Greece fails to make payment, defaults on IMF loans

ATHENS, Greece, June 30 (UPI) -- At midnight Tuesday, Greece became the first advanced economy to go into arrears with the International Monetary Fund, the international organization said.

Greece failed to make a last-minute payment of $1.73 billion to the IMF, spokesman Gerry Rice told Bloomberg.

It's not the first country to default on an IMF loan, but it is the first developed country to do so, the most recent taking place in 2001 in Zimbabwe, The Guardian reported.

The Greek government's proposal for a two-year agreement to pay for its economic needs and restructure its debt had included a last-minute payment of $1.73 billion to the IMF, the office of Prime Minister Alexi Tsipras said. Greece currently has a public debt of $361 billion from previous loans keeping the country afloat for the past five years.

Negotiations between Greece and the European Commission have centered on reforms demanded of Greece, including policy changes, budget cuts and concessions from other creditors. The bundle of reforms is the subject of a referendum on July 5, with Greek citizens able to cast a "yes" or "no" vote. Banks in Greece will be closed until July 7, with ATMs dispensing no more than $66 per day to customers, although some banks will reopen for a day, Wednesday, to allow pensioners, many of whom do not use bank cards, to withdraw funds.

The default could mean Greece's exit from the Eurozone of countries using the Euro as its currency, complicating its efforts to repay its debts and causing upheaval in world financial markets. If the matter comes to Greece's expulsion, it may seek a court injunction against the European Union to keep it within the Eurozone sphere.

"The Greek government will make use of all our legal rights," Greek Finance Minister Yanis Varoufakis said. "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."

Tsipras has also expressed his hope Greece remains within the Eurozone.