Connect with us

Hi, what are you looking for?

Capital Business
Capital Business
Greek Prime Minister Alexis Tsipras attends a swearing-in ceremony of the newly appointed members of the government at the presidential palace in Athens on July 18, 2015/AFP


Greece prepares to reopen banks, apply tax hikes

Greek Prime Minister Alexis Tsipras attends a swearing-in ceremony of the newly appointed members of the government at the presidential palace in Athens on July 18, 2015/AFP

Greek Prime Minister Alexis Tsipras attends a swearing-in ceremony of the newly appointed members of the government at the presidential palace in Athens on July 18, 2015/AFP

Athens, Greece, Jul19 – Greece prepared Sunday to restart its struggling economy with a revamped government, a bank reboot and a new round of tax hikes agreed after months of fraught confrontation with its creditors.

Banks are set to reopen Monday after a three-week shutdown estimated to have cost the economy some 3.0 billion euros ($3.3 billion) in market shortages and export disruption.

Crisis-hit Greeks will also have to endure widespread price hikes with a broad batch of goods and services — from sugar and cocoa to condoms and funerals — now taxed at 23 percent, up from 13 percent.

The measures are part of a tough fiscal package Greece had to agree to last week to earn a three-year bailout from its international creditors and avoid crashing out of the eurozone.

The austerity package caused a mutiny among lawmakers of the ruling radical Syriza party, forcing Prime Minister Alexis Tsipras to carry out a limited reshuffle on Friday.

Even so, most analysts and even government officials say early elections are now inevitable, and are likely to be held in September.

Tsipras — who barely has time to eat or sleep, according to his mother — faces a fresh challenge in parliament on Wednesday to approve a second wave of reforms tied to its economic rescue.

The leftist government has agreed to raise taxes, overhaul its ailing pension system and commit to privatisations it had previously opposed, in exchange for a bailout of up to 86 billion euros ($94 billion) over the next three years.

The draconian agreement — accepted by a party that came to power in January promising to end austerity — came after over 61 percent of Greeks on July 5 rejected further cuts in a referendum called by Tsipras himself.

His critics accuse the prime minister of kowtowing to blackmail by Greece’s creditors, who had threatened to expel the country from the euro.

Advertisement. Scroll to continue reading.

“The commission is prepared for everything… We have a Grexit scenario, prepared in detail,” European Commission head Jean-Claude Juncker had warned on July 8.

The Kathimerini newspaper on Sunday said the “Grexit” plan, which also entailed Greece’s expulsion from the Schengen Treaty, had been secretly prepared in less than a month by a 15-member European Commission team.

French Finance Minister Michel Sapin on Sunday insisted that the “real humiliation would have been for Greece to have been kicked out of the euro.”

“There was a real confidence problem… now this confidence is being restored,” Sapin told the To Vima weekly.

The Greek crisis exposed a rift between the eurozone’s top powers, Germany and France, on how far to apply austerity to meet fiscal goals.

French President Francois Hollande on Sunday called for the euro’s governance to be “strengthened”, calling for “the addition of a specific budget and a parliament to ensure democratic control”.

Commentators say the lack of centralised governance over national fiscal policies — a jealously-guarded sovereignty area for member governments — is a major flaw in the single European currency.

Greece is also scheduled Monday to repay 4.2 billion euros to the European Central Bank (ECB).

For this purpose, the EU on Friday approved a short-term loan of 7.16 billion euros, which will also enable Athens to repay debts to the International Monetary Fund outstanding since June.

Advertisement. Scroll to continue reading.
Click to comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...