Greek banks reopen, taxes rise

Three-week shutdown had cost the economy €3 billion

Greece’s government hiked taxes and began paying billions of dollars to its creditors on Monday, as banks reopened following a three-week shutdown imposed to prevent a disastrous run on cash machines.

Greeks woke up to widespread tax rises — on everything from sugar and cocoa to condoms, taxis and funerals — as part of a tough reform package agreed last week in exchange for a three-year bailout of up to €86 billion that the government hopes will stop it from crashing out of the Eurozone. The nation’s banks were thronging with customers after a shutdown estimated to have cost the crisis-hit economy €3 billion.

Limited bank services

The banks were ordered to close on June 29 after anxious citizens emptied cash machines in a dramatic escalation of the country’s debt crisis.

Banks are continuing to offer only limited services — with a ban on most transfers to foreign banks among the capital control measures that are still in place — but a daily cash withdrawal limit of €60 ($65) has been relaxed.

The European Union meanwhile confirmed that it had paid out a €7.16 billion emergency loan to Greece so it can meet debts of €4.2 billion due to the European Central Bank (ECB) on Monday as well as outstanding sums owed to the International Monetary Fund (IMF). A source close to the Greek finance ministry told AFP the payment had begun.

Taxes have gone up from 13 per cent to 23 per cent on a wide range of goods and services, although the tax on medicines, books and newspapers eased from 6.5 per cent to 6.0 per cent. — AFP

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