Greece won’t repay €1.6 billion IMF debt

But Athens still holds out hope of a last-minute deal with creditors on an aid package.

Protesters participate in a demonstration calling for a ‘No’ vote in the forthcoming referendum on bailout conditions set by the country’s creditors, in front of the Greek parliament in Athens on 29 June 2015. Picture: AFP.

JOHANNESBURG - The Greek finance minister has announced the country will not pay the €1.6 billion debt installment to the International Monetary Fund.

But Yanis Varoufakis says Athens still holds out hope of a last-minute deal with creditors on an aid package.

The Greek chief negotiator says accepting proposals of institutions would not have turned the economy around.

He says they're viewing Sunday's referendum as part of the negotiation process, and not a substitute.

German chancellor Angela Merkel has also confirmed the door stands open for talks with Greece, but warned the programme expires at midnight.

Earlier Greek Prime Minister Alexis Tsipras said he was confident Greece would stay in the eurozone, as the cost of a Grexit would be what he has described as the beginning and the end of the eurozone.

His comments, on Greek TV, come as long queues continued at ATMs after Greek banks closed since Sunday and capital controls were introduced.

Tsipras has dismissed the European rhetoric saying it's "unacceptable scaremongering".

The aim of the referendum, he said, was to further negotiations, not to end them.

He said the referendum was strengthening the Greek negotiating position, adding that the government had no intention of leaving the eurozone.

Tsipras also accused the lenders of forcing banks to close, soon after the referendum was called.

Greek citizens can draw €60 per day.

A six day banking holiday, with pensioners agonising over their ability to get their pensions on time and businesses running desperately out of cash, is what Greeks are enduring until Sunday's controversial referendum.

European leaders have emphasised that a no vote would send the wrong message about Greece's willingness to stay within the eurozone.

Additional reporting by Reuters.