The Government Expands the Public Finance Council's Powers and Recasts the Budget Framework Law to Fit New EU Rules

The government has moved to hand Portugal's independent fiscal watchdog a bigger role and to rewrite the rulebook that governs how the state draws up its budgets. At its Friday meeting, the Council of Ministers (Conselho de Ministros) approved two draft laws — one reinforcing the Public Finance Council (Conselho das Finánças Públicas, or CFP) and another overhauling the Budget Framework Law (Lei de Enquadramento Orçamental, or LEO) — to bring Portugal's public-finance architecture into line with the European Union's new fiscal rules. Both proposals will go to Parliament for debate once the summer recess ends.

The CFP, created after the 2011–14 bailout to give an arm's-length body oversight of the public accounts, gains a wider remit under the plan. It will formally monitor not only the execution of the state budget but also the long-term sustainability of Social Security (Segurança Social) and of the civil-service pension fund, the Caixa Geral de Aposentações (CGA). The reform also strengthens the council's guarantees of institutional independence and reworks how its governing bodies are nominated and run, alongside tighter mechanisms for scrutinising the public accounts. The Minister of the Presidency, António Leitão Amaro, said the changes would give the CFP “a still more robust role in the management and decision-making of public finances in Portugal.”

The second law recasts the way Portugal plans its spending. It responds to the 2024 reform of the EU's economic-governance framework, which retired the old Stability and Growth Pact (Pacto de Estabilidade e Crescimento) in favour of a system built around a multi-year ceiling on net public spending. To match it, Lisbon will introduce a National Medium-Term Structural Budget Plan (Plano Orçamental-Estrutural Nacional de Médio Prazo, or POENMP), a document approved at the start of each legislature and updated only when necessary, which replaces the annual stability programmes sent to Brussels each spring.

In practice, that ends the yearly ritual of approving the “Grandes Opções” (Major Options) as a stand-alone strategic document. Instead, a single medium-term plan would set the trajectory for a whole political cycle, with progress reported each year against it. The revised framework law also reshapes the pre-budget stage and tightens the transparency and accountability rules that surround the deficit and the public debt, the two headline figures the EU rules police most closely.

The push to modernise the framework has been building for some time. The CFP itself, together with the Court of Auditors (Tribunal de Contas) and Parliament's own Budget Support Technical Unit (Unidade Técnica de Apoio Orçamental, or UTAO), had flagged the overhaul as urgent, warning that Portugal risked falling out of step with its European commitments if the domestic law was not updated. The CFP, currently chaired by the economist Nazaré da Costa Cabral, has spent recent months publishing its own suggestions for what a new budget framework should contain.

For residents and businesses, the reform is less about any single tax or spending line than about the plumbing behind them: how binding the government's medium-term promises are, who checks the numbers, and how quickly a slippage in the deficit is spotted and corrected. With Portugal having recently trimmed its 2026 growth forecast and given up its planned budget surplus, the strength of the institutions that watch the accounts is likely to matter more, not less, in the years ahead.