Mid may target for Portugal aid

8 April 2011, last updated at 15: 53 GMT see: Ollie Rehn says "we must you first funding gap'the define European Union seeks a bail-out for Portugal from middle may have sorted."

It means that the agreement on the introduction of new cost-cutting measures before the elections of 5 June be.

In a communication on an EU Finance Ministers in Hungary said Commissioner Olli Rehn, that they have to a bipartisan agreement.

He added that he expected the package Bail-Out that in the order of trimmed euro ($115bn, £ 70bn).

He also said that he convinced was that Portugal to refinance its own debts could is until an agreement could be concluded.

The formal request for the grant was from Portugal to 2200 CET (2000 GMT) on Thursday.

Ambitious programme

Commissioner Rehn said that the cost-cutting measures were defeated in the Portuguese Parliament a starting point for the reforms, which would have to be made to secure the aid package.

He also said that it would have to be an "ambitious privatisation programme" to reduce debt.

Read the main plot Alison Roberts BBC News, Lisbon

There the Socialist Government was the lack of a majority, which to his last savings package rejected, and led the Prime Minister's resignation. The Parliament has now dissolved was.

So, that a Bail-Out deal be credible, it the centre right Social Democrats, consent, currently in the polls leading.

Opposition leader Pedro Passos Coelho said, that he provide the bailout generally supported, however, that each package should be "minimal".

The party is keen to avoid that the hands tied so far before the election of 5 June; Ideally, it would now be agreed for only a part of the transaction. But it is doubtful that EU officials and Member States, which would accept.

In the General walks the favor Social Democrats spending cuts on tax, although she have ruled out a further increase in VAT from 23% do not.

But during privatisation and increase the value added tax and other taxes on the agenda could be normal voters could like to see aid package curb political patronage in public authorities, where appointed are persons from the two main parties as handsome profit seen at the expense of the taxpayers.

José Sócrates Government fell, because it passed the measures could get.

The BBC business editor Robert Peston understands, that the Bail-Out on a similar basis, provided the Irish Republic, one-third of it comes from EU funds that will help UK one-third of the euro area and a third from the International Monetary Fund.

Meet with the Minister of finance continue to Spain's Finance Minister stress that their country must not bailouts for.

Elena Salgado, said that "of course" Portugal would be the last country in the euro area, which requires a debt Bail-Out and added that Spain application was one out of the question.

Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) be a first step in the negotiations on a Bail-Out for the European Commission to send a joint mission to Portugal.

EU rules require such a mission in a country send questions for the financial help that make details of the help needed.

Portugal's costs for borrowing has risen so sharply, since entered the Socialist minority Government last month after his proposed more stringent cost-cutting measures in Parliament defeated.

Continue reading the most important story

young people with talent are Portugal leave, because they can find jobs, where they can progress. "

End quote JEL writer of Portuguese Eurovision Song Contest entry different problems, the the ECB most wrote Thursday, it encourages Portugal seeking financial aid."

Portugal's problems were distinguished by Greece and the Irish Republic, the other countries, the rescue operations for needed have.

Weak economic growth and low productivity that the country fight, increase government spending to pay enough money through taxation resulted.

When the banking crisis came, it was to do with the same increasing cost of debt, which has had to deal with other countries, and finally had to admit that it can not, the money must increase it by the financial markets.

Ireland this burst had on the other hand, a much more severe banking crisis, mainly as a result of a property bubble.

Greece went on a debt fuelled shopping spree in the failure to sort, the public finances, to finance it.

Read more >>

Portugal misses bond target

March 31, 2011 last updated at 20: 00 GMT losses nationalised bank BNP had admitted in the public deficit, according to European rules which has Portuguese Government, is missing that 2010 budget deficit target will be included.

A total was 8.6% of economic output, about 7.3% of the EU target. Lisbon blame the inclusion of losses in State transport company and a bank.

Portugal's cost of borrowing has increased sharply as bond markets increasingly expect a debt default.

Fresh elections will be held on 5 June, which announced the Portuguese President. A vote of confidence was the minority Government last week after the loss.

Bail-Out delay

The Government short and medium term cost of borrowing has increased rapidly in the last few days as the prospect of a debt restructuring over the next two increasingly looks likely.

The return of the Portuguese two-year bonds hit 8.6% on Thursday - highest since Portugal joined the euro in 1999. The yield has increased and a half by 2.5 percentage points in the last week.

The five year cost of borrowing increased to 9.5%.

The caretaker Government - free of charge after the resignation of Prime Minister Jose Socrates last week until elections expected in may or early June - blame the revised deficit for accounting changes.

Continue reading the main budget deficit: 8.6% (2010) borrowing costs: 8.6% (two year bonds) growth: 1.2% inflation (2010): 3.5% (Feb 2011) unemployment: 11.1% (Dec 2010)

Data source: Bloomberg

Around EUR 1.8 billion ($2 billion, £ 1 billion) in losses at nationalised bank BNP were added, the deficit after a visit to the Ministry of finance by Eurostat, the Statistical Office charged with strict rules for Governments that set financial accounting.

The 8.6% level an improvement on the 10% deficit is recorded yet in 2009.

The Government said that it was targeted still a deficit of only 4.6% for the current year.

Meanwhile said the Finance Minister, Fernando Teixeira dos Santos, that the Transitional Government request not the legal authority to a financial rescue package by the European Union and the International Monetary Fund.

However, he said, they expected, took office - some of this summer "the necessary financing conditions" until a new Government.

Inflation vice

Portugal has been put in an even tighter spot by rising inflation.

On Thursday, it was revealed that this inflation increased to 2.6% in the euro area as a whole, consumer prices.

Inflation at 3.5% is in Portugal.

Not only is this put pressure on household finances, but is also the prospect of an imminent interest rate rise by the European Central Bank.

Market expectations of higher interest rates have added also the increase in Portugal's borrowing costs.

Read more >>