Portugal's Government Proposes Major PRR Revisions to Meet EU Deadlines

Government Presents New PRR Reprogramming Proposal

The Government will present this Friday the proposal for reprogramming the Recovery and Resilience Plan (PRR). "Tomorrow [Friday], we will present the PRR reprogramming proposal – I wouldn't exactly call it a reprogramming, but rather a readjustment or reappraisal," stated the Minister of Economy and Territorial Cohesion, Manuel Castro Almeida, during a parliamentary hearing.

This new PRR reprogramming – which is already the second since the start of this year – anticipates "some changes resulting from the assessment" made by the Government regarding the current execution level and the ability to complete projects within the maximum deadline, i.e., by August of next year. This assessment is expected to lead to the removal of new investments that can be completed on time. Among these investments is the Lisbon metro, as the minister had previously admitted in Parliament in September.

"In 2026, there is no more leeway. By August 2026, everything must be physically done, and by the end of the year, everything must be financially concluded," Manuel Castro Almeida told deputies, explaining the need to withdraw the most delayed investments. The official specified that this new version of the PRR will only bring adjustments in the "allocations and investment values" planned in the current plan, based on the public administration's execution capacity.

On the other hand, the reforms are expected to remain "all as they were". The only changes will be on the investment side.

Despite these adjustments, the minister emphasized that "the PRR is not delayed". "Proof of this is that, with this reprogramming, we are anticipating 10 targets" that were only expected to be met next year. "It's a good sign," he argued.

Later in the debate, the Secretary of State for Planning, Hélder Reis, mentioned that the PRR targets the Government aims to anticipate with this reprogramming relate to "culture, Social Security, and other governmental areas", but avoided going into details because the reprogramming proposal they intend to submit to Brussels "is not yet finalized".

Hélder Reis also noted that, regarding investments that may lose PRR funding, solutions have been found to continue projects for the construction and rehabilitation of schools and housing, particularly through loans from the European Investment Bank (EIB). As for health centers, whose works were tendered by municipalities and are facing execution difficulties, there is currently no alternative funding source, and the Government is seeking solutions.

According to Manuel Castro Almeida, this week is "particularly important for European funds", as the proposal for reprogramming Portugal 2030 was also presented to Brussels this week, allowing Portugal to operationalize European funds from the current community support framework (2021-2027).

The PT2030 reprogramming aimed, according to the minister, "to adjust it to the new priorities defined by the European Commission in April: defense and security; affordable housing; EU competitiveness and decarbonization; energy transition; and water resilience." Projects allocated to these priorities will benefit from larger pre-financing and higher co-financing rates, which should "help comply with the N+3 rule", the so-called "guillotine rule".

Manuel Castro Almeida acknowledged that "this year is being very difficult to comply with the N+3 rule" and that some programs are "quite delayed", such as Compete 2030, aimed at supporting business competitiveness. Nonetheless, he is confident that Portugal will meet the necessary execution targets to avoid funding cuts at the end of the year. "I am convinced that we will comply with it [the N+3 rule]," he said.