Scope Makes It Three Agencies Rating Portugal A+, but Flags the Risk of Fiscal Fatigue Under a Minority Government

Scope Ratings, the Berlin-based credit rating agency, raised Portugal's long-term sovereign rating by one notch to A+ from A on Friday evening, and changed its outlook from positive to stable. It also lifted the country's short-term rating to S-1+ from S-1. The move applies to debt issued in both euros and foreign currency.

Portugal now holds an A+ from three of the five agencies that the Agência de Gestão da Tesouraria e da Dívida Pública (IGCP, the Treasury and debt management agency) tracks: Scope, Fitch, which upgraded it on 4 September, and S&P, which has rated Portugal A+ since August 2025 and kept a positive outlook in August. DBRS has it at A (high) with a positive outlook, and Moody's at A3, stable. Moody's next review is on 20 November and DBRS's on 13 November, according to the IGCP's latest investor presentation.

Why Scope moved

The agency gives two reasons. The first is the fall in public debt. Portugal's debt stood at 134.1 percent of GDP at its 2020 peak, 96.9 percent in 2023 and 89.2 percent in 2025, a drop of about 45 percentage points in five years. Scope expects it to reach 86.9 percent this year and "around 76%" by 2031.

That rests on three years of budget surpluses in a row, the latest worth 0.7 percent of GDP in 2025. Scope says the surplus came in better than expected even after cuts in corporate and personal income tax and extra payments to pensioners, because tax revenue and social contributions kept rising.

The second reason is growth and the country's external accounts. Scope expects the economy to grow 2.1 percent in 2026, slightly faster than last year, despite the Atlantic storms and the war in the Middle East, and by an average of 1.7 percent a year from 2027 to 2031, above the euro area. Portugal has run a current account surplus since 2023, and its net debt to the rest of the world, 48.2 percent of GDP in the second quarter, is shrinking.

A balanced budget this year, smaller surpluses after

Scope expects the 2026 accounts to be "broadly balanced" rather than in surplus. It lists what eats into the margin: emergency measures after the storms and the Middle East conflict, spending financed by the Recovery and Resilience Plan, the further income tax cut and this year's extra pension payment. Dividends from the state bank Caixa Geral de Depósitos and the sale of public housing assets help offset them.

From 2027 the agency sees the primary surplus (the balance before interest payments) narrowing from 2.0 percent of GDP this year to about 1.2 percent a year on average, as ageing costs rise and defence spending grows under the EU's SAFE loan programme, worth 5.8 billion euros to Portugal. Interest costs should stay contained: the average maturity of the debt is about seven years, and the floating-rate part is mostly savings certificates whose rate is capped, at 2.5 percent on the latest series. Net interest is forecast to rise from 2.1 percent of GDP in 2026 to 2.3 percent in 2031.

What still holds the rating back

Scope is blunt about the politics. It says the risk of "fiscal fatigue" eroding the surpluses, "in the context of a fragmented parliament and a minority government, is not negligible", and it scores Portugal's governance as "weak" against countries with similar ratings because the government has no majority in Parliament. The warning comes a week before the government's 2027 budget is due in Parliament, by 10 October.

The agency's model on its own pointed one notch higher, at AA-. Scope's analysts took a notch off for the weak governance score, financial imbalances and the resilience of the current account.

Its other concerns:

• Housing. House prices were still rising 16.5 percent a year in the second quarter, down from 18.9 percent at the end of 2025. Scope sees a growing risk of a price correction, and notes that households' net financial assets, at 134.9 percent of GDP, are well below the euro area average of 171.3 percent, so families have thinner buffers if prices fall.
• Pensions and ageing. Citing European Commission projections, it expects pension spending to rise from 12.2 percent of GDP in 2022 to 13.5 percent in 2030 and to peak at 15.2 percent in 2046.
• Growth potential. An ageing population, low birth rates, modest productivity and housing costs that make it harder for workers to move to where the jobs are.

It sees no particular risk in the banks, whose "solid capitalisation and sustained profitability" mitigate threats to financial stability.

What would move it again

Scope says the risks over the next 12 to 18 months are balanced. A further upgrade would need a "material and sustained" fall in the debt ratio, or substantial economic diversification with incomes converging on the euro area average and lasting current account surpluses. A downgrade would follow a fiscal slide that reverses the progress on debt, or a significant hit to growth, for example from an external shock.

The rating was not requested by Portugal, though the government took part in the process. Neither the Finance Ministry nor the IGCP had commented on their own websites by Saturday morning. A better rating tends to lower the interest rate investors demand on government bonds; for the public finances that means cheaper refinancing as old debt falls due. Figures published on Wednesday showed that the public accounts' surplus had narrowed to 249 million euros by the end of August.

Sources: Scope Ratings, rating announcement of 2 October 2026 and its announcement of 31 October 2025; IGCP, Investor Presentation, September 2026.