Sunday, July 19, 2015

Greek debt crisis: Banks to reopen Monday but capital controls remain; Tsipras reshuffles cabinet


Greek banks will reopen on Monday after a three-week closure and withdrawal limits will be relaxed, but capital controls remain in place, a government decree says.

Greek banks will reopen Photo: Greeks will be able to withdraw up to 420 euros ($616) from ATMs per week after banks reopen on Monday. (AFP: Aris Messinis)

Related Story: Greece should turn to China to break debt spiral: economist

Related Story: German parliament backs Greek bailout talks despite rebellion

Map: Greece

The decree sets a new cumulative weekly withdrawal limit of 420 euros ($616), with the daily limit remaining at 60 euros.

To facilitate Greeks studying abroad, the decree permits the electronic transfer of up to 5,000 euros ($7,342) per trimester.

Meanwhile, people receiving health treatment abroad will be able to access up to 2,000 euros ($2,937) in cash.

A broad range of capital controls still remain in place, however, including a block on capital transfers and a ban on the opening of new accounts and addition of new depositors to existing accounts.

The decree also enables the Bank of Greece to restrict the amount of euros or other currency carried in cash out of Greece.

New sales tax rates that were agreed between Greece and its international creditors in return for a three-year bailout last week will also come into effect on Monday.

The government of the left cannot undertake obligations it knows it cannot fulfil

Former finance minister Yanis Varoufakis

The bank closure was enacted on June 29, after the radical government of Alexis Tsipras called a referendum on lenders' austerity demands that Greeks rejected by over 61 per cent.

The three-week shutdown has cost the country's struggling economy some 3 billion euros ($4.4 billion) not counting lost tourism revenue, Kathimerini daily estimated on Saturday.

Meanwhile, Mr Tsipras' outspoken has cast doubt on the government's ability to enforce the unpopular reforms required by the terms of the bailout.

"The government of the left cannot undertake obligations it knows it cannot fulfil," he wrote in Efimerida ton Syntakton daily.

"The government of the left has no right to further plunder the victims of the five-year crisis without at least giving a positive answer to the question 'did you at least achieve something that counterbalances the recessionary measures?'"

Greek cabinet reshuffled to enact unpopular reforms

A revamped Greek government took over on Saturday in an effort to enforce a third bailout accompanied by tough fiscal reforms opposed by a sizeable section of the ruling Syriza party.

Mr Tsipras reshuffled his administration on Friday to fill the vacancies left by three cabinet members who were sacked after voting against the reforms in parliament.

The prime minister faced down a mutiny from his party in parliament last week, with over 30 of his 149 politicians refusing to approve the package of tax hikes, pension reform and privatisations demanded by lenders.

Greece must approve a second batch of banking and justice-related reforms on Wednesday to qualify for a three-year bailout of up to 86 billion euros ($94 billion).

Greek prime minister Alexis Tsipras Photo: Greek prime minister Alexis Tsipras leaves a swearing in ceremony for the government's newly appointed ministers. (AFP: Angelos Tzortzinis)

Mr Tsipras and other members of his government have publicly admitted they do not believe the reforms to which they have signed up will benefit the country.

His new spokeswoman Olga Gerovassili on Saturday repeated that the leftist government would attempt to counterbalance the "bad deal" with "compensating" measures to support the poor and the middle class.

The appointment of a TV soap opera comedian as junior labour minister has raised eyebrows but the new appointee, Pavlos Haikalis, insisted he had relevant expertise.

"I was party spokesman for social security for three years," said Mr Haikalis, a member of the nationalist Independent Greeks party which is Syriza's junior coalition partner.

"I am taking over a very hot potato, I must handle it with love and cool it down if I can."

Analysts say that Mr Tsipras will probably have to hold snap elections in the autumn, and that the reshuffle is merely designed to keep the government going until the bailout is finalised.

Already, some of the main parties to the deal are raising doubts over its viability.

Some German officials have suggested that it might be better for Greece to take a five-year "time-out" from the euro.

The International Monetary Fund, for its part, has left a question mark over its participation in another rescue package, saying it will not join in unless there is "dramatic" relief on Greece's debt to make the country's finances more sustainable.


More on this story:
From other news sites:

Greek debt crisis: Banks to reopen Monday but capital controls remain; Tsipras reshuffles cabinet - ABC News (Australian Broadcasting Corporation)