Greece hits new low as bailout to expire, default looms

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Thanassis Stavrakis/ AP

Individuals stand in line to utilize an ATM outside a closed bank, next to a sign on the plant, bottom right, checking out “NO” in Athens, Tuesday, June 30, 2015.

Tuesday, June 30, 2015|2:23 p.m.

ATHENS, Greece– Greece slipped deeper into its monetary abyss on Tuesday as the bailout program it has counted on for 5 years was set to expire and eurozone finance chiefs chose not to extend it a new monetary lifeline.

Rejected a last-minute bailout extension, the country was likewise due to become the very first industrialized country to miss a payment to the International Monetary Fund.

After Greece made a last-ditch effort to extend its bailout, eurozone finance ministers decided in a teleconference late Tuesday that there was no way they might reach an offer prior to the due date.

“It would be crazy to extend the program,” stated Dutch Finance Minister Jeroen Dijsselbleom, who heads the eurozone finance ministers’ body known as the eurogroup. “So that can not occur and will not occur.”

“The program expires this evening,” Dijsselbleom said.

The brinkmanship that has actually defined Greece’s bailout arrangements with its European creditors and the IMF increasinged a number of notches over the weekend, when Head of state Alexis Tsipras revealed he would put a deal proposal by creditors to a mandate on Sunday and urged a “No” vote.

The step increased fears the country might soon fall out of the euro currency bloc and Greeks hurried to draw cash from ATMs, leading the government to shutter its banks and impose restrictions on banking transactions on Monday for at least a week.

However in a surprise step Tuesday night, Deputy Head of state Yannis Dragasakis hinted that the government may be open to aborting the popular vote, saying it was a political choice.

The government chose the mandate, he stated on state tv, “and it can make a decision on something else.”

It was unclear, however, how that would be possible legitimately as Parliament has currently voted for it to go on

Greece’s international bailout expires at midnight central European time, after which the nation loses access to billions of euros in funds. At the exact same time, Greece has said it will certainly not be able to make a payment of 1.6 billion euros ($1.8 billion) to the IMF.

With its economy teetering on the brink, Greece suffered its second sovereign downgrade in as numerous days when the Fitch scores firm reduced it even more into junk status, to simply one notch above the level where it considers default unavoidable.

The firm said the breakdown of negotiations “has actually significantly increased the threat that Greece will certainly not be able to honor its financial obligation obligations in the coming months, including bonds held by the private sector.”

Fitch said it now considered a default on privately-held financial obligation “possible.”

Under credit controls enforced Monday, Greeks are now restricted to ATM withdrawals of 60 euros ($67) a day and can not send out cash abroad or make international payments without special authorization.

Expects an 11th-hour offer were raised when the Greek side revealed it had actually sent a brand-new proposal Tuesday afternoon, and the eurozone’s 19 finance ministers held a teleconference to discuss it.

But those hopes were swiftly dashed.

German Chancellor Angela Merkel said she ruled out additionally negotiations with Greece prior to Sunday’s popular vote on whether to accept creditors’ demands for budget reforms.

“Prior to the planned referendum is performed, we will certainly not work out over anything brand-new,” the dpa news company estimated Merkel as stating.

Greece’s newest offer includes a proposal to tap Europe’s bailout fund– the so-called European Stability Mechanism, a pot of money established after Greece’s rescue programs to aid countries in requirement.

Tsipras’ workplace said the proposition was “for the full protection of (Greece’s) funding requires with the simultaneous restructuring of the financial obligation.”

Dijsselbloem stated the finance ministers would “study that demand as we need to” which they would hold another conference call Wednesday, as they had actually also received a 2nd letter from Athens that they had actually not had time to check out.

Dragasakis said the new letter “narrows the differences even more.”

“We are making an added effort. There are six points where this effort can be made. I do not want to get into specifics. But it includes pensions and labor issues,” he stated.

European authorities and Greek opposition celebrations have been determined that a “No” vote on Sunday will certainly indicate Greece will leave the euro and possibly even the EU.

The government says this is scaremongering, and that a rejection of lender needs will suggest the nation is in a much better negotiating position.

In Athens, more than 10,000 “Yes” vote fans collected outdoors parliament despite a thunderstorm, shouting “Europe! Europe!”

Many huddled under umbrellas, including Athens resident Sofia Matthaiou.

“I have no idea if we’ll get a deal. However we have to push them to see factor,” she said, describing the government. “The lenders need to water down their positions, too.”

The protest came a day after countless government fans promoting a “No” vote held a similar demonstration.

On Monday, European Commission President Jean-Claude Juncker made a brand-new offer to Greece. Under that proposal, Tsipras would need to accept the lenders’ proposition that was on the table last weekend. He would also need to change his position on Sunday’s mandate.

Commission spokesperson Margaritis Schinas said the offer would also include unspecified discussions on Athens’s massive financial obligation load of over 300 billion euros, or around 180 percent of GDP. The Greek side has long called for financial obligation relief, saying its mountainous debt is unsustainable.

A Greek government official stated Tsipras had spoken previously in the day with Juncker, European Central Bank chief Mario Draghi and European Parliament president Martin Schulz.

Meanwhile, missing out on the IMF payment will certainly cut Greece off from new loans from the organization.

And with its bailout program ending, Greece will lose access to more than 16 billion euros ($18 billion) in financial support it has actually not yet tapped, authorities stated. They spoke on condition of anonymity since talks about the program were still ongoing.

On the streets of Athens, long lines formed once again at Automated Teller Machine as Greeks battled with the brand-new constraints on banking deals.

The elderly have been hit especially hard, with tens of countless pensions unpaid since Tuesday afternoon. Numerous likewise discovered themselves completely cut off from any cash as they do not have bank cards.

The finance ministry said it would open about 1,000 bank branches throughout the country for 3 days starting Wednesday to permit pensioners without bank cards to make withdrawals. But the limit would be set at 120 euros for the whole week.

Casert reported from Brussels. Derek Gatopoulos in Athens and Geir Moulson in Berlin contributed to this report.

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