Greek Prime Minister Alexis Tsipras has refused the terms being offered to him for unlocking the remainder of Europe's bailout of his country. His creditors want promises of austerity, with an emphasis on reducing spending rather than simply hiking taxes. Tsipras' far-left Syriza party continues to balk.
Today, he announced he was calling for a referendum on July 5 so the Greek people can vote on the package of proposed reforms.
The problem? The deadline for Greece to make a multibillion-euro loan repayment to the International Monetary Fund (IMF) is June 30. That's almost a week before Greek voters will be able to have their say on whether to comply with the European community's demands.
Unless Tsipras and the IMF can come to an agreement before the end of this month—which is Tuesday—Greece won't be able to make the required loan repayment. It doesn't have the cash and was relying on the bailout money being available by now. The IMF has said it will not offer the beleaguered Mediterranean nation a grace period.
Will Greece's creditors relent? There's been no indication they're inclined to.
What will happen if Greece fails to make the payment to the IMF? The European Central Bank could cut off the flow of money that's currently keeping Greek banks afloat. A banking collapse is the worst-case scenario.
We're now just four days away from finding out if that's what's in the cards.
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