It's official: Greece declared in default ahead of knife-edge referendum

Athens: Greece was officially declared in default today, injecting even more urgency into a make-or-break weekend referendum that new polls suggested was too close to call.

The fund providing Greece’s financial lifeline declared “an event of default by Greece”.

The European Financial Stability Facility added, though, that it had decided to not immediately demand repayment of its loans - a step that analysts say could have triggered sudden “Grexit”, or Greece’s exit from the eurozone.

The news will come as a fresh shock to Greece’s 11 million people, and will hang over two major, rival rallies taking place in Athens today seeking to galvanise ‘Yes’ and ‘No’ support for Sunday’s referendum.

Stakes were already high before the EFSF announcement, with EU leaders warning a ‘No’ in the plebiscite would jeopardise Greece’s place in the 19-nation eurozone.

But Greek Prime Minister Alexis Tsipras rejects that, insisting a ‘No’ result would strengthen his hand and force international creditors withholding bailout funds to drop “humiliating” austerity terms.

Only a last-minute challenge to the legality of the ballot in Greece’s top administrative court, the Council of State, might be able derail it. The court is to give its ruling today.

Confusion, however, is widespread over the very technical question posed in the referendum.

That, and capital controls that have reduced Greeks to lining up at ATMs to make daily withdrawals capped at 60 euros ($67), has prompted many who formerly supported the government to swap sides.

The two latest polls published today showed voter intentions were effectively tied.

An Alco institute poll found 44.8 percent of Greeks intend to vote ‘Yes’ and 43.4 percent are for ‘No’. A Bloomberg survey for Greece’s Macedonia University was equally split, showing 43 percent to vote ‘No’ and 42.5 percent ‘Yes’.

European Commission chief Jean-Claude Juncker warned that Greece’s negotiating position with creditors would be “dramatically weakened” in the event of a ‘No’.

Even if the ‘Yes’ vote wins, there would still be “difficult” negotiations ahead, he added.

Greek voters, however, are confronted with a referendum question that has stumped many.

Eurozone officials have firmly said that the “deal” referred to expired on Tuesday - the same day Greece failed to repay a 1.5-billion-euro repayment to the IMF, becoming the first developed country to ever do so.

AFP