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It's official - Greece has failed to pay for its loans with the IMF

The deadline of 11pm has been and gone.

Image: AP/Press Association Images

Updated 23.20

GREECE HAS JUST officially missed a payment on its loans with the IMF. The deadline for the payment of €1.6 billion to be made was 11pm GMT. It passed without fanfare.

Greece is now on track to become the first country to default on a loan from the IMF since Zimbabwe in 2001.

What all this means for Greece’s debt situation, and whether or not it could cause an aftershock that sees the embattled country leave the euro, remains to be seen.

A statement just released by IMF communications director Gerry Rice states that “Greece is now in arrears”.

“I confirm that the (repayment) due by Greece to the IMF today has 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.

At 10pm Jeroen Dijsselbloem, president of the eurogroup, had told CNN that “Greece will be in default tomorrow morning to the IMF”, unless it makes that €1.6 billion repayment within the hour.

Earlier today, Greece requested a two-year rescue plan from the European Union just hours before the bailout deal was due to expire.

In a statement, Prime Minister Alexis Tsipras’s office said: ”The Greek government today proposed a two-year agreement with the European Stability Mechanism (ESM) to fully cover its financing needs and the simultaneous restructuring of debt”.

It is not clear how the deal would fit in with Greece’s plan to hold a referendum on the existing demands from its creditors.

The request for a third bailout comes after earlier today Greece’s finance minister confirmed his government will miss the deadline for its next debt repayment.

When asked today if the country would make the €1.6 billion installment owing to the IMF, Yanis Varoufakis told reporters: “No”.

However German Chancellor Angela Merkel has reportedly said her country won’t consider a third bailout package before the referendum. European leaders have called an urgent meeting for later today after the latest development.

First IMF default since Zimbabwe

The Mediterranean nation is fast bearing down on becoming the first government to default on its IMF debts since Zimbabwe in 2001 as it waits for a Sunday referendum that will decide whether it accepts the latest bailout demands from the troika.

Prime Minister Alexis Tsipras, elected on an anti-austerity ticket in January, has urged fellow Greeks to reject the proposals, which include deeper cuts to the country’s pension system than his government was willing to stomach.

His administration has already made the drastic move of shutting banks and introducing credit controls to stem the flow of cash out of the country after the ECB closed the door on providing extra emergency funds.

(How) is it possible the creditors are waiting for the IMF payment while our banks are being suffocated?” Tsipras said in a late-evening interview on ERT television yesterday.

Greece Bailout Source: AP Photo/Thanassis Stavrakis

Missing the repayment won’t automatically put the country in default, rather it will be declared “in arrears” with its lender.

Within 30 days of the payment falling due, IMF managing director Christine Lagarde will have to formally notify the institution’s board – although a fund spokesman has said it would probably happen much faster than that.

Earlier this month Lagarde said there would be “no period of good grace” and yesterday she added the IMF couldn’t give Greece any more bailout money until the arrears had been paid.

A last-minute deal

An 11th-hour deal has reportedly been put back on the table ahead of the referendum with the European Commission the olive branch extending with an undisclosed solution.

“The door remains opened for a deal but time is running out quickly,” commission spokesman Margaritis Schinas told a news conference.

However Merkel told journalists earlier today she wasn’t aware of any new bailout deal being put forward.

The only thing I know is that the last offer I am aware of is the one from last Friday,” she said. “There is nothing more I can say.”

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Germany Kosovo German Chancellor Angela Merkel Source: AP Photo/Markus Schreiber

Little help?

Meanwhile, a crowdfunding campaign aimed to help the beleaguered Greeks is coming up a little short of its stated target of €1.6 billion, a sum that would allow the Greeks pay the latest instalment of its €240 billion bailout back.

Despite attracting 7,244 funders in one day – and offering post cards of Tsipras – the fund has raised about €110,000 at last count.

Thousands took to Greece’s streets last night to support their government’s opposition to the latest debt deal after the clash with the country’s creditors brought the country’s financial systems close to collapse.

Greece Bailout Source: AP Photo/Thanassis Stavrakis

Talks collapse

The final point after five months of discussions between the Syriza government and the troika came when Tsipras announced the new bailout deal would be put to a referendum.

EU leaders including Germany’s Angela Merkel, France’s Francois Hollande and Italy’s Matteo Renzi, wrong-footed by Tspiras’s shock announcement of the vote over the weekend, warned it would effectively be a vote on Greece’s place in the euro.

An emotional European Commission head Jean Claude Juncker bitterly criticised Tsipras, saying he felt “betrayed” by the leftist Syriza government’s behaviour and adding it was time to tell voters “the truth”.

Greek debt crisis European Commission president Jean-Claude Juncker with Tsipras Source: Stefan Rousseau/PA Wire

“A ‘No’ would mean, regardless of the question posed, that Greece had said no to Europe,” said Juncker, previously Tsipras’s closest — and sometimes only — ally in five months of debt talks.

But Greek Finance Minister Yanis Varoufakis hit back, telling British newspaper The Daily Telegraph Athens could seek legal action to stop the country being forced out of the eurozone.

With reporting from Paul Hosford, Cianan Brennan and AFP

First published 7.10am

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About the author:

Peter Bodkin  / Editor, Fora

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