Greece has officially become the first Western country to go into arrears on its debt to the International Monetary Fund (IMF) after failing to meet last night’s deadline for a repayment of €1.5bn (£1bn), despite a last-ditch attempt to reach a deal with its creditors yesterday.
The IMF confirmed late last night that the payment due 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,” said IMF communications director Gerry Rice.
“I can also confirm that the IMF received a request today from the Greek authorities for an extension of Greece’s repayment obligation that fell due today, which will go to the IMF’s executive board in due course.”
The country was also downgraded further into junk status last night with rating agency Fitch making an unscheduled cut to Greece’s rating, taking it down by one notch from CCC to CC.
The Eurogroup, made up of Eurozone finance ministers, held an emergency teleconference yesterday to discuss Greece’s options.
Greek Prime Minister Alexis Tsipras had sent a letter containing three requests to the Eurogroup: an extension of his country’s bailout programme, debt relief or credit from the European Stability Mechanism, which he said could be dealt with separately from the emergency procedures currently being used.
Jeroen Dijsselbloem, chairman of the Eurogroup, said last night that the opportunity for an extension of Greece’s bailout had passed.
“My information is that [Greece] will be in default tomorrow because they will miss payments to their creditors,” he said. “That is something that I don’t think we can stop.”
German Chancellor Angela Merkel shot down the idea of reopening discussions with Greece ahead of its referendum, scheduled to take place this Sunday 5 July. The referendum will ask the Greek people whether they want to accept the economic reforms put forward by the country’s creditors as a condition of receiving fresh bailout funds.
On Monday Merkel said “the euro will fail” if Greece does not agree to the terms.
A huge pro-Yes vote rally took place in Athens’ Syntagma Square last night, with thousands of protestors braving the rain in the Greek capital to call for a vote in favour of the creditors’ conditions.
According to onlookers, turnout at the Yes rally was higher than at the No rally held on Monday night.
Meanwhile in a further twist in the Greek saga, Briton Thom Feeney stepped in earlier this week to offer a solution to the crisis, launching a crowdfunding campaign to create a bailout fund for the debt-ridden country.
The campaign received so much attention yesterday that it caused the website of Indiegogo, the crowdfunding platform Feeney chose for his crusade, to crash.