An 11th-hour request to seek a way out of economic ruin after a bailout expired were not enough and the country become the first developed economy to default on a loan with the International Monetary Fund.
The IMF officially confirmed shortly after midnight Central European Time that the 1.6-billion-euro debt due by Greece had not been paid.
After a teleconference call on Tuesday eurozone finance minister unanimously rejected a last-minute request for a one-month extension of Greece's bailout program on Tuesday, and the Greek government couldn't come up with money on its own to pay the IMF.
The non-payment has put Greece in IMF “arrears” rather than in “default”. It means the country won't be able to get any more aid from the IMF until the bill is paid.
If it still doesn’t pay after a year or so, it will fall into “protracted arrears”, joining Somalia, Sudan, and Zimbabwe, and its IMF voting rights could be suspended.
Greece's last-minute overtures to international creditors for a new two-year rescue package on Tuesday was sternly dismissed by German Chancellor Angela Merkel. Merkel told her Christian Democrat (CDU) party that she ruled out further negotiations with Greece ahead of Sunday's referendum in which Greeks will vote whether to accept creditors' demands for budget reforms.
REFERENDUM MAY BE CANCELED
Greece's government, for its part, has suggested that it'd be willing to cancel the vote for the right deal, which makes it seem dubious if it will happen at all.
In an interview with public broadcaster ERT, Greece’s deputy prime minister, Yannis Dragasakis said he believed the government would not rule out taking a political decision to cancel the plebiscite.
He also said that Greece had produced a new, six-point plan in an effort to break the impasse with its lenders. “We are making an additional effort. There are six points where this effort can be made. I don’t want to get into specifics. But it includes pensions and labor issues,” Dragasakis said.
Greek Finance Minister Yannis Varoufakis indicated on a call with European counterparts that Athens might scrap the upcoming referendum if a deal was reached, according to Reuters.
In other words all that the brinkmanship by the Greek government has been a gambit to get something out of Greece's international creditors.
With Greece’s stay in the eurozone at stake, finance ministers in the 19-nation bloc are scrambling for a solution to pull Greece away from the precipice after two bailouts and five months of protracted and ill-tempered negotiations. Eurozone finance ministers and the European Central Bank will both be holding crunch meetings to discuss Greece.