Greece begins repaying ECB and IMF as banks reopen Monday

 Photograph: Yiannis Kourtoglou/Reuters

Greece begins repaying ECB and IMF as banks reopen Monday


Greece’s bank branches are open for the first time in three weeks, but capital controls are still in place

This is a step back to normality as its banks reopen following three weeks of closures, a receipt of a €7.2bn (£5bn) loan, and, almost all of it spent on repaying debts - a maturing debt repayment owed to the ECB, and to cover outstanding bills to the IMF

Bank branches across Greece reopened, as the financial restrictions that have constrained the country for the last three weeks are relaxed, a little, following last week’s bailout deal.

Queues formed early at branches in Athens and Thessaloniki, but there were no reports of panic



The banking sector is still subject to capital controls, which mean people can’t withdraw more than €420 per week from their accounts, or transfer money overseas.
Greek shareholders aren’t allowed to buy or sell stock today, as the Athens exchange remains closed.

The European Commission sent a $7.2bn bridge loan and  the money was used to repay a maturing debt repayment owed to the ECB, and to cover outstanding bills to the IMF. The IMF confirmed Greece has now cleared its arrears with the fund.
Gerry Rice, the IMF’s director of communications says:

“I can confirm that Greece today repaid the totality of its arrears to the IMF, equivalent to SDR 1.6 billion (about €2.0bn). Greece is therefore no longer in arrears to the IMF.
“As we have said, the Fund stands ready to continue assisting Greece in its efforts to return to financial stability and growth.”

But the Greek money merry-go-round carries on in full swing as Athens received a €7.2bn (£5bn) loan from the EU and immediately spent almost all of it on repaying debts.

Greek officials confirmed on Monday they had begun paying back international lenders, not long after the emergency bridging loan arrived in the Greek government’s bank account.

The EU agreed the loan on Friday to enable Athens to meet urgent debt repayments and clear arrears, both necessary hurdles if the Greek government is to get a three-year bailout worth up to €86bn.

However, capital controls will remain in place and payments and wire transfers abroad will still not be possible – a situation which Angela Merkel, the German chancellor, said on Sunday was "not a normal life" and warranted swift negotiations on a new bail-out.

The stock market will also remain closed until further notice.

Limits on cash withdrawals have been made slightly more flexible, with a weekly limit of €420 in place of the daily €60 limit previously.

"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.

More about the terms of the bailout

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 three-week 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.

The bank closures were the most visible sign of the crisis that took Greece to the brink of falling out of the euro earlier this month. But Mr Tsipras is eyeing a fresh start and swift talks on the bail-out that will keep Greece afloat.

The tough terms of the bail-out will see tax hikes, pension cuts, strict curbs on public spending, an overhaul of collective bargaining rules and a transfer of €50 billion of state assets into a special privatisation fund.

In exchange, Greece is hoping to receive loans of up to €86 billion.

The decision to reopen banks was the first action by Greece's new cabinet after the 40-year-old leftist prime minister Alexis Tsipras sacked rebels who had opposed the deal he struck with EU leaders last week.

Increases in value added tax agreed under the bail-out terms have also taken effect with VAT on food and public transport jumping to 23 per cent from 13 per cent.

Acceptance of the bail-out terms that meant the banks could reopen marked a turnaround for Mr Tsipras after months of difficult talks and a referendum that rejected a less stringent deal proposed by the lenders.

He sacked party rebels in a government reshuffle on Friday and is seeking a swift start to talks on the bail-out accord with European partners and the IMF before elections which Interior Minister Nikos Voutsis said were likely in September or October.