Greek banks were open for business Monday for the first time in three weeks, as packages of emergency aid allowed the embattled Mediterranean economy to finally start getting back on track.
Greece’s government is still reportedly keeping a tight cap on just how much cash people are able to withdraw or transfer so as not to strain the country’s fragile banking sector. But Greek citizens — who have been limited to withdrawing only 60 euros per day from their personal accounts — will now be able to take out larger quantities of cash at a time, though a weekly withdrawal limit will be enforced, according to The New York Times.
The country’s banks were first shuttered at the end of June after fears of an economic collapse led the public to withdraw hundreds of millions of dollars from personal savings accounts, depleting banks’ cash reserves across the country.
But after the Greek government agreed to adopt a series of controversial budget-cutting austerity measures considered prerequisites for any kind of future bailout deal, the European Central Bank last week agreed to continue pumping funds into Greek banks to help keep them afloat.
“Greek debt negotiations are still underway with a long-term ‘solution’ not yet found,” Lindsey Piegza, chief economist at Stifel Fixed Income, wrote in a research note Monday. “In the meantime, the good news is Greek banks have reopened after three weeks of closure. … Basic services such as payment orders and check deposits are now available.”
Some of the approved reform programs also took effect Monday, including a tax increase from 13 percent to 23 percent impacting processed food and public transportation, according to Reuters. Greek Prime Minister Alexis Tsipras last week brought a series of austerity measures back to the country’s lawmakers for ratification after being stonewalled by Greece’s international creditors, many of whom have been calling for higher taxes, government spending limits and pension system reform in the country.
Such measures are expected to ultimately help the Greek government repay its outstanding debts more quickly, but the Greek public is getting the short end of the stick.
“With more tightening of the belt through pension reform and greater taxes, I still see more years of pain for Greece. And with an unemployment rate at 25 percent, the last thing Greece needs is austerity. It needs money injected into the economy so jobs can be created,” Gary Carmell, partner and president at CWS Capital Partners, wrote in a research note last week. “To think creditors will be repaid on time and at par is complete pie in the sky unless the shackles can come off Greece.”
Additional austerity measures are expected to be voted upon by the Greek Parliament in the coming days, as the country attempts to secure its third internationally funded bailout since 2010 and free up as much as $94 billion from international creditors. Greece on Monday also is expected to finalize a $4.5 billion debt repayment to the European Central Bank, thanks to a last-minute bridge loan the country was able to secure from the European Union last week. That emergency cash already allowed Greece to repay the International Monetary Fund $2.2 billion following a missed deadline at the end of June.
“I can confirm that Greece today repaid the totality of its arrears to the IMF,” IMF communications director Gerry Rice said in a statement Monday. “As we have said, the Fund stands ready to continue assisting Greece in its efforts to return to financial stability and growth.”
Greece will now leave the company of Zimbabwe, Sudan and Somalia — the only other countries currently in arrears to the IMF — though it is unclear whether the new payment will impact the IMF’s involvement, or lack thereof, in Greece’s upcoming bailout plan. The fund had previously condemned Greece’s public debt as ” highly unsustainable,” noting that the country’s economic peril is unlikely to be resolved without “debt relief measures that go far beyond what Europe has been willing to consider so far.”
German Chancellor Angela Merkel said in a television interview Sunday that Greek debt relief, or a “haircut” that would essentially forgive some of Greece’s outstanding debt, could be a possibility at a later date. But she insisted that Germany would not consider such a move until the details of Greece’s new bailout loan are ironed out, also saying that “a classic haircut of 30, 40 percent of debt cannot happen in a currency union.”
“Greece has already been given relief. We had a voluntary haircut among the private creditors, and we then extended maturities once and reduced interest rates,” Merkel said on Germany’s ARD TV, according to the BBC. “Once the first successful review of the program to be negotiated has been completed, then exactly this question will be discussed — not now, but then.”
Needless to say, Greece’s new bailout is far from a done deal, though many creditors have expressed willingness to play ball after passage of the first batch of austerity measures. The reforms, however, have rankled members of Greece’s Syriza party, who were elected earlier this year on an anti-austerity platform.
Nikos Voutsis, Greece’s interior minister, said last week that it is “very likely” Greece will have to hold early elections in the fall after 38 Syriza members voted against the austerity package Tsipras brought to the table. Tsipras already has reshuffled nearly a dozen high-ranking government positions in the vote’s aftermath, though even newly appointed ministers seem reluctant to back the new package.
“The government was obliged to make a tactical retreat to save the country,” Giorgos Katrougalos, Greece’s new labor minister, said Monday. “This was the result of a soft, postmodern financial coup that was handled by the prime minister in a responsible way.”
More from U.S. News
Florida’s Jeb Bush vows to cut spending, Washington lobbying
With Attack on McCain and POWs, Donald Trump Dies By the Sword He Lived By
As Baby Boomers Age, Alzheimer’s Rates Will Soar
Greece Adjusts to New Normal as Banks Reopen originally appeared on usnews.com
