Portugal Hits 2% NATO Defense Spending Target — But Ranks Among Bottom Five Alliance Members

Portugal achieved NATO's long-standing defense spending benchmark of 2% of GDP in 2025, up from 1.55% the previous year—a 31.67% annual increase that brought national defense expenditure to just over €6 billion, according to NATO's latest annual report released this week.

But despite the sharp rise, Portugal remains in the bottom tier of Alliance members. The country joins Spain, Canada, Belgium, and Albania as the five NATO nations spending the least on defense relative to their economies, all falling short of the 2.77% Alliance average.

The 2% target was set at the 2014 Wales Summit, with a deadline of 2024. Portugal missed that mark but has now closed the gap. The bulk of defense spending still goes to personnel—45.2% in 2025, down from 81.9% a decade ago—while 31.4% funds operations and maintenance, 21.2% goes to equipment, and just 2.2% to infrastructure.

NATO estimates Portugal currently fields around 21,500 active-duty military personnel.

A Pressuposto for Peace and Development

Prime Minister Luís Montenegro, speaking in December during a visit to Portugal's first national detachment in Slovakia, called the surge in defense investment unprecedented.

The effort we are making now and will make in the coming years has no parallel in our history, he said, framing the spending increase as essential for both national sovereignty and Portugal's commitments to allies.

Montenegro argued that Europe is waking up to a reality that was perhaps a little dormant—the reality of danger. The investment, he added, supports not only military careers and equipment but also Portugal's standing in international organizations like NATO.

The New 5% Target Looms

At the June 2025 NATO Summit in The Hague, Alliance members agreed to a far more ambitious goal: raising defense spending to 5% of GDP by 2035. That would require Portugal to more than double its current outlay over the next decade.

With Portugal's 2025 GDP estimated at around €300 billion, hitting 5% would mean annual defense budgets approaching €15 billion—well over twice the current figure.

Whether Portugal can sustain that trajectory remains an open question. The country has already committed to major equipment acquisitions, including KC-390 transport aircraft and expanded drone programs, and is participating in NATO's Black Sea exercises and broader European security operations.

But rising defense budgets will compete with domestic priorities like housing, healthcare, and public sector wages—policy areas where political pressure is mounting.

Context: Portugal and NATO

Portugal is a founding member of NATO (1949) and hosts the strategically vital Lajes Field in the Azores, which has seen a surge in U.S. military traffic amid Middle East tensions. Portuguese forces are currently deployed in NATO missions across Eastern Europe, including Slovakia and Romania.

The country's recent defense agreements with Slovakia and participation in the Sea Shield 2026 naval exercises in the Black Sea signal a more active posture within the Alliance.

Portugal's Defense Council, convened earlier this year under new President Seguro, has been grappling with the tension between rising defense commitments and domestic spending priorities.

Still, the climb from bottom-tier spender to mid-pack performer will require sustained political will—and money—over the next decade.