ATHENS (Reuters) – Greece entered uncharted financial territory Tuesday as it became the first advanced economy to default on an International Monetary Fund loan, failing to meet a €1.5 billion ($1.7 billion) payment deadline and pushing Europe closer to a potential Greek eurozone exit.
The historic default came after eleventh-hour negotiations between Athens and its international creditors collapsed, triggering mass protests in the capital. Tens of thousands of Greeks flooded Syntagma Square, voicing anger over both austerity measures and the looming financial chaos.
Financial markets reacted immediately, with European stocks falling sharply and the euro dipping to a one-month low against the dollar. Greece’s banking system remained shuttered for a third day under emergency capital controls, with ATM withdrawals limited to €60 daily.
In a dramatic late-night address, Prime Minister Alexis Tsipras announced a July 5 referendum on creditors’ bailout terms, framing the vote as a rejection of “ultimatums.” European Commission President Jean-Claude Juncker countered that the plebiscite would effectively determine Greece’s euro membership.
“The situation just went from critical to catastrophic,” said Megan Greene, chief economist at Manulife Asset Management. “Markets haven’t priced in Grexit risk because no one believed Europe would actually let it happen. Now they’re scrambling.”
The IMF confirmed the payment default in a statement, while the European Central Bank froze emergency liquidity assistance to Greek banks at current levels. Analysts warn the country could face outright monetary collapse within days without a resolution.
Key Developments:
- Greece misses largest IMF default in history
- ECB maintains but doesn’t increase ELA support
- Referendum called for July 5 on bailout terms
- Asian markets open lower in early Wednesday trading
This developing story is being updated continuously. Follow our live blog for real-time market data, expert commentary from London, Frankfurt and Brussels, and on-the-ground reports from Athens.
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