combination matters.

What to Watch

The reform now passes to parliament. The key questions in the months ahead will be whether the Inspeção-Geral de Finanças has the capacity and the political independence to genuinely replace what the Tribunal de Contas provided — and whether the EU's scrutiny of Portuguese public spending, already heightened by PRR deadlines, sharpens as a result. Efficiency and accountability are not always in opposition, but the architecture of this reform bets heavily on the former. Whether that bet pays off will depend on institutions that have not yet been tested under the new rules.