Greece moves closer to Grexit as it defaults on IMF loan

Greece has become the first developed economy to default on a loan with the International Monetary Fund after it missed making a 1.6 billion euro loan repayment that was due on June 30th.

Concerns now grow that this default would lead to Greece’s exit from the euro. The fate of Greece’s membership in the Eurozone now depends on the result of a referendum on Sunday when Greek citizens will vote on whether to accept the austerity terms of its creditors for continued financial aid.

Greek Prime Minister Alexis Tsipras has said the referendum is the democratic way for Greeks to decide if they will accept more budget cuts and taxes in return for international aid. He has urged a “No” vote.

Polls so far show that the “no” camp is in the lead with 54 percent of Greeks planning to oppose the bailout proposal against 33 percent in favour.

IMF spokesman Gerry Rice said Greece can now only receive further funding from the global lender once the arrears are cleared. He confirmed that Greece asked for a last-minute repayment extension earlier on Tuesday, which the fund’s board will consider “in due course.”

Meanwhile, Greek government made a request on Wednesday for an extension of its current bailout and a two-year funding and debt restructuring program.

Greece has received nearly 240 billion euros in two bailouts from the European Union and IMF since 2010.

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