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Zero hour offer as Greece lurches towards default

Athens: Greece confirmed it would fail to make a key IMF repayment due on Tuesday, fanning fears of a chaotic eurozone exit on the same day the country’s international bailout expires.

At the same time the European Commission said it had offered an eleventh hour deal to Prime Minister Alexis Tsipras to stave off a crisis which could rupture the eurozone and risks a knock-on effect on other troubled countries.

Tsipras has urged Greeks to reject creditors’ tough reform demands in a referendum on Sunday, but has also pleaded for an bailout extension to keep Athens afloat.

Failure to pay would see Greece become the first country to default on the International Monetary Fund since Zimbabwe in 2001. In terms of standards of living, it would be the wealthiest.

With just hours to go before the deadline, Finance Minister Yanis Varoufakis gave an emphatic “no” to questions over whether Greece would make the debt repayment of about 1.5 billion euros (USD 1.7 billion) today.

Europe’s main stock markets dropped on the news, though losses were less acute than yesterday.

Tsipras, elected on an anti-austerity ticket in January, yesterday blamed creditors for “suffocating” the banks and making it impossible for the country to pay up its debt.

Thousands of people poured onto the streets of Greece’s two biggest cities, Athens and Thessaloniki, last night to support their government’s opposition to the latest proposals, after a clash with creditors forced the closure of banks and the imposition of capital controls.

Greece’s international bailout programme from its “troika” of lenders — the European Union, European Central Bank and the IMF — also expires today.

Talks between Greece’s leftist government and its creditors fell apart after Tsipras called a shock referendum on the latest proposals.

Tsipras sought to calm nerves yesterday by leaving the door open, saying the July 5 plebiscite on the creditors’ latest cash-for-reform plans would leave Greece “better armed” in the fight for a debt deal.

European Commission chief Jean-Claude Juncker set out a possible “last-minute” solution for an accord before the referendum, a commission source said.

A euro-MP from Tsipras’s hard-left Syriza party said the plan should be studied.

Juncker told the Greek premier that a deal would involve accepting reform proposals that Greece’s EU-IMF creditors made at the weekend and backing a ‘Yes’ vote in Sunday’s plebiscite.

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