Banks in Greece are reopening after three weeks of closures sparked by the deadlock over the country’s debt.
Greece reached a cash-for-reforms deal aimed at avoiding a debt default and an exit from the eurozone.
However, many restrictions remain, including a block on money transfers abroad, and Greeks also face price rises with an increase in Value Added Tax (VAT).
Meanwhile, Germany has said it is prepared to consider further debt concessions to Greece.
Queues at ATMs have been a feature of life in Greece for weeks, with people waiting in line each day to withdraw a maximum of €60 a day, a restriction imposed amid fears of a run on banks.
From July 20, the daily limit becomes a weekly one, capped at €420, meaning Greeks will not have to queue every day.
While banks throwing open their doors marks the return of some normality to the Greek economy, long-term problems remain.
Unemployment is stubbornly high, and as this chart shows, Greece’s recession is comparable to one of history’s most famous economic crashes.
However, a block on transfers to foreign banks and a ban on cashing cheques remain in place.
Greeks will also pay more on a range of goods and services, including taxis and restaurants, with VAT rising from 13% to 23%.
The rise was among a package of reforms demanded by Greece’s creditors to open talks on the proposed €86 billion bailout.
Members of PM Alexis Tsipras’ party rebelled against the austerity measures demanded by creditors when it was voted through parliament.
It paved the way for Greece to receive a bridging loan, which enables the reopening of the banks and for Athens to repay debts of €4.2 billion, (including €700 million in interest), to the European Central Bank (ECB) due on July 20.
Both Greece and the IMF have been arguing for a restructuring of its €320 billion debt, saying its current position is “unsustainable”.
German Chancellor Angela Merkel ruled out “a classic haircut” – a markdown of Greece’s debts.
She told German television other forms of relief, such as extending maturities or slashing interest rates, could be considered once the details of the latest program are worked out.
Angela Merkel also played down reports of a row with her Finance Minister Wolfgang Schaeuble, who suggested in an interview with Der Spiegel magazine that he would rather resign than defend something he did not believe in.
“The finance minister will, like me, conduct these negotiations and I can only say that no-one came to me and asked to be relieved,” said Angela Merkel when asked about the suggestion.
Germany, which is the largest contributor to Greek rescue funds, has taken a tough line on Greece.
At one point in the fraught talks over the bailout, Wolfgang Schaeuble suggested Greece could temporarily leave the eurozone while it stabilizes its economy.
PM Alexis Tsipras, who has reshuffled his cabinet to replace rebellious ministers, has another set of reforms to push through parliament on July 22.
Hours after Greece’s parliament passed tough reforms required for a third bailout deal, the eurozone ministers have met to discuss on emergency funding to keep Greek banks afloat.
The Eurogroup was also due to discuss next steps in negotiating the bailout.
The Greek government is expected to survive, despite losing its majority after 38 lawmakers voted against the reforms.
Later, the European Central Bank is to consider easing a funding squeeze on Greek banks, allowing them to reopen.
Greece is facing an immediate cash crisis, with banks there closed for more than two weeks.
The European Commission has proposed giving Greece a €7 billion “bridging” loan from an EU-wide fund to help the government pay its mounting debts.
Eurozone ministers have agreed in principle to extend the loan to Greece, according to an unnamed official speaking to Bloomberg. The loan will be announced on July 17 after national parliaments have voted on the bailout deal, the official added.
Eurozone leaders agreed on the bailout in principle in Brussels on July 13, on the condition that the Greek parliament passed reforms on taxation increases and pension curbs by July 15.
PM Alexis Tsipras won the parliamentary vote by 229 votes to 64, but needed the support of opposition lawmakers to do so.
The vote paves the way for eurozone finance ministers to open detailed talks on the bailout, worth up to €86 billion.
Finland’s parliament on July 16 approved the bailout talks – one of a number of eurozone states which require a mandate from their own parliament for Greece to secure new funds.
Germany’s parliament is due to vote on the deal on July 17.
Passionate opposition came from within Alexis Tsipras’ own Syriza party, with parliamentary speaker Zoe Constantopoulou calling the measures “social genocide”.
Former Finance Minister Yanis Varoufakis was another vocal opponent.
In his address to parliament Alexis Tsipras said: “I acknowledge the fiscal measures are harsh, that they won’t benefit the Greek economy, but I’m forced to accept them.”
Since capital controls were imposed and the banks shut on June 29, Greeks have been limited to withdrawing €60 a day.
German Finance Minister Wolfgang Schaeuble, known for his hardline approach, told national radio he would submit a request for parliament to reopen negotiations on the third bailout with “full conviction”.
He also said he believed a temporary “Grexit” – Greece leaving the eurozone – would perhaps be a better option.
Meanwhile Slovakia’s Finance Minister Peter Kazimir said in a tweet he welcomed “the positive vote” but said “this is the easier part of the deal”.
By July 22, Greece must also commit to a major overhaul of the civil justice system. It has to agree to more privatization, to review collective bargaining and industrial action, and make market reforms, including Sunday trading.
The Greek parliament vote on July 16 approved:
VAT changes including a top rate of 23% to take in processed food and restaurants; a 13% rate to cover fresh food, energy bills, water and hotel stays; and a 6% rate for medicines and books
An increase in corporation tax from 26% to 29% for small companies
An increase in luxury taxes on big cars, boats and swimming pools
An end to early retirement by 2022, increasing the retirement age to 67
Opponents of the bailout measures took to the streets of Athens in mainly peaceful protests ahead of the vote on Wednesday. However, one group threw petrol bombs at police officers who responded with tear gas.
Unions and trade associations representing civil servants, municipal workers and pharmacy owners also went on strike on July 15.
Greek PM Alexis Tsipras has made a defiant speech as cash withdrawal limits begin to bite for bank customers.
Alexis Tsipras promised Greeks their pensions and wages would be safe.
Earlier the prime minister offered new concessions to eurozone partners, accepting most conditions that were on the table before talks collapsed.
Germany says talks requested by Greece will not be possible until after a debt referendum called by Alexis Tsipras for July 5.
In his address on July 1, Alexis Tsipras thanked Greeks for their “calm” in the face of bank closures and said their salaries and pensions would “not be lost”.
He angrily denied he had a secret plan to take Greece out of the euro, calling those who accused him of this “liars”.
Greek banks did not open this week after the ECB froze their liquidity lifeline.
Withdrawals from cash machines are capped at just €60 a day and long queues have been forming outside banks.
However, up to 1,000 branches re-opened on July 1 to allow pensioners – many of whom do not use bank cards – a one-off weekly withdrawal of up to €120.
Many pensioners had waited outside banks from before dawn, only to be told to return on Thursday or Friday, the Associated Press reported.
Some pensioners were told their pensions had not yet been deposited, AP said.
Close to 300 pensioners marched on the Bank of Greece in Athens after being given only a small sum from banks in the morning instead of the entire €120.
The letter sent to creditors by PM Alexis Tsipras says he was prepared to accept a deal put forward last weekend, if a few changes were agreed.
European markets surged on the news Greece might be willing to accept a deal.
However, German Chancellor Angela Merkel said no new bailout talks would be possible before Greece holds Sunday’s referendum.
As well as seeking further amendments to the creditors’ proposals, Alexis Tsipras’ latest offer is tied explicitly to agreement on a request for a third bailout lasting two years and amounting to €29.1 billion.
His application for a third bailout was accompanied by a request for debt restructuring that other eurozone countries would, at this stage, be unwilling to consider.
Two key meetings are to take place to discuss aid for Greece, after Athens missed the deadline for a €1.5 billion ($1.7 billion) payment to the IMF on June 30.
Eurozone finance ministers were set to discuss Greece’s new proposal in a conference call.
The second meeting will see officials with the European Central Bank (ECB) deciding on whether to demand more collateral from Greek banks on emergency loans it has given them.
With the previous eurozone bailout expired, Greece no longer has access to billions of euros in funds.
Only three other countries are still in arrears to the IMF – Sudan, Somalia and Zimbabwe. Between them, they owe €1.6 billion, only marginally more than Greece.
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