EU package for crisis-hit Portugal is expected to reach €75bn
Portugal is set to start hammering out a bailout package that may total €75bn as it becomes the third euro-region country to seek European Union aid.
The Portuguese government planned yesterday to make a formal aid request to the European Commission, government minister Pedro Silva Pereira said yesterday at a press conference in Lisbon.
The request came as Finance Minister Fernando Teixeira dos Santos travelled to Budapest to meet with other officials from the other 16 euro nations near Budapest today.
Portugal is the latest nation to seek an EU-led bailout after Greece sparked a sovereign-debt crisis that threatened to splinter the euro region a year ago, and then engulfed Ireland.
The challenge for Teixeira dos Santos will be negotiating an interest rate on bailout loans that doesn't strangle an economy that's barely grown in the past decade, or spark the public outcry that greeted Ireland's bailout package in November.
Prime Minister Jose Socrates said he had no choice but to seek aid as the country faces €9bn of bond maturities in April and June. The yield on Portugal's 10-year bonds, which hit a record after Socrates resigned last month and early elections were called, rose six basis points to 8.595pc yesterday.
Fitch Ratings said in a statement that Portugal's aid request "will help moderate the near-term risks to macro-economic and financial stability".
Meanwhile, IMF chief Ajai Chopra was back in the Department of Finance yesterday looking through the books for the Irish bailout's first health check.
A team from the IMF, EU and ECB are conducting a 10-day review of the country's performance under the terms of the bailout. Mr Chopra, the IMF European Department deputy director, arrived in Dublin on Wednesday and attended briefings in the department yesterday.
Meanwhile, Finance Minister Michael Noonan is not expected to secure a reduction in the interest rate on the EU's portion of the bailout this weekend. Mr Noonan is attending a meeting of EU finance ministers in Budapest, which will be dominated by the crisis caused by Portugal now requiring a bailout.