Miranda Sarmento's Two-Year Despesa Squeeze Meets a CFP Forecast That Outruns the Government on the 2027-28 Spending Path to Brussels

The Conselho das Finanças Públicas (CFP) published its Plano Estrutural de Médio Prazo execution opinion on Thursday 28 May 2026, projecting primary current spending growth in 2027 and 2028 above the path Finance Minister Joaquim Miranda Sarmento committed to Brussels under the Plano Estrutural — the multi-annual framework that anchors Portugal's compliance with the EU's reformed Pact for Stability and Growth. The CFP also reiterates that the Government's 2% real-GDP-growth forecast for 2026 is overly optimistic and carries significant downside risk.

The 6.6% Number and the Rigidity File

Primary current expenditure rose 6.6% in 2025 — more than double the eurozone average — with social benefits and personnel expenses accounting for over 80% of that increase. The CFP frames the issue as one of spending rigidity: pensions, public-sector wages and Indemnizações Compensatórias to public companies are now growing on an indexed cycle that the government cannot compress in the short term without statute changes. The Conselho's reading is that this rigidity 'compromises the capacity to respond to future challenges' and forces the choice between higher tax burdens or higher indebtedness if a counter-cycle materialises.

The Sarmento Pledge and the CFP Counter-Forecast

Miranda Sarmento committed in his February 2026 Plano Estrutural that Portugal's net expenditure growth — the new fiscal anchor under the reformed EU framework — would stay inside the agreed corridor through 2028. The CFP's Thursday opinion counter-projects expenditure trajectories above the agreed corridor in 2027 and 2028, pinning the deviation on the same three rigidity drivers (pensions, wages, social benefits) plus an under-projection of healthcare and education capital expenditures linked to the PRR's 30 June 2026 execution wall and the post-PRR investment tail-off.

The Surplus Dependency on Segurança Social

Portugal closed 2025 with a budget surplus of 0.7% of GDP — €2,059 million — against the 0.6% reading of 2024. The CFP's standing concern is that the surplus 'continues to depend heavily on Social Security', which posted its own large surplus on a buoyant employment cycle. Strip out the Segurança Social contribution and the State direct accounts already sit close to balance; a 2026 unemployment uptick or a wage-cycle slowdown would convert the consolidated surplus into a small deficit on the CFP's central scenario for 2027.

The Brussels Calendar

The European Commission reviews member-state PEMP compliance in October 2026 against the structural-budget arithmetic and net-expenditure ceilings. A confirmed CFP divergence carries through to the Commission's autumn package and can trigger a Country-Specific Recommendation on expenditure containment — a politically awkward marker for a Montenegro government that has built its post-2024 framing around fiscal prudence and against PS-era 'excessive expansionism'. The CFP opinion lands the same week the Council of EU Finance Ministers begins technical preparation for the autumn-package cycle.

What This Means for Expats — The Bottom Line

• The 2026 fiscal frame is not at risk. The current-year surplus is locked in by Q1 execution and seasonal Segurança Social over-performance; the CFP's concern is forward-looking and centres on 2027-28.
• Pensions and civil-service wages are the political battleground. Any deviation from the agreed expenditure path will need to be closed either via slower pension indexation (politically toxic ahead of the 2027 cycle) or via deferral of civil-service wage steps — both of which sit on the IL/Chega-PSD coalition negotiating perimeter.
• The IRS Jovem and personal income-tax cut package interacts directly with this file. The Government has banked future tax cuts inside the same envelope the CFP says is constrained by spending rigidity. A 2027 IRS package above the CFP's tolerance band would require an offsetting spending cut or be classed as non-compliant.
• The 2% growth forecast carries Brussels-side weight. The Commission, Bank of Portugal and OECD all currently print 2026 numbers between 1.8% and 2.2%; the CFP's downside read centres on the housing-correction risk and the post-PRR investment cliff. A confirmed below-2% outturn would compress the denominator on Portugal's debt-to-GDP path and amplify the expenditure overshoot.

The full CFP opinion is published on conselhofinancaspublicas.pt; the Plano Estrutural execution report follows in late June with the regional-government and Segurança Social breakdowns.