Banks reopen as Greece prepares to reboot economy

2015-07-20 06:24
People stand in a queue to use the ATM to withdraw cash at a bank in Athens. (Aris Messinis, AFP)

People stand in a queue to use the ATM to withdraw cash at a bank in Athens. (Aris Messinis, AFP)

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Athens - Greek banks prepared to reopen Monday after a three-week shutdown, but capital controls remained largely in place while citizens also face widespread price hikes.

The shutdown is estimated to have cost the economy close to $3.3bn in market shortages and export disruption, with a block on money transfers to foreign banks and a ban on the opening of new accounts still active.

Greeks will be able to withdraw up to 420 euros at once-per-week, sparing people the ordeal of queuing daily at ATMs in the summer heat, which thousands did for just 60 euros per day.

The government is meanwhile expected to make a 4.2-billion euro payment on Monday to the European Central Bank (ECB), made possible by the granting of a short-term loan of 7.16 billion euros by the European Union on Friday.

The loan will also enable Athens to repay debts to the International Monetary Fund (IMF) outstanding since June.

Greece last week had to agree to a tough fiscal package to earn a three-year bailout from its international creditors and avoid crashing out of the eurozone.

Merkel’s red line

German Chancellor Angela Merkel on Sunday reiterated Berlin's tough stance ruling out debt forgiveness for Greece, but added that her government was open to more flexibility in Athens' repayment schedule.

Crisis-hit Greeks will now be taxed at 23%, up from 13%, on everything from sugar and cocoa to condoms, taxis and funerals.

To sweeten the pill, the tax on medicines, books and newspapers eases from 6.5% to 6.0%.

For the first time in months, technical teams representing the creditors - the European Union, the European Central Bank and the International Monetary Fund - are expected in Athens in the coming week to assess the state of the economy.

The austerity package caused a mutiny among lawmakers of the ruling radical Syriza party, forcing Prime Minister Alexis Tsipras to carry out a limited reshuffle on Friday.

Even so, most analysts and even government officials say early elections are now inevitable, and are likely to be held in September.

Read more on:    greece
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