Greece crisis: One day to come up with 1.6 billion euros

GREECE is edging inexorably towards an exit from the euro as it is poised to become the first developed nation to default on money owed to the International Monetary Fund.

At 11pm on 30 June, an hour after midnight in Athens, it is on course formally to miss its deadline to stump up €1.6bn  in debt repayment to the world's most important financial institution, pointing the way to a possible departure from the single currency.

As the enormity of what lies ahead began to dawn, an equally unprecedented war of words broke out between the European Union and the Greek government, with EU leaders rounding on Greece's Prime Minister, Alexis Tsipras.

They effectively branded him a reckless and feckless liar over his sudden announcement of a referendum on 5 June over the terms of an EU bailout that may no longer even be on offer.

The European Commission's President, Jean-Claude Juncker, led the charge, accusing Mr Tsipras of betrayal and egotism.

He was followed by the German Chancellor Angela Merkel, who said the 18 other members of the eurozone had already made "generous" concessions to Greece, and could make no further compromises.

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The Greek government has begun insuring against disaster, closing its banks until after the referendum and imposing capital controls to contain the growing strains on its financial system.

The European Central Bank has switched off emergency liquidity assistance to the contain the strains on its financial system. The European Central Bank has switched off emergency liquidity assistance to Greek banks, which means they run a risk of running out of cash when they reopen.

Mr Juncker switched between four languages as he delivered his speech before a screen portraying both the Greek and EU flags.

He related how Mr Tsipras and Greek ministers had misled their European partners and the Greek people. Mr Juncker explained how EU leaders were taken by surprise by the referendum announcement on 26 June.

"In one night, the euro suffered a major blow and goodwill was thrown to the wind," he said.

"It's not a game of liar's poker. There are not winners or losers. Either we are all winners or we are all losers."

He added that Greek counter-proposals were intentionally "delayed" or "deliberately altered" and the Greek people "should be told the truth".

The question for Sunday's referendum will refer to the latest bailout proposals by Greece's creditors - the European Commission, the European Central Bank and the International Monetary Fund.

Mr Tsipras tweeted that a "No" vote would strengthen his negotiating hand, but Mr Juncker attempted to frame the question as one about Europe itself as he appealed for Greeks to cast a "Yes" vote.

Although Mr Juncker condemned Mr Tsipras, he offered consoling words for the Greek people, who, he suggested, had been misled. "Greece is a member of the European family and I want this family to stand together."

Earlier, Greece's creditors unexpectedly released details of their offer to Athens on 26 June.

This revealed that the two sides had been inching closer to a compromise, with the creditors agreeing to Greek demands for a 13 per cent VAT rate on hotels, rather than the 23 per cent they had previously been seeking. Mr Juncker said that there was no requirement for public sector wage cuts, or for further reductions in pensions.

Mr Juncker also revealed the Eurogroup was ready to discuss writing off at least some debt as part of a plan to ensure the long-term sustainability of Greek finances - an issue that had until then not been on the agenda. "Mr Tsipras knows this," he added.

While markets initially suffered sharp falls on 29 June, these were not as far as feared and most of the losses were clawed back later.

This relative restraint was attributed to investors already accepting that most of the Greek debt would be written off when a "haircut" was agreed three years ago.

Since then, most have limited their exposure to Greece, while institutions now say a firewall has been constructed to prevent any potential contagion from Greek default, or from a Greek exit from the euro.

In Berlin, Ms Merkel was more restrained, but criticised Mr Tsipras for failing to compromise after receiving what she called a "generous" offer.

But the country's Economy Minister and Vice-Chancellor Sigmar Gabriel warned that a "No" vote on 5 June would be taken as a clear vote against the euro.