Global Business

Greek Banks Close As Debt Crisis Deepens

Prime minister announces referendum on new bailout deal as deadline for $1.7 billion debt payment looms.
Katie Kuehner-HebertJune 29, 2015

Greeks faced a host of problems, including shuttered banks, after Prime Minister Alexis Tsipras unexpectedly announced a July 5 referendum on a new bailout deal from international creditors — five days after Greece’s 1.6 billion euro ($1.77 billion) debt payment to the International Monetary Fund is due and its current bailout program expires, Reuters reports.

If the leftist government defaults on its debt payment Tuesday and Greeks on Sunday vote down the new bailout deal that includes additional reforms, the odds of a Greek exit from the eurozone will rise to 60%, according to the Economist Intelligence Unit.

Over the weekend, Tsipras pleaded by phone with European officials to extend the current bailout program until Sunday’s referendum. Greece claims the new deal’s austerity terms would further deepen “one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed,” Reuters said.

But European leaders stuck to their guns. European Commission President Jean-Claude Juncker told reporters that he felt personally betrayed and told Greeks a “no” vote would point to a euro exit.

“I will say to the Greeks who I love deeply: You mustn’t commit suicide because you are afraid of death,” Juncker said.

Both French President François Hollande and German Chancellor Angela Merkel said they were willing to talk personally to Tsipras before the Tuesday deadlines.

The government will keep Greek banks shut at least until after the July 5 referendum and withdrawals from automated teller machines were limited to 60 euros a day when they reopened at midday Monday. The stock exchange will also stay shut.

Meanwhile, lines “snaked outside ATMs and inside supermarkets while fears of disruptions to petrol and medicine supplies grew,” Reuters said.