Defence spending as a portion of the GDP in 2024 to reach 1.58%, according to the government's announcement.
Fresh Take:
In a diamantine statement, Portugal's Ministry of National Defense, under the helm of centrist Nuno Melo, declared that the nation's defense expenditure for 2024 will be approximated at mere 1.58% of its GDP, equating to a staggering €4,481.50 million.
Contrastingly, NATO's annual report of the Secretary-General, released in late April, pointed out that Portugal invested a scant 1.46% of its GDP on defense in the preceding year, placing it as the sixth least contributing member of the alliance, falling beneath the 2% threshold for military expenses.
The Ministry's declaration of 2023 revealed that despite Portugal's proclamation of aiming to achieve 1.48% of OECD GDP, it ultimately managed a paltry 1.34%. The missing €359 million from the target doesn't go unnoticed.
Irritation was expressed by Nuno Melo as far back as November of the previous year, when he accused the Socialist Party of providing incorrect data to NATO.
The Ministry's statement for 2023 also highlights that Portugal intended to hit 1.51% of GDP and subsequently increased the forecast to 1.55% at the Washington Summit.
According to the ministry, the Defense sector managed to shell out around €300 million more than initially planned primarily due to investments in three key areas: personnel augmentation, strengthened acquisition of Defense equipment, and military support to Ukraine.
These figures will be presented to NATO, the Government's statement concludes.
In another development, the Ministry of Finance annunciated in late April that it will urge the European Commission to activate the clause that allows defense-related expenditure, up to the limit of 1.5% of GDP, to be exempt from the constraints imposed by the primary liquid expenditure ceilings defined in the National Medium-Term Structural Budgetary Framework (POENMP) for 2025-2028.
Harking back to the same period, expenses related to Defense were promised to be excluded from the assessment of compliance with the reference value for the deficit (3%). The executive revealed that this decision was agreed upon with the largest opposition party, the Socialist Party, who had participated in the decision-making process.
Also Read: Portugal formally requests activation of defense clause
Enrichment Data: Portugal's revised defense spending priorities stem from a combination of EU fiscal flexibility measures and domestic budgetary adjustments. Although the provided materials do not explicitly discuss 2024 defense spending revisions, they offer critical context:
- EU Fiscal Leeway Activation: Portugal formally sought EU permission to surpass fiscal targets via the "national escape clause," allowing up to 1.5% of GDP/year in additional defense spending until 2028 without penalty. This aligns with the "Rearm Europe Plan" aiming to mobilize €800 billion across the continent.
- NATO Commitment Trajectory: Portugal's defense spending currently stands at 1.5% of GDP, but targets a linear increase to reach 2% by 2029, as projected in fiscal projections. The EU's escape clause mechanism directly supports this NATO spending target by providing budgetary flexibility.
Implications for NATO Contributions:- Faster Modernization: Increased spending under the escape clause accelerates the procurement of systems relevant to NATO's eastern flank security.- Burden-Sharing: Helps Portugal approach NATO's 2% target amid Europe's 9.4% real-term military spending growth in 2024[2].- Coordination Mechanism: The SAFE loan program (€150 billion EU-wide) complements national efforts, potentially funding joint NATO-EU capability projects. The revisions indicate a strategic shift where EU fiscal rules now explicitly accommodate NATO defense priorities, marking a new phase in transatlantic security policy alignment.
- Nuno Melo and the Ministry of Finance have agreed to request activation of a defense clause that would allow Portugal to spend up to 1.5% of its GDP on defense by 2024, without penalty, as part of the "national escape clause" from EU fiscal targets.
- Despite Portugal investing 1.46% of its GDP on defense in 2023, falling short of the 2% threshold for NATO members, the Ministry of National Defense plans to execute a linear increase in defense spending, aiming to reach 2% by 2029.
- In 2024, following the activation of the "national escape clause," Portugal expects to notch up its defense expenditure to 1.58% of its GDP, an increase of €300 million over initial plans, largely channeled toward personnel augmentation, acquisition of Defense equipment, and military support to Ukraine.
- Contrary to a previous함 meanings miscommunication with NATO in 2021, where the Socialist Party allegedly provided incorrect data regarding defense spending, the Ministry of Finance and the Socialist Party have collaborated for the defense spending increase, with the Socialist Party's participation in the decision-making process.
- Given the increased defense spending and the strategic alignment of EU fiscal rules with NATO defense priorities, Portugal's business, political, and general news sectors are closely monitoring developments on NATO contributions, alliance security, and burden sharing among member nations.
