LISBON, Portugal — Foreign officials began inspecting Portugal’s public finances Tuesday to figure out the size of the country’s promised bailout.
European finance ministers agreed last week to provide money to debt-heavy Portugal, making it the third country in the 17-nation eurozone to accept a financial lifeline after Greece and Ireland.
Officials estimate Portugal will need around C80 billion ($116 billion).
A delegation from the International Monetary Fund, European Central Bank and European Commission started examining Portugal’s books at the Finance Ministry. One delegate, who declined to give his name but said he was from the ECB, told reporters the team would engage in “technical discussions, fact-finding.”
The ministry did not answer requests for details about the talks, saying they were not open to the media.
Portugal urgently needs a deal on the bailout to shore up its national finances ahead of steep loan repayments. It has to find C4.5 billion for a bond repayment on Friday — which officals have said the country can meet — but then it needs another C7 billion ($10 billion) to repay more debts in June.
Failure to settle those debts would have catastrophic consequences for Portugal, scaring away investors, and would likely trigger fresh market unease about the eurozone’s soundness.
Officials hope to approve the financial aid program by mid-May.
After evaluating this week how much money Portugal needs, officials are due to begin negotiations next Monday about the scope and terms of the massive loan.
As well as proposing more austerity measures, the IMF and ECB will likely demand changes aimed at improving Portugal’s weak economic competitiveness — the shortcoming which is at the heart of the ailing country’s problems.
But negotiations with Portuguese political parties could be sticky in the run-up to a June 5 election to replace the government that quit last month.
The two main parties — the centre-left Socialists and the centre-right Social Democrats — have exchanged accusations about who is to blame for the crisis and who has the authority to negotiate the bailout.
Social Democrat leader Pedro Passos Coelho appeared to soften his position late Monday, saying he would “never let the country go bankrupt or not meet a payment it has to make.”
Portugal is struggling to raise funds on its own as markets back away from investing in a country plagued by financial difficulties following anemic levels of growth over the past decade. Two rating agencies recently downgraded its bond rating to one notch above junk.
Authorities also need cash to keep public services running and to finance heavily indebted state-owned companies. Public transport companies alone have debts of around C17 billion.
The foreign delegation is expected to examine whether Portuguese banks require financial help, too.
Adding to Portugal’s woes, the IMF forecasts the country will remain in recession through 2012.