Portugal starts bailout talks; deal seen

Portugal launched talks with European authorities and the IMF on a bailout the caretaker government says is needed to cover the country's financing from June, as politicians jostled ahead of a general election.

Officials from the European Commission, European Central Bank and the International Monetary Fund will pore over Portugal's public accounts to decide on additional austerity measures they deem necessary for Lisbon to reduce its budget deficit in return for a three-year loan that could reach 80 billion euros ($115.7 billion).

Finance Minister Fernando Teixeira dos Santos acknowledged Lisbon only had its financing needs covered for this month and next, and will need the bailout loans from June onwards.

"We are covered until June. But in June we will be needing the activation of this programme," Teixeira dos Santos told reporters in an interview, saying he expected Europe to approve the aid programme in mid-May.

The country has to pay off 4.9 billion euros in maturing bonds in June.

Economists had seen a bailout for Portugal, following on from Greece and Ireland, as inevitable. But the minority Socialist government only caved in, after months of resistance to foreign aid, when it failed to get its latest measures through parliament.

That failure led to multiple downgrades of Portugal's credit ratings and a sharp rise in borrowing rates, making it prohibitively expensive for the country to continue borrowing in debt markets.