Portugal launches new municipal financing scheme through Banco de Fomento

The Portuguese government under Prime Minister Luís Montenegro has set up a working group, led by José Nunes Liberato, to revise the country's Local Finance Law. The aim is to shift municipal funding from relying mainly on annual state transfers to a more stable, strategic model that supports long‑term investment.

The proposal includes creating a dedicated municipal window at the Banco de Fomento Português. This window would combine credit, guarantees, European Union funds, European Investment Bank financing and multilateral instruments to back projects in four priority areas: urban regeneration and housing, green and climate‑resilience upgrades, digitalisation and administrative modernisation, and territorial economic development. Access would be conditioned on balanced municipal accounts, financial sustainability, project quality and measurable territorial impact.

The plan draws on examples such as Denmark’s KommuneKredit, New Zealand’s Local Government Funding Agency and France’s Banque des Territoires, suggesting that a similar institutional architecture could expand financing capacity for Portuguese municipalities tackling housing, health, education, climate risk and investment attraction.