Greek banks reopen after three-week closure

By MoneyTimes

Jul 21, 2015 06:59 AM EDT

Greek depositors lined up outside banks Monday as banks reopened three weeks after closing their doors.

But while people can now withdraw money, restrictions remain and, with new taxes, they will have to shell out more for goods and services.

Daily cash withdrawal is still at 60 euros ($65), but a weekly limit of 420 euros ($455) has been added. This allows Greeks who don't make it to the bank on a particular day to withdraw 120 euros ($130) the following day.

Greeks can also make check deposits and purchases using their cards. But they can neither cash their checks nor get cash abroad with their credit or cash cards.

The banks reopened after the European Central Bank promised last Thursday to grant them emergency funding amounting to 900 million euros ($974 million).

This new funding came as Parliament raised the value added tax (VAT) from 13% to 23%, one of austerity measures demanded by Greece's creditors in exchange for a third international bailout of up to 86 billion euros ($96 billion).

Goods affected by the new tax include tea, coffee, some meats, cooking oil, and salt.

The VAT also renders services at restaurants and tutorial schools more expensive. Public transport fares will likewise go up next month.

More austerity measures are expected to be approved by the reshuffled government Wednesday or Thursday.

These include a cut in pension and public spending, amendment of collective bargaining rules, and a transfer of some state assets into a special privatization fund.

Over the weekend, President Alexis Tsipras reshuffled his cabinet after sacking party rebelswho had opposed the measures. It was a change of heart for Tsipras following tough discussions and a referendum that rejected the bailout terms with European leaders.

Tsipras wants a new bailout agreement finalized as soon as possible, as Greece remains hungry for cash for debt repayments and other bills.

To ease Greece's burden, the European Union is giving the country a short-term loan of 7 billion euros ($7.8 billion).

The bank closures on June 29 were meant to prevent the financial system collapsing amid a flood of withdrawals, as Greece's second bailout expired.

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