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Greek banks reopen with controls

July 20, 2015

Banks in Greece have reopened after a three-week shutdown that saw the country plunged into financial chaos. However, capital controls are to remain in place, with taxes set to shoot up.

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Bank of Greec Bank of Merkel Bank Griechendland Finanzkrise Eurokrise
Image: Getty Images/A. Tzortzinis

From Monday, Greeks were able to withdraw up to 420 euros ($465) at once each week - the same amount possible as during the shutdown, but without the ordeal of having to line up every day for 60 euros.

A block on money transfers out of the country and on the opening of new accounts is to remain in place.

"Capital controls and restrictions on withdrawals will remain in place, but we are entering a new stage which we all hope will be one of normality," Louka Katseli, the head of the Greek banking association, told the Skai television.

Meanwhile, the Greek government was expected to make a 4.2 billion euro payment to the European Central Bank (ECB) on Monday. The repayment is possible after the European Union granted Athens a short-term loan of 7.16 billion euros on Friday.

That amount will also make possible a payment due to the International Monetary Fund (IMF), which has been outstanding since June.

At the same time, Greeks are having to get used to a tough fiscal package with further austerity. The level of financial hardship the new reforms are expected to place on the Greek people have caused a split within Greek Prime Minister Alexis Tsipras' Syriza party.

Tax soars on variety of items

Greeks will now have to pay 23 percent in value-added taxes (VAT) on a whole range of items, from cocoa and sugar to condoms and funerals. However, VAT sales taxes will be reduced on certain products, such as medicine, books and newspapers.

On Sunday, German Chancellor Angela Merkel - who now says a Grexit from the eurozone is off the table - maintained her government's tough line on debt relief for Greece.

She said a "classic haircut" reduction of 30 to 40 percent of the country's debt was not possible "in a monetary union." However, she did not rule out a "voluntary write-down for private creditors, extended maturities and lower interest rates."

Technical teams from the hated troika of creditors - representing the EU, IMF and ECB - are expected in Athens in the coming weeks.

rc/cmk (AFP, Reuters)