Greece 'will not make IMF payment' says Finance Minister

Greek Finance Minister Yanis Varoufakis has confirmed his country will not make its payment due later to the International Monetary Fund (IMF).

When asked while walking into the finance ministry about whether Greece will pay the €1.6bn due to the IMF, Mr Varoufakis said: “No.”

His comment came amid speculation that Greek prime minister Alexis Tsipras is trying to craft a last-minute deal with creditors before the payment is due and before the European part of Greece’s bailout comes to an end.

A Greek official said Mr Tsipras has spoken with European Commission President Jean-Claude Juncker, European Central Bank chief Mario Draghi and European Parliament president Martin Schulz.

The European Commission has indicated that an assessment of Greece's overall debt situation and its financing needs could be part of a last-minute bailout deal.

Mr Juncker had earlier made a last-ditch effort to help Greece get a bailout deal, provided Greek prime minister Alexis Tsipras campaigns for his country staying in the euro.

Beyond accepting proposals made by international creditors last weekend, Commission spokesman Margaritis Schinas said there would be unspecified discussions on Athens’s massive debt load, which stood at €317bn at the end of 2014, or 177% of the country’s annual GDP.

German chancellor Angela Merkel has made clear she is not aware of any breakthrough in talks over a bailout deal before tonight's deadline.

Ms Merkel said in Berlin that Greece’s bailout programme expires at midnight and she knows of “no solid indications to the contrary”.

She added: “The door is open for talks – that is all I can say at this hour.”

The crisis, which peaked over the weekend after Mr Tsipras called a referendum on creditor proposals for reforms in return for bailout loans, has increased fears the country could very soon fall out of the euro currency bloc.

If Greece does not repay the IMF by the deadline, it will be officially in arrears and will no longer have access to funding from the body until it clears its arrears.

This, IMF chief Christine Lagarde said last week, has “never happened in the case of an advanced economy”.

€60 a day

Straight after the referendum call, in which the government is advocating a “no” vote, Greeks began rushing to ATM machines.

The referendum is set for Sunday and the government declared all banks will remain shut for at least a week. Greeks have been limited to cash withdrawals of €60 per day.

Capital controls began on Monday and will last at least a week, an attempt to keep the banks from collapsing in the face of a nationwide bank run.

There was speculation that an 11th-hour deal might be possible, with reports that Mr Tsipras will undertake an initiative based on an offer by European Commission President Jean-Claude Juncker.

Markets in Europe rose on the hopes for a resolution of some kind.

Asked whether there was a chance of a deal, Mr Varoufakis later told reporters outside the finance ministry: “We hope.”

No details have emerged over the content of discussions between Mr Tsipras, Mr Juncker, European Central Bank chief Mario Draghi and European Parliament president Martin Schulz.

In Brussels, European officials said the Commission chief was willing to help give Mr Tsipras a belated way out of his financial crisis if he accepts creditors’ conditions and campaigns for staying in the euro.

An EU official called it “a sort of last-minute offer” before Tuesday’s dual deadlines.

Mr Tsipras would need to write to Mr Juncker and other leaders saying he accepts the latest offer, which was on the table last weekend. He would also have to change his position on Sunday’s referendum.

Beyond accepting the creditors’ proposal, Commission spokesman Margaritis Schinas said the offer would also involve unspecified discussions on Athens’s massive debt load. The Greek side has long called for debt relief, saying its mountainous debt is unsustainable.

Mr Juncker had expected an answer before midnight on Monday, but is still waiting this afternoon.

In Athens, Euclid Tsakalotos, alternate foreign minister and the coordinator of the Greece’s bailout negotiating team, suggested there was no particular offer to discuss.

Asked by reporters outside the prime minister’s office what the answer to the proposal would be, Mr Tsakalotos replied “What proposal? Did they send us something?”

Mr Tsipras argues the demands from creditors for further, tougher austerity measures cannot be accepted after six years of recession.

European officials and Greek opposition parties have warned a “no” vote in the referendum will lead Greece out of the eurozone and potentially out of the broader 28-country European Union.

The government has responded by saying this is scaremongering, and that a rejection of creditor demands will mean the country is in a better negotiating position.

The crisis has roiled global markets as investors fret over the repercussions of a Greek debt default and its exit from the euro – developments that could derail a fragile global economic recovery, as well as raise questions over the long-term viability of the euro currency.

The last-minute attempts to negotiate a deal for Greece have helped stocks. The Stoxx 50 index of top European shares was up 0.2%, having been down 0.8% earlier.

Mr Tsipras was defiant in a television interview yesterday, urging voters to reject creditors’ demands.

More than 13,000 people gathered in Athens to support him and denounce Greece’s creditors, as they chanted: “Take the bailout and go.”

A protest by supporters of a “yes” vote is planned for Tuesday night.

The government insists a “no” vote will not mean an exit from the euro, with Mr Tsipras saying in his Monday night interview that Europe would not dare kick Greece out of the joint currency.

Mr Varoufakis went further, threatening court action if attempts were made to remove the country from the joint currency.

“The Greek government will make use of all our legal rights,” Mr Varoufakis told the Telegraph newspaper.

“We are taking advice and will certainly consider an injunction at the European Court of Justice. The EU treaties make no provision for euro exit and we refuse to accept it. Our membership is not negotiable,” he told the paper, in comments released by the ministry.

On the streets of Athens, Greeks began adjusting to the new reality of restricted cash. Pensioners have been hit particularly hard, as many do not have bank cards and are completely cut off from cash.

The finance ministry said it would open about 1,000 bank branches across the country for three days from Wednesday to allow pensioners without bank cards to make withdrawals.

But the limit for them would be set at 120 euro (£84) for the whole week, rather than the €60 per day allowed for those with bank cards.