Greece's prime minister has called for a referendum on the outcome of bailout talks with international creditors.
Prime Minister Alexis Tsipras announced the surprise move in a televised address early Saturday, saying the referendum will take place on July 5.
He said an emergency session of parliament later Saturday would be called to ratify the decision.
The prime minister made the call hours after the latest round of negotiations with European and IMF creditors failed to produce an agreement.
Finance ministers from the 19-member eurozone are due to meet in Brussels later on Saturday for a last attempt to reach a mutually agreed deal.
German Chancellor Angela Merkel told reporters Friday that time is short to arrive at a bailout deal for Greece, and said all efforts must be taken to find a solution Saturday.
Eurozone leaders speak out
Leaders of the European Council, France and Germany say the issue of Greek debt must be settled at a crucial meeting of eurozone finance ministers Saturday, after talks Thursday ended without a deal.
European Council President Donald Tusk confirmed Friday that no progress had been made so far at talks in Brussels, where a European Union summit is in progress. He said talks on Greece will resume — and must be concluded — Saturday at the finance ministers meeting.
French President Francois Hollande called Saturday's meeting "crucial." He told the Reuters news service that a deal has been "in sight" for several days but has not been finalized.
Greece must make a nearly $2 billion loan payment to the International Monetary Fund by next Tuesday. To do that, it needs an $8 billion installment of an EU economic bailout.
Although Greece has agreed to reform its pension system and raise certain sales taxes, it is still demanding its debt be restructured by the EU.
The Greek government, headed by Prime Minister Alexis Tsipras, says Greeks have suffered enough from spending cuts and tax increases that have lowered their standard of living. Tsipras has expressed confidence that a deal can be established with Greece's European creditors.
But even if the European Commission and the IMF agree to the latest tax hikes and pension cuts proposed by Athens, an agreement would buy Greece just enough time to meet its payments for six months. After that, economist Robert Kahn at the Council on Foreign Relations said, another $20 billion in payments will come due.
“And so it seems to me quite possible that for Greece to grow, they may end up having to leave the eurozone, take back their own currency and have a very significant depreciation," Kahn said.
Others believe such an exit would cause serious damage to Greece. Economist Jacob Kirkegaard at the Peterson Institute for International Economics said Greece is likely to agree to IMF and EU demands just to avoid a collapse of the Greek banking system.
“If there is no agreement over the weekend, I’ll predict you’ll have deposit control in the country, which sets in motion another very, very dramatic economic decline,” Kirkegaard said.
Despite Greece's limited exposure in the global business community, financial markets worry that what happens there could spill over into other high-debt countries such as Portugal, Spain and Italy — something analysts say could seriously damage the perceived security and stability of the eurozone.
