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The Portuguese front pages yesterday Francisco Seco/AP/Press Association Images

EU finance ministers to discuss Portugal bailout terms

The discussions in Budapest are expected to overshadow Ireland’s attempts to renegotiate the interest rate on its own bailout.

EU FINANCE MINISTERS will discuss the terms of Portugal’s bailout at a meeting in Hungary today after receiving a formal request for aid on Thursday.

The scope of a potential deal, including how much Portugal will get in aid and what interest rate will be applicable on the money they pay back will be discussed at a two-day summit in Budapest, the BBC reports.

The exact amount of aid that Portugal will receive is not yet clear although The Guardian speculates that it could be as much as €90 billion because of hidden debt in state companies and private-public partnerships.

The Portuguese newspaper Diário de Notícias says (Portuguese) the need for financial assistance is because of the difficulties of the banking sector and “particularly regarding the risk of liquidity and withdrawal of deposits”.

Uncertainty over the Portuguese government’s ability to agree to austerity measures also surrounds the talks.

The government of Jose Socrates, the current caretaker prime minister, was unable to push through austerity measures in a budget last month leading to the collapse of the government and the request for a bailout.

Negocios reports (Portuguese) that an EU/IMF technical team will arrive in Lisbon before scheduled elections on 5 June “to assess the financial needs and the minimum conditions for granting the first tranche of funding.”

In much the same way Ireland’s bailout was negotiated, opposition parties, business leaders, and trade unions will be spoken to before terms of are agreed.

It is not certain whether the bailout will involve the International Monetary Fund in the way Ireland’s aid package does. Germany has previously demanded this be a pre-condition of EU bailout plans.

The discussion over Portugal’s financial affairs will overshadow Ireland’s finance minister Michael Noonan’s attempts to seek a re-negotiation of the interest rate on Ireland’s loan, the Irish Examiner reports this morning.

RTÉ says that Noonan will meet with French and German finance ministers, briefing them on the recent banking stress tests and the subsequent restructuring of the Irish banking sector.

He said he will be hoping the ‘promise’ of a reduction in the bailout interest rate will still stand.

He added that Ireland’s corporation tax rate was not on the agenda.

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