Government to Submit Budgetary Framework Law Revision Only After 2026 State Budget
The Portuguese Government will only present its proposal for the revision of the Budgetary Framework Law (LEO) to Parliament after the State Budget for 2026 is delivered, the Deputy Secretary of State for the Budget, José Maria Brandão de Brito, announced this Friday. The update to the fundamental law governing public financial management, which had been anticipated for the first quarter of this year, was suspended following the dissolution of the previous government. The new administration has now clarified that this structural reform will be postponed until after the next budget cycle is complete.
During a hearing at the Committee on Budget, Finance, and Public Administration (COFAP), Brandão de Brito stated that the current LEO is “outdated” and requires a comprehensive update. “The Government will have to propose an update to the LEO and in that context will propose a broader set of measures,” he explained. When pressed for a timeline, he confirmed, “Certainly after the Budget. Exactly when, I am not in a position to say.” The statement was made in the context of discussions surrounding the 2023 General State Account, highlighting the procedural importance of the LEO in ensuring fiscal transparency and stability.
The policy objectives for the LEO revision were previously outlined by the Minister of Finance, Joaquim Miranda Sarmento, who has consistently reaffirmed the executive's commitment to the process. The reform is intended to achieve four key goals: full adaptation to the new European budgetary rules, the introduction of a permanent public spending review mechanism, the reinforcement of commitments to gender-responsive budgeting, and the integration of green budgeting principles as mandated by Portugal’s Climate Framework Law. The unexpected change in government earlier this year effectively reset the timeline for this complex legislative undertaking.
The topic of national budgetary sovereignty has been a point of discussion among public finance experts. In a March interview with ECO, Nazaré da Costa Cabral, president of the independent Public Finance Council (CFP), advocated for Portugal to define and adopt its own national budgetary rule. She argued against the simple transposition of European directives, suggesting that a domestically developed rule would foster a greater sense of ownership and accountability among the nation's political institutions. “Portugal, as a sovereign country that wants to be, independent even from a financial point of view, should assume an attitude of adopting its own budgetary rule,” she stated, emphasizing that this would create a 'master line' for fiscal discipline across all levels of public administration, including regional and local governments.
The government's decision to sequence the LEO revision after the 2026 budget indicates a strategic choice to prioritize the immediate budgetary process over longer-term structural reforms. This approach allows the current administration to operate under the existing framework for its first full budget cycle while preparing for a more fundamental overhaul of the country's fiscal architecture in the subsequent period. The future law will be critical in shaping Portugal's public finances and its alignment with international standards of fiscal responsibility. Understand policy impacts on your Portugal property plans at realestate-lisbon.com.
