Greece defaults on IMF payment

Athens: Greece requested a two-year rescue deal with the EU in a race down to the wire on Tuesday, after admitting it would fail to make an IMF payment with just hours left before its EU bailout expires. The zero-hour appeal came amid a flurry of actions aimed at preventing a chaotic eurozone exit which could have untold repercussions on international markets and the European Union.

 

The Greek premier’s office said Athens has requested an agreement with the European Stability Mechanism “to fully cover its financing needs and the simultaneous restructuring of debt”. 

The ESM, created in 2012, is designed as a means to handle financial crises in the eurozone and keep the single currency region stable.

 

The move prompted quick reaction from Eurogroup chief Jeroen Dijsselbloem who tweeted that the eurozone finance ministers would hold a teleconference later on Tuesday to discuss the Greek request. Athens’ proposal followed European Commission chief Jean-Claude Juncker's attempt to clinch a “last-minute” solution before the referendum.

 

Mr Juncker told the Greek premier that a deal would involve accepting reform proposals that Greece’s EU-IMF creditors made at the weekend and backing a ‘Yes’ vote in Sunday's plebiscite. Prime Minister Alexis Tsipras has urged Greeks to vote ‘No’ and reject creditors’ tough reform demands in a referendum on Sunday, but has also pleaded for an extension of the EU bailout which expires Tuesday to keep Athens afloat.

 

Chancellor Angela Merkel of Germany, Europe’s paymaster, said she would not discuss any new Greek request until after Sunday’s referendum. Europe’s main stock markets ended the day firmly lower on Tuesday with London’s FTSE 100 index falling 1.50 percent, the DAX 30 in Frankfurt down 1.25 percent and the CAC 40 in Paris losing 1.63 percent.

 

The Athens market like the country's banks is closed this week. 

Whether an accord was in the offing or not, Greece said it would miss the deadline to make a debt repayment of about 1.5 billion euros ($1.7 billion) to the International Monetary Fund.

 

It would then become the first country to default on the IMF since Zimbabwe in 2001, and the wealthiest, in terms of standards of living. Negotiations fell apart after Mr Tsipras called a shock referendum on Greece’s creditors latest proposals.

 

Mr Tsipras sought to calm nerves on Monday by leaving the door open, saying the July 5 plebiscite on the creditors’ cash-for-reform plans would leave Greece “better armed” in the fight for a debt deal.