Defense Budget Revision Proposed by Portugal's President: New Accounting Standards Under Consideration
The Prez speaks on defense expenditures and investments, eyeing flexibility to reach the 2% GDP target
In the heart of Faro, during the celebration of the Day of Portugal, of Camões and of the Portuguese Communities, President Marcelo Rebelo de Sousa addressed journalists. He discussed the need for greater flexibility in the accounting of defense expenditures and investments, aiming to reach the 2% GDP mark, a practice followed in other countries, as Portugal's criteria are rigid.
Marcelo Rebelo de Sousa, in agreement with the Government, dismissed the idea of requiring a Revised Budget for Portugal to meet the NATO commitment. Instead, he proposed that Portugal should change its accounting approach for defense spending. However, he mentioned that Portugal hasn't been down this path yet.
The President concluded, stating that this change won't need a Revised Budget. On the subject of NATO now setting a target of 3.5% GDP for defense investments and expenditures, Marcelo described this as a challenge for the future.
EU countries, including Portugal, typically adhere to similar accounting and reporting standards for defense expenditures under the European System of National and Regional Accounts (ESA 2010) and International Public Sector Accounting Standards (IPSAS), or national adaptations thereof. Countries must inculcate defense spending in their annual budgets and fiscal reports, following uniform classification systems for government functions and activities.
Portugal, like other nations within the Union, is subject to EU fiscal rules. Defense spending is part of the overall state budget as general government expenditure, with specific line items for operational and investment-related costs. Portugal faces challenges related to rising pension and social expenditure that may hinder fiscal sustainability and prevent increasing defense spending without re-allocating funds within the budget.
On the brighter side, Portugal is progressing towards modernizing its public sector accounting by implementing new standards and improving performance budgeting mechanisms. The country's aim is to align with advanced EU countries in terms of public sector financial management systems.
In light of the President's proposal to adjust Portugal's defense spending accounting approach, discussions surrounding policy-and-legislation related to this matter are likely to emerge within the politics sphere. As the President's statement concerning the 2% GDP defense spending target draws comparisons with other countries' practices, general-news outlets may cover this story as a topic of international interest.
