Portugal has today become the first EU country to have its recovery plan rubber-stamped by the European Commission.

EU President Ursula von der Leyen said an initial disbursement from its Covid-19 recovery fund should come in July.

"The plan clearly meets the demanding criteria we have jointly established," von der Leyen told reporters after meeting Portuguese Prime Minister Antonio Costa in Lisbon.

"There is no doubt that it will deeply transform Portugal's economy," she added.

In April, Lisbon was also first with the official submission of its plan to Brussels, expecting the recovery programme to increase GDP by 3.5% by the end of 2025, compared with what it would be without it.

Portugal's tourism-dependent economy contracted by 7.6% in 2020, in its steepest recession since 1936.

Portugal wants to use the nearly €14 billion in EU grants until 2026, as well as some €2.7 billion in loans, out of the bloc's €750 billion pandemic recovery package, in a bid to reboot the economy and increase competitiveness.

It plans to give around €5 billion to companies, reinforcing their equity, supporting investments in innovation, greener production processes and digital tools and skills.

The plan also envisages dozens of investment projects in health, social housing and infrastructure.

The government has predicted conomic growth of 4% this year, while the central bank earlier today raised its growth forecast to 4.8% from the 3.9% predicted in March, expecting a sharp increase in investment already benefiting from the European recovery fund.