Greece is on the verge of becoming the first developed nation to default on an International Monetary Fund (IMF) loan – the latest development in the ongoing Greek financial crisis.
According to the Telegraph, the Greek government has confirmed that it will not be able to make a 1.9 billion euro (CAD$2.65 billion) payment to the IMF by the end of Tuesday.
The country has run out of money again and also needs to pay 1.5 billion euros ($CAD$2.08 billion) in public sector wages and pensions by the end of the day.
As well, Europe’s contribution to the Greek international bailout package will also expire at midnight, which means the country will not be able to request and access any other rescue loans to pay its public debts totalling 323 billion euros (CAD$449 billion).
Greece has a population of just over 11 million and accounts for 1.3 per cent of the European Union’s economy.
The BBC reports that Greece has initiated eleventh hour talks with the European Commission on a new two-year bailout package from the Eurozone. It remains to be seen whether Greece will receive another deferred deal.
Today’s payments amount to Greece’s decision to bundle all four of its June payments, a method that has not been used since the mid-1980s by Zambia.
The added uncertainty ahead of the July 5 referendum on the nation’s bailout package, the proposals made by Greece’s creditors, has caused the government to shutter all banks until after the public vote. Long lineups at ATMs have been reported as there is currently a 60 euro (CAD$83.50) limit on ATM withdrawals in the country.
Leaders across Europe have asked Greek nationals to vote ‘Yes’ in next week’s referendum. A rejection of the conditions of the bailout package could lead to their country’s exit from the Eurozone.
The opposition movement is being led by Greek Prime Minister Alexis Tsipras, who joined 20,000 other people at an Athens rally on Monday night to vote against the bailout package and ‘better terms’ for the Greek people.
Greece was forced to implement immense austerity measures over the last five years and has seen mounting opposition to the bailout package with unemployment in the country hovering at above 25 per cent.
Uncertainty also caused global stocks to plunge on Monday, with the Toronto Stock Exchange (TSX) falling 318 points and American stocks experiencing their worst fall to date in 2015.
Markets are expected to remain volatile over the coming days as investors will be waiting for the outcome of next week’s referendum.