Greek Banks Reopen Their Doors

By Nektaria Stamouli 

        ATHENS--Greece paid two pressing bills and reopened its bank branches after a three-week shutdown on Monday, though still stringent restriction on financial transactions underlined how far the debt-battered country remains from normality.
        Buying Athens some desperately needed breathing room, the country completed a EUR4.2 billion (EUR4.6 billion) payment to the European Central Bank due Monday and paid off some EUR2 billion in arrears to the International Monetary Fund, according to Greek officials. Eurozone officials agreed last week to give the country a desperately needed short-term bridge loan to pay the debt.
        Failure to pay the ECB could have forced the central bank to cut off emergency lending to Greece's banks, tipping the country further into financial chaos. By clearing the arrears to the IMF, the Washington-based Fund, which confirmed the payment, can also once again assist Athens.
        Greece was required to clear a series of hurdles--including passing tough new austerity measures and overhauls--before talks could begin on the terms of a tentative wider deal struck last week with the eurozone for up to EUR86 billion in aid.
        On Monday, Greeks were hit by substantial increases in value-added tax on goods and services, one of the measures passed by parliament in a first austerity package last week.
        Prime Minister Alexis Tsipras is struggling to carry his left-wing Syriza party with him as he accepts the demands. The government is bracing for renewed parliamentary defections as it prepares to enact a second round on Wednesday, heightening concerns about the stability of the government.
        Most capital controls, including limits on cash withdrawals and money transfers, remain in place at Greece's banks. But from Monday depositors are allowed to bundle their EUR60 daily withdrawal limit over several days and take out a cumulative EUR420 at the end of the week.
        The reopened banks are also limited to basic services such as making domestic payments in person, which customers have only been able to carry out online in recent weeks. The branch openings help those who don't have access to online banking. Clients can now access their safe-deposit boxes again.
        The Athens Stock Exchange, which also halted on June 29, remained closed Monday and it was unclear when it would resume trading.
        Officials from the three institutions overseeing Greece's bailout--the ECB, the IMF and the European Commission--were set to return to Athens this week to consider the country's economic situation and consult the government.
        Since Greece was first bailed out in 2010, the "troika" of international inspectors have visited Athens regularly to assess the country's progress in implementing austerity measures.
        Since coming to power in late January, the Syriza-led government has tried to keep the troika out of Greece and shift the negotiations to Brussels instead. That stance irritated the troika and eurozone governments, which saw it as an impediment to proper inspections.
        The return of the troika is one of the conditions the government had to accept this month as a prerequisite for new talks about a bailout.
        Last week's austerity package caused a split in the ruling Syriza party, but passed comfortably because of opposition support. Among the 149 lawmakers in Mr. Tsipras's party, 32 voted against the measures--including three cabinet ministers and former finance chief Yanis Varoufakis--while six abstained.
        Mr. Tsipras announced a small cabinet shuffle Friday to signal that he wanted ministers who will support his government's quest for a new bailout deal.
        In order to avoid more losses during the second vote, the government decided not to include new increases in taxes on farmers and new regulations on early retirements, which both Syriza and opposition lawmakers had threatened to reject. Parliament has the coming months to get those measures through.
        Government officials and analysts in Greece now expect elections this fall if Mr. Tsipras can complete a new bailout program by then.
        Ian Talley and Gabriele Steinhauser contributed to this article.
        Write to Nektaria Stamouli at nektaria.stamouli@wsj.com
        (END) Dow Jones Newswires

        July 20, 2015 12:33 ET (16:33 GMT)

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