Greek debt crisis: Deadline passes as Eurozone finance ministers refuse request to extend bailout

 

Photo: Thousands of pro-Euro protesters gather in front of the parliament building in Athens. (Reuters: Jean-Paul Pelissier)

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Map: Greece

Cash-strapped Greece has missed a 1.5 billion euro payment to the International Monetary Fund (IMF) as last-ditch efforts to find a compromise with official European Union (EU) lenders came to naught.

The missed payment made Greece the only developed country ever to fall into default with the global crisis lender and underscored the utter failure of more than five months of efforts to rescue the country's economy and prevent it from dropping out of the Eurozone.

The future of efforts to restore its finances and meet creditor demands for reforms were in question, with fresh proposals from Athens spurned as the country moved toward a referendum on Sunday on EU bailout offers.

IMF spokesman Gerry Rice confirmed that the payment, due in Washington at 8:00am (AEST), had "not been received".

"We have informed our executive board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared," he said in a statement.

Greece had made a last-minute request for the IMF to extend the payment deadline, something the crisis lender has only done twice before, in 1982 for Nicaragua and Guyana.

Mr Rice confirmed the request but the board did not rule on it.

The request "will go to the IMF's executive board in due course," he said.

Greece cut off by lenders it has relied on since 2010

But that would not negate the fact that Greece has pushed into uncharted waters in its five-year-old bailout.

As the IMF froze its loan program to the government, the European Commission-European Central Bank assistance also expired.

Greece's repayment schedule

• June 30: IMF repayment, 1.5 billion euros
• July 10: Greek Treasury T-bill redemption, 2 billion euros
• July 13: IMF repayment, 450 million euros
• July 17: Greek T-bill redemption, 1 billion euros
• July 20: ECB and national central banks repayments, 3.5 billion euros
• August 1: IMF coupon payment, 175 million euros
• August 7: Greek T-bill redemption, 1 billion euros
• August 20: ECB and national central banks repayments, 3.2 billion euros
• September 4: IMF repayment, 300 million euros
• September 4: Greek T-bill redemption, 1.4 billion euros

That means the lenders the country has relied on since 2010 to balance its finances have cut it off, heightening expectations it will also default in July on payments to the EU and possibly make a tumultuous exit from the Eurozone.

When EU and Greek officials could not reach agreement over the weekend on an extension, Athens broke off and announced the referendum, asking Greeks to say if they want the EU deal being offered, which includes cuts on pensions and other tough reforms.

With the call for the referendum, and prime minister Alexis Tsipras urging Greeks to vote "no" on a deal he said would humiliate the country, the ECB froze its essential liquidity lifeline to Greek banks.

Greece then implemented capital controls and shut banks for a week to stanch any further gush of money from the country.

Rating agencies further downgraded the country's debt, now worth nearly 180 per cent of its GDP.

And they said that after having received two bailouts worth 240 billion euros, the country's economy is now expected to contract again this year.

Unemployment has more than doubled since 2009 to 25.6 per cent and pensions and benefits were roughly halved between 2010 and 2014.

EU politicians not willing to accept compromise deal

In a last-ditch roll of the dice, Greece proposed a fresh two-year support deal with the European Union overnight.

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Athens asked for a nearly 30 billion euro line of funds from the European Stability Mechanism "to fully cover its financing needs and the simultaneous restructuring of debt".

But after a conference call, EU politicians confirmed that they were not willing to accept it.

"The practical circumstances is that the old program expires tonight at 12 and practically and legally there's little we can do," Euro group chief Jeroen Dijsselbloem told CNN.

German chancellor Angela Merkel stuck to Berlin's hard line when she said she would not discuss any new Greek request until after Sunday's referendum.

"Before the referendum Germany can't negotiate a new request" for assistance, Ms Merkel was quoted as saying by a lawmaker of her conservative Christian Democrats.

According to unconfirmed reports, Greece offered to cancel the referendum in order to reopen talks, but that too proved too late.

The ministers do plan to hold further discussions this evening on a request for a new bailout, but the situation will be markedly changed with Greece's funding lines cut off.

'Greece is Europe': Protesters take to the streets

The decision not to extend the bailout came as thousands of people rallied in Athens in support of a deal with international creditors, which has been rejected by the Greek prime minister.

At least 20,000 people, many waving European and Greek flags and blowing whistles, gathered in front of parliament in Syntagma square five days before a national referendum on whether or not to accept the bailout.

The cry "resign!" sounded repeatedly through the crowds, with families, businessmen and the retired braving the rain to vent their anger against Mr Tspiras and his radical left Syriza party.

One banner read: "We will not become the last Soviet state".

Shoe seller crowd funds for Greek debt

A British shoe shop worker has launched an online crowd funding campaign to help solve the Greek debt crisis.

Many carried flags featuring slogans such as "Greece is Europe" and chanted "Greece, Europe, democracy!"

Withdrawal limits of 60 euros a day have been fixed for cash machines, and there have been long queues at petrol stations and in supermarkets as worried shoppers have stocked up on essentials like pasta and rice.

There were no immediate signs of serious shortages but if the banks remain closed, cash flow problems that have already been reported by some firms could worsen.

Greece has debt worth nearly 180 per cent of its GDP after receiving two bailouts worth 240 billion euros since 2010.

Unemployment has more than doubled since 2009 to 25.6 per cent and pensions and benefits roughly halved between 2010 and 2014.

AFP/Reuters

From other news sites:

• The Australian: Greece debt crisis: Juncker 'proposed last-minute solution to Tsipras'

• Huffington Post: Greece's Debt Crisis Deadline Approaches, As EU Makes Last-Ditch Effort

• Daily Telegraph: Greece debt crisis live: EU leaders say the referendum is a choice between euro and drachma as Grexit looms

• BBC: Greece debt crisis: Athens seeks new last-minute deal

• Yahoo!7 Finance: Eurozone to discuss new Greece request

Greek debt crisis: Deadline passes as Eurozone finance ministers refuse request to extend bailout - ABC News (Australian Broadcasting Corporation)