Brussels wants to reduce advances of European funds to Portugal

The European Commission is landing in Portugal this week . The aim is to meet with the Portugal 2030 programmes that are furthest behind in implementation and that may be at risk of having to return funds this year if the reprogramming is not approved. Portugal submitted its reprogramming proposal at the end of March, but the exercise was put on hold in view of the new priorities – which include a mandatory investment in defence – and the need to reduce cash flow pressures, ECO has learned.

An official source from the Agency for Development & Cohesion confirmed to ECO that the meetings were held this week, but downplayed their importance. “Every week we have meetings with our interlocutors at DGRegio and DGEmprego”. However, this week “the meetings will be extended to some Managing Authorities precisely so that we can jointly analyse the procedural situation of the respective reprogrammings (submitted on 31 March 2025) in the context of the legislative package for the mid-term review presented on 1 April”.

The European Commission wants to reduce the amount of advances paid to Member States . The amount currently stands at 30%, but Brussels wants to reduce it to 20% to reduce pressure on the EU budget. Pre-financing is the money that Brussels advances to each Member State to help implement EU funds.

On the other hand, the EU Executive wants to reduce the additional payment to countries that invest 10% of the programme in new priorities . Until now, it was possible to have an additional 4.5% in the advance payment, but this amount should increase to 1.5%.

But the other advantages should remain, such as the possibility of paying 100% and, if 10% of the program is allocated to new priorities, closing the N+3 program.

Brussels also does not look favorably on Member States having too much flexibility in reprogramming exercises, to the point of ending up with completely different programs to those initially approved.

However, it was the Commission itself that defined new priorities for the funds – defence, water, housing, energy transition and specific for countries bordering Ukraine –, which requires redoing the reprogramming exercises already sent.

If housing and water only serve to reinforce the Executive's objectives of guaranteeing financing in PT2030 for projects that were dropped from the Recovery and Resilience Plan (RRP) due to the impossibility of completing them on time, the defense is not quite like that. Especially because the definition of large investment projects has to be done at central level.

The Pisão dam, the Pomarão water intake and the Algarve desalination plant are some of the investments that the Government had already said would be financed by the current community support framework, but also with funds from the Environmental Fund and the State Budget.

This option would automatically resolve the problem of poor implementation of some programmes , particularly Sustainable 2030, which presented the greatest risk of returning funds to Brussels due to the application of the guillotine rule. This risk arose from the fact that PT2030 had started with an additional delay compared to previous Community frameworks, but also from the delays in the legal proceedings in the contested tender for train carriages.

This year, all programmes – whether thematic or regional – must comply with the guillotine rule , meaning that programmes must spend the amount corresponding to each year's budget over the following three years. If they fail to do so, the remaining amount must be returned to Brussels. This means that for each operational programme, the allocation must be divided by seven (corresponding to the number of years in the framework) and that is the amount that must be spent three years later (this is the N+3 rule).

But aware that the risk of funds being returned to Brussels increases even more if pre-financing is reduced (implementation may be slower), there are options open on the table.

Portugal is trying to negotiate a proportional reduction of N+3, so that the Commission's financial effort is not so great, but the objectives are still met.

As regards housing, the aim is to try to register affordable housing, but also housing for functional areas, such as building residences for health professionals . In terms of housing, it is also possible to finance projects to overcome energy poverty (OP2). Depending on the budget used to finance housing, this will be the responsibility of the municipalities, requiring a territorial instrument, or the CCDR.

These negotiations with the European Commission may delay the PT2030 reprogramming exercise.

ECO asked the European Commission and the Ministry of Economy and Cohesion, but had not received a response by the time this article was published.