Greek government 'may resign' if it loses referendum

Greece's radical left government said today it may resign if it fails to win a referendum that could decide the country's financial future.

Greek Finance Minister Yanis Varoufakis said the government "may very well" quit if the public went against it in Sunday's plebiscite and voted for more austerity in return for international bailout funds.

"We are on a war footing" to ensure the rushed referendum happens on time, Varoufakis added in the radio interview.

The world's financial markets and Greece's creditors -- the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF) -- are stepping back after days of dizzying drama to watch the outcome.

But European chiefs warned the situation was deteriorating and what could emerge after the vote remained unclear.

"The situation is only getting worse, due to the Greek government's behaviour," said Jeroen Dijsselbloem, Dutch finance minister and head of the Eurogroup of eurozone finance ministers.

"In case of a 'No', Greece's situation will become exceptionally difficult," he told Dutch lawmakers.

Such a result would plunge Greece and the eurozone "into the unknown," French President Francois Hollande said on an African visit.

Ordinary Greeks are divided over which way to vote and even what the referendum is about.

Would a 'No' sought by the government prevent yet more grinding austerity?

Or, as EU leaders warn, would it send the country crashing out of the euro?

The Greek government led by Prime Minister Alexis Tsipras believes rejecting the bailout conditions would strengthen its hand in negotiations with creditors.

Orange posters urging a 'No' vote line Athens streets, the word 'OXI' (no in Greek) stamped in large black letters.

But support for the 'No' camp has sharply slid this week as Greeks struggled under capital controls reducing ATM withdrawals to 60 euros ($67) a day.

The government's failure Tuesday to make a 1.5-billion- euro loan repayment to the IMF has also focused minds. Athens is now in danger of failing in arrears to the ECB if it also fails to pay 3.5 billion euros on July 20.