Greece becomes the first developed nation to default on its international debt, failing to pay its $1.8 billion debt to the International Monetary Fund (IMF) as its bailout program expired at 01:00 am local time on Monday.
A spokesman from the IMF confirmed that Greece has not paid its debt and has missed the deadline.
"I confirm that the SDR 1.2 billion repayment due by Greece to the IMF today has not been received. We have informed our Executive Board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared," said Fund spokesman Gerry Rice.
Eurozone finance ministers dismissed a last minute Greek proposal for a two year extension of the bailout plan on Tuesday, leaving Greece with no other choice but to default.
Greece then requested the IMF to extend the debt deadline.
"We have filed a request with the IMF asking it to take the initiative to delay the payment until November," deputy prime minister Ioannis Dragasakis said on national Greek television.
This last minute proposal was also rejected.
The IMF has accepted deadline extension proposals of crisis ridden countries twice before, in 1982 for Nicaragua and Guyana.
Another Eurogroup meeting is scheduled for Wednesday, whereby Greece is anticipated to make further proposals, according to Eurogroup chairman Jeroen Dijsselbloem.
Following the expiration of the loan payment period for Greece, the IMF has officially frozen monetary outflows to Greece along with the European Commission-European Central Bank assistance.
The country has relied on these payments since 2010, in an effort to balance out their finances and fix the economy. It is also predicted that Greece will fall short of reimbursing the EU by July and a possible withdrawal from the eurozone is on the horizon.
With no deal reached over the weekend, after Greek efforts to secure an extension failed, Prime Minister Alexis Tsipras on Sunday called his nation to vote in a referendum for bailout terms, offering proposals to reduce the pressure on bank balance sheets.
Speaking to a national TV channel on Monday, Tsipras told the Greek public that he will not stay in his post and oversee the cuts if the bailout is accepted in the referendum.
"If the Greek people want to proceed with austerity plans in perpetuity, which will leave us unable to lift our head... we will respect it, but we will not be the ones to carry it out," he said.
Tsipras said “the bigger the turnout and the wider the no-vote to that deal, the bigger the possibility for a substantial restart of negotiations, so that we can take a course of viability and reason.”
Saying that other EU member countries want Greece to stay in Euro-zone, Tsipras said “I don’t believe that they want to kick us out of the euro and they won’t. They won’t, because the cost would be huge.”
During the television broadcast, Tsipras also added that Greece’s fight against austerity will be an example to those European societies which have been suffering under austerity policies and trying to find another route to economic recovery.
The Greek stock exchange and banks remain shut down till at least July 6 and ATM withdrawals are limited to 60 euros a day, with an effort to bolster Greek credit controls after international creditors refused to extend the country’s bail out, financial industries reported.
Chief executive of Piraeus Bank announced that both the financial exchange market and the banks will be sealed off from public access, following a meeting of government and finance officials.
The former ECB board member Lorenzo Bini Smaghi told the Italian daily Corriere della Sera on Sunday that the ECB will no longer be able to back Greek banks, as uncertainty looms the county.
"Given the uncertainty over Greece remaining in the euro the ECB will no longer be able to supply liquidity to the Greek banks, who in turn will be unable to supply euros to their clients," he said, according to the report.
Rating agencies have further slashed down the country’s debt that is now worth over 180 percent of its total GDP.
And they added that, Greece has received two massive bailouts worth over 240 billion euros and the current situations points to another economic contraction. Unemployment has doubled since 2009 and sits at 25.6 percent, with pensions and benefits nearly halved over the course of the last four years.
In a last ditch effort, Greece took a final effort on Tuesday proposing a fresh two year support deal to the EU. The Tsipras government requested nearly 30 billion euros of funding from the European Stability Mechanism "to fully cover its financing needs and the simultaneous restructuring of debt."
The deal did not charm the EU finance ministers, who dismissed the proposal swiftly.
"The practical circumstances is that the old program expires tonight at 12 and practically and legally there's little we can do," Eurogroup chief Jeroen Dijsselbloem said speaking to CNN.
Christine Lagarde, chief of the IMF, announced that if the referendum vote on Tuesday resulted in "a resounding yes" to endure within the eurozone and solve the problems of the Greek economy, then the creditors would be more assistive and lenient in sealing a deal.
German chancellor, Angela Merkel has said negotiations may get back underway following the July 5 referendum.
“If Greek government asks for new negotiations after the referendum, for example, of course we will not refuse such talks,” the chancellor said following an emergency meeting with government officials and economic advisors.
Unconfirmed sources also stated that the referendum may be cancelled in order to reopen talks, but it is too late for such an opportunity now.
In Athens, over 20,000 pro-bailout Greek residents came out to protest an hour before expiration the IMF imposed deadline, a day after pro-Tsipras’ anti-bailout ‘no’ stance.
Some of the banners at the protest site read "Greece is Europe", while chants of ‘resign’ created a pandemonium amid the large crowd.
One of the protesters, lawyer Vassiliki Salaka said, those who are running Greece are "incompetent, they lack organization, they don't know what they want."
However many Greeks back the Tsipras government as a defiant force against what they deem as a ‘troika’ that intervenes into the country's national policy, accusing creditors for the tough recession that has become predominant as a result of punitive austerity measures.
Pro-Greece demonstrations are scheduled to take place this week all around Europe, including in Berlin, Paris, Brussels, Rome and Amsterdam.