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Portugal Fails to Reach Defense Investment Goal

Portugal Ranked Sixth in NATO for Lowest Defense Investment in 2020, Falling Short of the 2% GDP Threshold for Military Expenditure.

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NATO's Lesser Spenders: Portugal Fell Short of Military Spending Threshold, Investing Less Than 2%...
NATO's Lesser Spenders: Portugal Fell Short of Military Spending Threshold, Investing Less Than 2% of GDP on Defense Last Year.

Unveiling the Defense Budget Landscape Across NATO States

Portugal Fails to Reach Defense Investment Goal

In the evolving geopolitical landscape, NATO is considering amplifying its military spending objective from the traditional 2% of a member nation's GDP to a formidable 5%. This shift encompasses dedicating 1.5% to associated defense costs such as logistics, cybersecurity, and more [1][4]. This policy evolution signifies an effort to fortify military capabilities and confront ongoing security challenges.

Present Scenario: NATO Defense Spending in Figures

  • Allied Spending: In 2024, NATO, on the whole, committed 3.19% of its GDP towards defense, marking a decrease from 3.68% a decade earlier [2].
  • Country-wise Allocations:
  • Portugal: Sets aside approximately 1.55% of its GDP for defense [5].
  • Top Spenders: Germany spends the most among Central and Western European nations, with a defense budget hovering around $88.5 billion, yet not reaching the proposed target [5].
  • Frontrunners: Poland spends a staggering 4.2% of its GDP on defense, surpassing the current target [5].
  • Cautious Players: The United Kingdom exercises careful considerations before adopting the higher spending target, focusing on existing commitments [1].
  • Emerging Contenders: Nations like Albania (2.02%), Croatia (1.81%), Montenegro (2.2%), and North Macedonia (2.22%) edge closer to or surpass the existing 2% target but face concerns about the accuracy of these figures [5].

Portugal: A Comparative Analysis

Portugal's defense spending, accounting for 1.55% of its GDP, falls below the present NATO objective. When juxtaposed with frontrunners like Poland that already surpass the proposed target, Portugal's defense expenditure appears relatively modest. However, nations such as Italy (1.49%) and Spain (1.28%), too, lag behind the current target, placing Portugal in a parallel position [5].

Personnel, Equipment, and Other Expenses

Data unveils that Portugal's personnel expenses consume 58.6% of its overall defense expenditure, constituting a rise since 2014 when investment in defense stood at 2.263 billion [6]. However, compared to a decade ago, the significance of personnel expenses dwindles, reducing to 32.4% of investment in 2024, and Portugal housed roughly 6.7 thousand fewer military personnel during that period [6].

Portugal's second-largest defense spending chunk, at 19.5%, apportions to equipment purchases, a significant increase since 2014 when the country assigned just 8.4% of its budget to this category [6]. Nevertheless, Portugal ranks third among NATO countries in spending the least on equipment, trailing only Canada (17.8%) and Belgium (15.2%) in percentage terms [6].

17.9% of the Portuguese Government's defense budget was allocated towards operations, maintenance, and other expenses—a number that skyrocketed from 10.2% in 2014—while infrastructure received 3.9%, up from a mere 0.1% in 2014 [6].

Last week, the Ministry of Finance declared its intention to activate a provision that would exclude defense-related expenses, within the ceiling of 1.5% of GDP, from the constraints imposed by the ceilings on net primary expenditure, as outlined in the National Medium-Term Structural Budget Plan (POENMP), for the years 2025-2028 [7]. Similarly, defense-related expenses, within the limit of 1.5% of GDP, would not influence the assessment of compliance with the reference value for the deficit (3%) [7].

"This decision was endorsed by the largest opposition party, and the Socialist Party was consulted during this process by the Government," said the Government [7].

  1. The news about Portugal's defense spending, which accounts for 1.55% of its GDP, is significantly lower than the current NATO objective, similar to the spending of countries like Italy and Spain.
  2. In terms of equipment purchases, Portugal ranks third among NATO countries, spending the least on this category after Canada and Belgium.
  3. A recent statement from the Portuguese Ministry of Finance reveals that defense-related expenses, within the limit of 1.5% of GDP, will be excluded from the constraints imposed by the ceiling on net primary expenditure for the years 2025-2028.
  4. Portugal's political landscape has seen the ruling government and the largest opposition party agreeing on a provision to exclude defense-related expenses from budgetary constraints as part of the National Medium-Term Structural Budget Plan.

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