Greece Hours Away From Defaulting On IMF Loan

June 30, 2015

Prime Minister Alexis Tsipras is urging Greeks to vote “no” in Sunday’s referendum on proposals from the country’s creditors, saying European leaders won’t let Greece exit the eurozone because “the cost would be too high.” His plea comes as Greece is hours away from defaulting on an approximately $1.8 billion loan payment to the International Monetary Fund.

“We ask you to reject it with all the might of your soul, with the greatest margin possible,” Tsipras said Monday night on national TV.

And he suggested that a “yes” vote would prompt him to resign as prime minister.

“If the Greek people want to proceed with austerity plans in perpetuity, which will leave us unable to lift our head … we will respect it, but we will not be the ones to carry it out,” Tsipras said.

The question before Greeks in Sunday’s referendum is as follows:

“Should the agreement plan submitted by the European Commission, European Central Bank and the International Monetary Fund to the June 25 eurogroup and consisting of two parts, which form their single proposal, be accepted? The first document is titled ‘Reforms for the completion of the Current Program and Beyond’ and the second ‘Preliminary Debt Sustainability Analysis’.

“Not approved/NO


European leaders have suggested that those who vote “no” are choosing to leave the eurozone, the bloc of countries that uses the euro currency. But Tsipras dismissed that idea.

“I want to be sincere. Is it because they want to get rid of us? They are not going to do that. I will explain to you: The cost would be huge,” he said in the TV interview. “The financial cost of the dissolution of the eurozone and the cost of bankruptcy of the European Central Bank is huge — enormous. This is my evaluation.”

The translation of his comments came from the BBC.

Greece has until 5 p.m. ET to make the loan payment to the IMF. Until last weekend, it was hoped that emergency meetings between Greece and its creditors — the European Commission, the IMF and the European Central Bank — would pave the way for Greece to receive an additional $8.17 billion, the latest tranche in several infusions that will go to repay the country’s outstanding loans.

Without that money, Greece will fall into arrears and likely will exit the eurozone, a move that would have an even worse effect on the country’s economy and hurt the rest of the EU, too.

But talks broke down over the terms of the agreement. Tsipras announced a July 5 referendum on the proposals and urged his people to vote “no.” He said Monday that a “no” vote would give Greece “more powerful weapons.” The failed negotiations were followed by the ECB halting an emergency credit line to Greek banks. Banks and ATMs in the country remain closed for a second day after the government announced capital controls in response to the ECB’s move.

There are news reports today that Greece and its creditors are in last-minute contacts, but what that portends is unclear.

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