Greece Calls For Snap Referendum On Bailout Extension On July 5

(RTTNews) - Greece has stunned European policymakers with its surprising call for a referendum next weekend on the terms of the bailout extension put forward by its European creditors even as the EUR 245 billion bailout is scheduled to expire on Tuesday.

Addressing the nation at 1.00 a.m. on television in Athens, Greek Prime Minister Alexis Tsipras announced that a public vote will be held on July 5 for the Greek voters to have a say on the tough reforms to be implemented in exchange for the extension of the country's bailout program.

Tsipras took the decision after an emergency meeting he held with his cabinet on Friday night.

Tsipras stated in the televised address that the Greek government is being forced to accept "unbearable burdens" that would hit the job market and see tax hikes.

Tsipras added that he will request for the bailout terms to be extended for a few days until the referendum to avoid the looming debt default.

The proposed referendum is sure to see Greece most certainly defaulting on the repayment of EUR 1.55 billion or $1.73 billion of loans to the International Monetary Fund that fall due on Tuesday.

This move by Tsipras will leave the all important meeting of eurozone finance ministers on Saturday under a cloud of uncertainty as it was called the D-Day for Greece.

German Chancellor Angela Merkel had earlier said the weekend's talks will be "decisive," noting that time is quickly running out.

Merkel told reporters early Friday that European leaders "agreed that everything must be done to find a solution on Saturday."

Tsipras had met Merkel and French President Francois Hollande on Friday ahead of the crucial meeting on Saturday as pressure mounts on both sides to reach a solution.

It is crucial to reach a deal by Saturday or Sunday, so that it can go for both Greek and euro area parliament's approvals, at the latest by Monday.

Greece's creditors have proposed a five-month extension of its current bailout program until end November if the government agrees to a set of reforms, which include drastic tax hikes and sharp cuts in government spending, including on pensions.

It will then also offer an aid of a total EUR 12 billion. The extension could give more time to hold negotiations between Greece and creditors to reach a feasible solution.

News agencies reported that Greece may be given EUR 1.8 billion as the first tranche to meet a EUR 1.6 billion payment due to the IMF on June 30. The money will come from profits made by the European Central Bank's holdings of Greek bonds.

However, the disbursement will be possible only if the Greek parliament approves the proposal and adopts first set of reforms. The offer will also require approval from other euro zone parliaments.

Talks between creditors - the European Commission, the ECB and the IMF - and Greek Prime Minister Alexis Tsipras had failed to produce any deal on Thursday.

Later, Eurogroup meeting in Brussels also ended without an agreement, leading European finance ministers to schedule another session on Saturday. Eurogroup Chief Jeroen Dijsselbloem said the "door is still open" for Greece.