Portuguese finance minister Fernando Teixeira dos Santos
European finance bosses, including Britain’s Chancellor, George Osborne, have been meeting in Hungary to thrash out the terms of a bailout.
They estimate Lisbon will need around 80 billion euros (£70bn) in loans – of which the UK may have to contribute £4bn.
While a rescue of Portugal had long been anticipated and its needs can easily be met by Europe, the country’s political situation makes reaching a final deal difficult.
Prime Minister Jose Socrates resigned late last month after opposition parties rejected spending cuts and tax hikes the government said were vital to stop the economy’s slide.
He is continuing to serve in a caretaker government until new elections on June 5.
However, EU finance ministers at the meeting near Budapest are warning the economic adjustment programme that accompanies the rescue loans will cut deeper than the measures rejected by the opposition.
A fully-fledged adjustment program should be in place by mid-May, allowing the debt-ridden country to meet huge bond repayments in June, the EU’s Monetary Affairs Commissioner Olli Rehn said.
The Government’s cuts plans sparked a general strike
He added that the program would have to be agreed by all major political parties to ensure that it will be implemented after the elections, which the opposition is expected to win.
Portugal’s acting finance minister, Fernando Teixeira dos Santos, said the caretaker government would not talk directly to the opposition and that any talks would have to be led by the European authorities and the IMF instead.
Portugal has become the third country in the eurozone to request international help, after last year’s multi-billion-euro rescue packages for Greece and Ireland from the EU and IMF.
European officials hope the latest bailout will be the last and contagion will not spread to the likes of Spain and Italy.
But Portugal’s government was not the first in the eurozone to collapse amid anger over austerity measures.
And doubts are growing over how much longer citizens in debt-ridden countries will accept painful cuts and radical overhauls of traditional privileges, such as early retirement ages and protected professions
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