Portugal begins bail-out talks

Portugal has begun talks with officials from Europe and the International Monetary Fund about the terms of its bail-out.

Senior officials are meeting Portuguese Finance Minister Fernando Teixeira dos Santos after a fact-finding mission last week.

The total size of the bail-out is expected to be as much as 80bn euros ($115bn; £70bn).

Officials have suggested aid will be agreed by the middle of May.

Portugal is set to become the third member of the euro to be bailed out, after Greece and the Irish Republic.

While the main opposition party is backing the caretaker government’s bail-out bid, many Portuguese are vocal in their opposition, the BBC’s Alison Roberts reports.

The government of Jose Socrates collapsed – prompting the bail-out – because he could not get an ambitious austerity and privatisation package passed.

Some economists see the IMF taking a softer line on the interest rate and duration of the loan than EU officials, who are under pressure from voters in member states that are putting up the money.

Last week, the IMF forecast that Portugal’s GDP would shrink this year and next.

Ongoing turmoil

Support for the bail-out from Germany, the largest economy in Europe, is crucial.

Two Germans are leading the EU delegations – Juergen Kroeger for the European Commission and Rasmus Rueffer for the European Central Bank – while the IMF team is led by a Dane, Poul Thomsen.

Meanwhile, Spain had to pay sharply higher interest rates to borrow money for 12 months at an auction on Monday.

The heavily-indebted state, which has often been talked about as the next state that could face a sovereign debt crisis, paid a rate of 2.77%, up from 2.13% last month.

In Greece, there were protests in Thessaloniki over the weekend as people protested against the austerity measures that were agreed after the country’s bail-out last year.

Greece received 110bn euros in May last year, while the Irish Republic received a bail-out of about 85bn euros in November.