Portugal's Credit Rating Soars

Fitch has upgraded Portugal's sovereign debt rating from A to A+ with a stable outlook, marking the country's best credit rating in 15 years. The upgrade reflects years of falling public debt and stronger-than-expected growth in Portugal.

The country's public debt is expected to fall from 89.7% of GDP in 2025 to 87.0% in 2026 and 82.9% in 2028. In comparison, the forecast median of public debt for countries rated A is 59.5% of GDP.

Other ratings agencies have also shown confidence in Portugal's economy. Standard & Poor's (S&P) confirmed its unsolicited sovereign credit ratings for Portugal at A+/A-1 in August, while Morningstar DBRS confirmed the Republic of Portugal's rating at A (high) with a stable outlook in July 2025. According to the Portuguese government, all financial ratings agencies now assign Portugal an A rating.

Fitch expects Portugal to maintain primary surpluses and moderate nominal growth. The agency cited the country's governance indicators, which are above the median for countries rated A, as well as its institutional strengths linked to its membership of the European Union and the euro area.

## Why it matters The upgrade is a significant boost to Portugal's economy, reflecting the country's strengthening public finances and institutional strengths. It is expected to increase investor confidence and potentially lead to lower borrowing costs for the government. The upgrade also highlights the country's progress in reducing its public debt and improving its budget balances, which are considerably stronger than those of comparable countries.

The upgrade is not without its caveats, however. Fitch noted that defence spending and housing costs still pose risks to Portugal's economy. Nevertheless, the upgrade is a positive development for the country, and it is expected to have a positive impact on its economy in the long term.