Greek banks reopen amid capital controls, tax hikes

GMT 18:44 2015 Monday ,20 July

Arab Today, arab today Greek banks reopen amid capital controls, tax hikes

People wait outside a bank that reopened
Athens - XINHUA

Greek banks reopened on Monday after a three-week holiday introduced to avert a collapse of the banking system amidst fears of an imminent default and Grexit.

The debt deal clinched last week between Greece and its international creditors enabled bank branches nationwide to reopen to offer a restricted range of services.

As capital controls remain in place and new VAT increases came into effect as of Monday under the recent agreement, Greeks will have to continue to make do with limited sources.

Limits on cash withdrawals have been made slightly more flexible. The Greek government kept the daily cash withdrawal limit at 60 euros (65 U.S. dollars) but added a weekly limit of 420 euros (455 dollars) that will be available beginning Sunday.

This means depositors who don't make it to the bank on Monday to withdraw cash could pull out 120 euros (130 dollars) on Tuesday instead, and so on, so Greeks don't have to feel they need to visit an ATM every day.

Businesses, students living abroad and patients traveling for health reasons will be able to withdraw larger sums, while depositors will also have access to bank deposit boxes.

Louka Katseli, head of the Greek Bank Association, urged Greeks to overcome fear and support the banking system by returning cash stashed at their homes to banks.

The cash injection by the European Central Bank (ECB) through the Emergency Liquidity Assistance mechanism after clinching the debt deal can cover Greece's liquidity needs only for a couple of weeks.

The deal opened the way for the release of a bridging loan so that Athens can also cover a 3.5-billion-euro (3.79 billion dollars) bond repayment to the ECB due on July 20, but for the ordinary Greek citizens, the pressure remains.

Since Greece has a big loan payment due Monday to the ECB, plus arrears owed to the International Monetary Fund, the European Union decided Friday to release a short-term loan of 7.16 billion euros (7.75 billion dollars) to help Greece make those payments.

The debt deal last week that leads to the finalization of a third bailout by autumn includes more harsh measures.

As of Monday, VAT rates on food products, transportation and other services increased from 13 percent to 23 percent.8 "The banks opened and I can theoretically withdraw more cash each week, but my 480-euro monthly pension remains the same and when I get to the supermarket today, I will have to pay more," Areti Kitseli told Xinhua.

Taxi driver Yannis Tsarouchas complained that measures are implemented so fast to satisfy creditors that Greeks do not have time to get adapted to the new standards.

"Business was down due to recession for years. The new increases will be the death of small businesses, including taxi drivers," he told Xinhua.

Greek Prime Minister Alexis Tsipras appears determined to finalize the third bailout despite strong opposition even within his ruling radical left Syriza party.

The Greek parliament approved the bailout package on Thursday but Tsipras was forced to rely on votes from the opposition after 39 "rebels" from his party refused to back the government by voting against or abstaining.

On Friday, he dismissed cabinet-level dissenters by a reshuffle.

On July 22, the parliament will vote on the next set of reforms, which are expected to be approved with the support of pro-euro opposition parties, as it happened last week.

However, a new heavy blow to the government's parliamentary majority could cause political uncertainty at a critical period for Greece, analysts warned.

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