Q. What happens next?
A. As with Greece and Ireland, the Eurogroup of Eurozone finance ministers will send the Troika – representatives of the European Central Bank, the International Monetary Fund and the European Commission – to Portugal. Over three to four weeks they will assess the size of the bailout needed and any conditions likely to be placed on it.
Q. How much will it need?
A. An €85bn (£74bn) bailout is expected. This includes €60bn to mop up government bonds and avoid further refinancing until 2013; €10bn to recapitalise its banks and €14bn to finance state-owned companies.
Q. When is the funding likely to be given?
A. It should take two weeks from approval of funding to receipt of the money – so Portugal should receive the aid by the end of May.
Q. What would happen if Portugal defaulted?
A. Its estimated $200bn (£123bn) of external debt would become worthless. This could cause difficulties for holders of the debt such as banks in Spain, Germany, France and the UK. A default may also hinder the inter-bank lending markets, which could again cause problems for European banks. Portugal’s banks are most vulnerable – they own almost €20bn of government debt. This has largely been funded through borrowing from the ECB, which means it too would bear losses.