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Troika inspectors review Portugal bailout

Troika inspectors review Portugal bailout
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Portugal is the latest stop for officials from the European Union, the International Monetary Fund and the European Central Bank on their debt crisis tour.

It is their third evaluation of the country’s bailout programme and if they find it is on track, Lisbon will get the next 15 billion euro instalment of the 78 billion euros of aid it needs.

Some changes to the programme are expected, but it is not thought they will be major and they will likely focus on structural reforms to make long-term economic growth possible.

Portugal’s economy slipped further into recession in the final quarter of last year and the government has predicted that it will contract by more than the three percent this year which has made economists think it will need further rescue help.

There was good news on the borrowing front, however, as Portugal sold all three billion euros in treasury bills that it had on offer on Wednesday in its biggest debt sale since last year’s bailout request.

It also was able to pay a lower rate of interest to borrow than in previous auctions.

The troika of lenders said last November they were satisfied with Portugal’s performance but the recent spikes in the country’s sovereign debt yields have called into question its ability to return to the bond market in the second half of 2013, as dictated by the bailout deal.

In that case it might have to follow Greece in seeking a bailout extension. Earlier this month Lisbon was forced to deny that it had already sounded out advisers on options for a debt restructuring.

The troika’s inspectors said they will remain in Portugal for about two weeks, analysing compliance and planning for coming quarters with the government.