Greece is expected to default on a loan payment to the Inter­national Monetary Fund if it fails to cough up €1.6 billion today just after midnight.

With Eurogroup finance ministers on Saturday refusing to extend a bailout programme, Greece is unlikely to have the cash to pay back the loan.

Markets slid yesterday as Greece imposed capital controls and ordered banks to close until July 6, the day after a referendum that could determine whether the country will remain in the euro.

Withdrawals from cash machines have been capped at €60 per day and money transfers abroad have been curbed as the Greek government tries to avert a run on banks that would worsen the situation.

But as Greeks queued at cash machines to withdraw money, some tourists have reported an “uncanny” calmness in Athens.

Pierre Zammit, who was on holiday in the Greek capital, yesterday told Times of Malta the atmosphere on the streets of Athens was anything but chaotic.

“Despite the referendum scheduled for Sunday and the developments of the past few days, it does not seem like a Greek tragedy is unfolding,” Mr Zammit said. The cash restriction, however, has forced shops and restaurants to refuse credit card payments and ask for cash instead. Some cash machines in Athens had also stopped functioning, Mr Zammit said.

From his hotel, situated close to the parliament building, he could see foreign journalists taking up positions in front of cash machines as news organisations focused on people queuing up to withdraw money.

“There seems to be this emphasis by international networks on cash machines, but from my experience restaurants were full in the evenings and Greeks are pretty much going about their daily lives as normal,” Mr Zammit said.

Foreign journalists have set up posts in front of cash machines but Athens remains a calm place, according to Maltese tourist Pierre Zammit. Photo: Pierre Zammit

The only demonstration he witnessed was one held over the weekend by the Communist party and it was very orderly.

“I have spoken to Greek people who harbour some hope that some sort of agreement could be brokered by Wednesday [tomorrow] but if this does not happen my feeling is that people will vote for Greece to exit the euro,” Mr Zammit said.

Two polls released over the weekend, however, showed the Greeks would like to keep the euro.

But an agreement of sorts before Sunday’s referendum is highly unlikely after Greece unilaterally suspended negotiations with its creditors over the weekend.

It does not seem like a Greek tragedy is unfolding

Irrespective of what the referendum question will be, the vote will determine whether Greece remains inside the euro or exits the bloc, according to Finance Minister Edward Scicluna.

“The Greek Prime Minister may try to interpret a No vote as giving him the mandate to continue negotiations on his terms but we [Eurogroup finance ministers] have made it amply clear that the Greek people’s mandate does not bind creditor countries.”

Prof. Scicluna said Greece could not remain in the euro without adhering to the rules. The alternative to not accepting the package offered by creditors was to exit the euro, he added.

Prof. Scicluna said the European Commission, the European Central Bank and the IMF had shown flexibility during negotiations on bailout conditions but the Greek government failed to come up with alternative proposals that produced similar results.

“I agree with Greek government concerns that introducing VAT on the Greek islands as proposed by the institutions could damage tourism but the government came up with no alternative proposals,” Prof. Scicluna said.

Five years of austerity have caused a lot of hardship with unemployment soaring to 25 per cent and families seeing their incomes dwindle.

But if Greece is starved of cash the impact could be much worse, Prof. Scicluna said.

Greece’s debt due until end July

kurt.sansone@timesofmalta.com