Portugal will find it extremely difficult to achieve a balanced budget this year after storms in January and February cost the state €2 billion, about 0.6% of GDP, Economy Minister Manuel Castro Almeida said on Friday.
Three weeks ago, the government said it expected a balanced budget this year, with no deficit or surplus, after previously forecasting a small surplus of 0.1%.
"The government has not given up on the objective of reaching a balanced budget, but we’re aware that it’s an extremely difficult objective after the €2 billion the storms have cost us," Castro Almeida said in parliament.
The severe storms and floods hit central areas of mainland Portugal, a key economic region, causing extensive damage to businesses, homes and infrastructure, increasing public spending and reducing tax revenue.
Castro Almeida said Portugal's good international reputation and fiscal discipline, with debt below 90% of GDP, continue to support foreign investment, alongside plans to cut corporate taxes.
The storms and higher energy prices linked to the Iran conflict stalled the economy in the first quarter, but the government expects it to grow 2% this year, slightly above 1.9% in 2025.
