ATHENS (CBSNewYork/AP) — Investors around the world were on edge Tuesday night, after Greece missed a crucial payment deadline and became the first developed country to default on a loan to the International Monetary Fund.
As CBS2’s Jessica Schneider reported, the Greek government missed the looming deadline to repay the IMF as the clock ticked toward 1 a.m. It is the largest missed payment – at $1.7 billion – in IMF history.
Eurozone finance chiefs refused to grant a last-minute extension of the bailout program Greece has relied on for five years, and the Greek government couldn’t come up with money on its own to pay the IMF. The IMF said its executive board would consider a Greek request to extend the loan.
The economic meltdown is rattling worldwide markets and Greek citizens.
One man, Contralis Charlambos, has seen his pension slashed. Now, he doesn’t even have a debit card – leaving him penniless.
“I am hungry from yesterday. I have not eaten from yesterday,” one person said.
Greece has been living on borrowed money for the past six years. But with creditors knocking on the country’s door, Greece could quite literally run out of money.
The government has closed banks and limited withdrawals to about $70 per day.
Greek Prime Minister Alexis Tsiras has called a referendum Sunday in which Greek voters can decide whether to approve a deal proposed by the country’s creditors. A “No” vote would likely force Greece to stop using the euro currency.
But a “yes” vote would require accepting the creditors’ demands that will result in steep tax hikes and cuts in government salaries.
In Athens, tens of thousands of people urged a “yes” vote, saying a vote for “no” would mean serious trouble.
“Poverty, social unrest, people on the streets, and a lot of uncertainty,” said Alex Argyros. “I may choose to leave the country.”
Investors are on edge about the looming crisis. But back in New York on Wall Street, stocks closed higher Tuesday after huge losses Monday.
The Greek government is gambling that its creditors will not allow Greece to default on its loans, and will soften demands.
But if Greece ends up bankrupt and must leave the Eurozone, it could spark financial losses around the world.
The last country to miss an IMF loan payment was Zimbabwe in 2001.
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