Portuguese Government Announces Measures to Expedite Post-Fire Reconstruction
The Portuguese government has approved Decree-Lei n.º 98-A/2025, a legislative package designed to support the recovery of territories affected by the extensive rural fires of 2025, which have burned over 2% of the nation's land. The diploma, published on August 24, introduces a series of financial aids and exceptional public contracting rules to accelerate the reconstruction of housing and public infrastructure.
The new law aims to mitigate the negative consequences of the fires and facilitate a more rapid and effective recovery. According to legal experts at the law firm Cerejeira Namora Marinho Falcão, the measures cover various domains, including direct support for housing, businesses, local authorities, and farmers. A significant focus of the legislation is on streamlining the processes for public works and service contracts essential for the recovery effort.
In the area of public procurement, the decree introduces exceptional rules applicable to the direct and indirect state administration, including the public enterprise sector and local administration. These measures are intended to agilize the awarding of contracts for public works, the acquisition of goods, and the procurement of services related to fire damage. A key provision is the increase of the financial thresholds for using direct award and prior consultation procedures.
These thresholds are now aligned with the values stipulated in Article 4 of the EU Directive 2014/24/EU, which are substantially higher than those previously defined in the Portuguese Public Contracts Code (CCP). This change allows public bodies to contract necessary works and services more swiftly, bypassing more lengthy and complex tender processes. Ricardo Maia Magalhães, a partner at the aforementioned law firm, noted that this measure is crucial for an efficient response to the disaster.
Furthermore, Article 37 of the decree-law revokes some of the existing limitations on the selection of entities invited to participate in these simplified procedures, providing more flexibility to contracting authorities. However, specific limits remain in place for public works contracts to ensure a degree of competition and oversight. The legislation also introduces mechanisms for tacit approval on certain administrative and expenditure authorizations, a move intended to further increase the speed of the recovery process.
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Regarding housing, the government has announced specific support for the reconstruction of primary residences that were damaged or destroyed. The Prime Minister, Luís Montenegro, confirmed that the government would provide an immediate advance of 50% of the reconstruction costs once the total amount is determined. The support includes a 100% co-payment for reconstruction costs up to €250,000, with the remaining value being co-financed at 85%.
In addition to these measures, the Ministry of Finance is set to extend the deadline for the payment of the Municipal Property Tax (IMI) in the municipalities most affected by the fires that occurred after July 26, 2025. This fiscal relief is intended to ease the financial burden on families and businesses impacted by the disaster.
These coordinated actions by the Portuguese government reflect a strategy to provide immediate relief while also laying the groundwork for the long-term reconstruction and revitalization of the fire-stricken regions. The exceptional contracting measures are expected to create significant activity in the construction sector in the coming months.
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