Greece lurched deeper into crisis today as European finance ministers prepared to consider a request for new loans in a last-ditch effort to keep the country in the Euro zone after it defaulted on a key payment and a bailout keeping its economy afloat expired.

Cash-strapped Greece became the first developed country to default on the International Monetary Fund after missing a €1.5 billion ($1.7 billion) payment yesterday, as efforts to find a compromise with its EU lenders came to naught.

The missed payment underscored the failure of more than five months of wrangling between Greece’s left-wing government and its creditors to reshape the country’s bailout and prevent it dropping out of the Euro zone.

But talks were set to resume today after Athens asked for a new two-year aid plan – p the third in five years – as ratings agencies cut their ratings on Greece’s debt, predicting it will return to recession this year.

Athens is asking for a further €29.1 billion from the European Stability Mechanism, to “fully cover its financing needs and the simultaneous restructuring of debt,” for the next two years, according to the prime minister’s office.

Greek officials indicated they would be willing to suspend a referendum planned for Sunday on the reforms demanded by its creditors if today’s Euro zone talks in Brussels yield agreement on the new funding request.

“There was a willingness to take a look at the question in the referendum or update the referendum or suspend it,” an EU source said after talks between Greek Finance Minister Yanis Varoufakis and his Euro zone counterparts.

“All that depended on the signal the Eurogroup would give to this new proposal.”

Greece has entered uncharted waters without international aid for the first time in five years, sparking fears of a chaotic Euro zone exit which could have untold repercussions for global markets and the EU.

The ongoing uncertainty hit European stocks and the single currency yesterday. In Asian trade today, the euro treaded water, buying $1.1140 compared to $1.1139 in New York late yesterday.

On the streets of Athens, some 20,000 people turned out to show their support for a bailout deal after banks were closed this week amid the spiralling debt crisis, forcing people to queue for hours for cash.

An IMF spokesman in Washington confirmed the payment due by 2200 GMT yesterday had “not been received,” making Greece the first country to default to the Washington-based lender since Zimbabwe in 2001 and the wealthiest ever.

“We have informed our Executive Board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared,” Gerry Rice said in a statement.

The IMF is now considering extending Greece’s payment deadline – something it has only done twice before in 1982 for Nicaragua and Guyana – giving it the power to ease pressure on Athens as it starts fresh talks with the EU.