European Finance Ministers pose with the ESM board of governors during the Luxembourg EU Eurogroup Finance Ministers Meeting at the EU Headquarters in Luxembourg (Photograph: Nicolas Bouvy/EPA)

Eurozone finance ministers have begun a meeting in Luxembourg at which they are to decide whether to approve the disbursement of the latest €4.3bn tranche of Portugal’s bailout.

The Eurogroup meeting, as it is called, is also to approve the one-year extension of the deadline for Portugal to reduce its public sector budget deficit below 3% of gross domestic product. According to the new timetable agreed last month with international officials, the new targets are 5% for this year, 4.5% for next year, and 2.5% in 2014.

Portugal’s cabinet met for 13 hours on Sunday to finalise details of the government’s draft state budget for next year, in order to submit it to the eurozone ministers. Though full details have not been released, it includes significant increases in income taxes and other levies.

The Eurogroup meeting was preceded on Monday by the debut meeting of governors of the new permanent rescue fund for eurozone members, the European Stability Mechanism.