Portugal’s State Businesses Lose €1.3bn—Hospitals Underfunded, Services at Risk

Portugal’s state-owned companies closed 2024 with red numbers that eclipse previous years, and the fallout is beginning to touch households, taxpayers and regional authorities alike. A new report from the Conselho das Finanças Públicas shows combined losses of €1.312 billion, a jump of €546 million from 2023—enough to wipe out recent gains in the national accounts and reignite debate over how far the public purse should keep bankrolling chronically unprofitable entities.

Mounting losses overshadow tentative recovery

The headline figure looks stark because it comes at a moment when the wider corporate landscape is, in theory, improving. Across the economy the share of companies that finished the year in the red slipped slightly to 37.9 %, yet the Setor Empresarial do Estado—the cluster of firms owned or controlled by government—moved in the opposite direction. Economists point out that this deterioration will force Lisbon to rethink its 2025 budget arithmetic; the State is the sole shareholder in several of the worst performers and must therefore absorb their liabilities. Pressure on the deficit, debt-service costs, credit-rating outlook, EU fiscal rules, bond yields and public-sector wage negotiations are all suddenly intertwined with the latest balance-sheet surprise.

Health services at the heart of the red ink

Almost the entire shortfall can be traced to the hospital network. Entities classified as Entidades Públicas Empresariais inside the Serviço Nacional de Saúde generated €1.7 billion in losses, equivalent to 93 % of the negative result. Analysts blame a cocktail of factors: the expensive transition to new Unidades Locais de Saúde, rising pharmaceutical and energy bills, and structural under-funding that leaves 30 of 42 units in technical insolvency. That accounting reality matters because suppliers now demand shorter payment terms, forcing hospitals to rely on the Treasury for liquidity injections. The CFP warns that without swift corrective action the cash burn could crowd out investment in primary care, digital transformation and staff training.

Transport and logistics buck the trend

Not every state asset is under water. The transport and warehousing segment posted an aggregate profit of €205 million, lifted by Infraestruturas de Portugal—whose toll revenue recovered as tourism rebounded—and by TAP SA, whose operating turnaround helped offset a €59 million loss at the holding company TAP SGPS. While the airline still battles legacy litigation from flight-crew claims, its core flights to North America and Brazil benefitted from lower fuel hedging costs and a stronger dollar. That split performance inside the same corporate family illustrates why investors insist on clarity about which entity the State ultimately backs: holding companies may sink while operating subsidiaries swim.

Implications for the national budget

Public-sector accountants calculate that every €1 billion added to enterprise losses translates into roughly 0.3 percentage points of potential deficit slippage. With the Government projecting a return to budget shortfall from 2026 onward, the latest numbers accelerate that timetable. The public-debt ratio has been on a downward path—set to dip below 98 % of GDP—but new capital injections compromise that trend. In Brussels, the European Commission already flags Portuguese state companies as a contingent-liability risk that could reignite excessive-deficit proceedings if not managed. For ordinary residents the danger is more prosaic: cost-cutting at hospitals or higher ticket prices on regional rail lines could emerge as quick-fix solutions.

Government’s 2025 rescue blueprint

The Cabinet’s answer is a multi-pronged overhaul. A decree turning the Direção-Geral do Tesouro e Finanças into the leaner Entidade do Tesouro e Finanças consolidates oversight; two technical units that tracked project finance are being folded into the new body. Simultaneously a task force housed at the Finance Ministry is mapping which assets could be part-privatised, merged or wound down. Draft guidelines on pay policy, tighter procurement rules, mandatory digital reporting dashboards and a cap on off-balance-sheet guarantees aim to stem losses before they hit the books. The political gamble is that stricter governance will reassure ratings agencies without provoking unions already bracing for another round of wage restraint.

What to watch in the year ahead

Corporate surveys suggest the macro backdrop will stay challenging: inflation-driven cost spikes, rising payrolls, scarce skilled labour, volatile energy markets and higher borrowing costs remain on boardroom agendas. Yet Portuguese GDP is still expected to expand by 2.2 % in 2025, buoyed by European recovery funds. The unanswered question is whether state-owned companies—especially those in health—can tap that capital to modernise or will instead siphon it merely to plug funding gaps. If the reforms succeed, taxpayers could see relief and renewed investment; if they falter, the bill will circle back to households through either higher taxes or curtailed services. The stakes, in other words, are not confined to balance sheets; they will shape the everyday experience of people living in Portugal for years to come.