Saturday 22 October 2016

Greece pays back overdue €2bn to IMF as banks reopen

Lefteris Papadimas

Published 21/07/2015 | 02:30

Queues outside an Athens bank yesterday
Queues outside an Athens bank yesterday

Greece repaid €2bn to the IMF and reopened its banks yesterday in the first signs of a return to normal after last week's deal to agree a tough new package of bailout reforms.

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The repayment, and another for €4.2bn to the European Central Bank due yesterday, came after the EU made Greece a short-term loan of €7bn.

Customers queued up as bank branches opened for the first time in three weeks, after they were closed to save the system from collapsing under a flood of withdrawals.

Increases in VAT agreed under the bailout terms also took effect, with VAT on processed food and public transport jumping to 23pc from 13. The stock market remained closed until further notice.

"It is positive that the banks are open, though the effect is psychological for people more than anything else," said 65-year-old pensioner Nikos Koulopoulos. "Because to be honest, nothing much changes given the capital controls are still in place," he said.

Limits on withdrawals will remain, however - at €420 per week instead of €60 per day previously - and payments and transfers abroad will still not be possible, a situation German Chancellor Angela Merkel said on Sunday was "not a normal life" and warranted swift negotiations on a new bailout, worth up to €86bn.

"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," said Louka Katseli, head of the Greek bank association.

Greeks will be able to deposit cheques but not cash, pay bills as well as have access to safety deposit boxes and withdraw money without an ATM card.

Bankers said there may be minor disruptions after the extended interruption to services, but they expected services to resume largely as normal.

"I don't expect major problems, our network and the network of our competitors are ready to serve our clients," said a senior official at Piraeus Bank, one of the big four lenders. "There might be lines because many people will want to withdraw money from their deposit boxes," the official said.

Athens initiated payment of €4.2bn in principal and interest to the European Central Bank due yesterday, after European authorities agreed last week to provide emergency funding assistance.

It also paid €2.05bn to the IMF in arrears since June 30, when Greece became the first advanced economy to default on a loan to the IMF, along with €500m owed to the Bank of Greece.

The Greek parliament will hold another vote tomorrow on measures including justice and banking reforms.

Irish Independent

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