Greece moves out of default

  • 21/07/2015
Greek Finance Minister Euclid Tsakalotos (Reuters)
Greek Finance Minister Euclid Tsakalotos (Reuters)

Greece's government has raised taxes and paid billions of euros to its creditors, as banks reopened just days after the debt-laden country reached a reforms-for-cash deal with its European partners.

Greeks woke up on Monday (local time) to widespread tax rises - on everything from sugar and cocoa to condoms, taxis and funerals - as part of the tough reform package agreed last week in exchange for a three-year bailout of up to 86 billion euros aimed at keeping Greece from crashing out of the eurozone.

The nation's banks were thronged with customers after a three-week shutdown estimated to have cost the economy 3.0 billion euros. The banks were ordered to close on June 29 to prevent mass cash withdrawals that could have caused the financial system to collapse.

Banks are continuing to offer only limited services - with a ban on most transfers to foreign banks among the capital control measures still in place - but a daily cash withdrawal limit of 60 euros has been relaxed.

Bank tellers were dealing with a hectic stream of customers, many expressing frustration over continuing restrictions on financial services.

"I came today to collect my pension but unfortunately I could only get a small percentage of it," said Spyros Papasotiriou as he left his bank in the northern Athens suburb of Neo Psychiko. "It's a big hassle."

A source close to the Greek finance ministry meanwhile confirmed that the government had completed payments of billions of euros that were due to the European Central Bank and International Monetary Fund on Monday, after the EU granted emergency bridge funding of 7.16 billion euros.

The IMF separately announced that Greece was no longer in default on its loans after remitting about two billion euros  to make up for missed repayments, while an ECB spokesperson said: "The ECB confirms it has been repaid."

GST has gone up from 13 percent to 23 percent on a wide range of goods and services, although the tax on medicines, books and newspapers eased from 6.5 percent to 6.0 percent.