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Greeks defy Europe with overwhelming referendum ‘No’

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Greeks overwhelmingly rejected conditions of a rescue package from creditors by voting “No” in a referendum on austerity.

This could send Greece out of Eurozone.

German Chancellor Angela Merkel will meet with French President Francois Hollande in Paris on Monday to discuss the issue. Also European Union president Donald Tusk has called for emergency eurozone summit on Tuesday.

Prime Minister Alexis Tsipras said “This is not a mandate of rupture with Europe, but a mandate that bolsters our negotiating strength to achieve a viable deal.”

The ECB, the EC and the IMF would have to talk about restructuring the massive, 240-billion-euro ($267 billion) debt Greece owes them.

Last week Greece defaulted on a 1.5-billion euros repayment to the IMF and became the first developed country to fall into debt to the institution. As a result, it is cut off from further IMF financing until it settles the amount.

Effects

Without more emergency funding from the European Central Bank, Greece’s banks could run out of cash within days after a week of rising desperation as banks shut and cash machines ran dry. That might force the government to issue another currency to pay pensions and wages.

The daily withdraw limit from cash machines have been restricted to 60 euros and money transfers abroad was stopped.

Impact on India

Greece crises might impact India indirectly. But the macro economic situation in India is stable and we have forex reserves. So we are relatively insulated, said the Chief Economic advisor Arvind Subramanian.