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ATMs without money at Easter

31 March 2015 / 14:03:57  GRReporter
2648 reads

Greek Prime Minister Alexis Tsipras initiated the conduct of last night's plenary session of the Greek parliament to inform the other parties on the progress of negotiations between the government and the representatives of Greece’s creditors.

It ended at about 1:00 pm without the people who stayed awake until late into the night hearing their leaders, becoming aware of the progress of negotiations, and most of all, of what exactly is being negotiating in Brussels.

The government of SYRIZA and Independent Greeks continues to not provide information on the content of the "reform list" that it has sent to the Brussels group. It is significant that, from yesterday until today, there were only contradictory pieces of information on the imposition or cancellation of certain taxes. The future of privatizations, the pension system and labour law is not clear either and journalists can obtain from non-papers only fragmentary information on them.

In return, Prime Minister Alexis Tsipras presented in parliament only the "red lines" of his office and urged the opposition to support him in the tough negotiations. Immediately afterwards, he said that he who is not with the government does not support national interests.

The meeting ended after a violent exchange of remarks and New Democracy MPs even walked out in protest against the behaviour of parliament speaker Zoe Konstantopoulou. The leaders of other opposition parties said they could not support the government while it continued to hide its proposals for reforms and did not present a specific plan in the event that the negotiations with creditors failed.

In this situation, the state of the Greek economy is worsening each passing day and the lack of liquidity is threatening both the banking sector and companies. Analysts say that if Athens misses the chance to reach an agreement with the creditors by the week before Easter it will be almost certain that restrictions will be imposed on capital movement.

Today GRReporter presents the comments on the subject of analyst Dimitris Papaconstantinou, published on the online economic edition The author’s title is, "Capital controls are already in business. And closed ATMs after Easter?"

The threat for Greeks finding ATMs closed after the Easter vacation is becoming increasingly clear. More precisely, they will face restrictions on the amounts withdrawn from ATMs and on bank transactions. If the negotiations of the Greek government with the creditors are not completed within the Holy Week and no agreement is reached, which will provide funding for the country and the banking system, the possibility of capital controls will be very close. And this is because the banking system is already on the edge of its liquidity limit.

Banks are anyway in anticipation of the new funding from the European Central Bank through the Emergency Liquidity Assistance (ELA) to be able to respond to the traditionally more frequent cash withdrawals in the days before Easter. Both the Ministry of Finance and the Bank of Greece have already developed scenarios to impose a limit in the event that the negotiations in Brussels are not successful.

However, efforts have been made to ensure the normal functioning of the market in the week before Easter, because the imposition of any measure in those days would blow up the consumer market and the economy.

In fact, however, restrictive measures have already been implemented in the relations between banks and companies. In view of the fact that financial institutions have even stopped issuing letters of guarantee, it can be considered that business is totally "suffocated". This type of document is issued only in exceptional cases and after a very long and difficult process, while, at the same time, banks themselves reduce credit limits. And all this is happening at a time of increased financing requirements arising from the upcoming holiday, when all foreign suppliers require their Greek customers to prepay the entire amount of the contract or the full coverage of the letters of guarantee. That is, business is in a total deadlock.

Many companies have started to suffocate under the weight of the restrictive measures of banks, the extremely difficult access to financing and the strict conditions that accompany it. They have no access to loans and their requests for deposit withdrawals are only partially approved. It is clear that if this situation does not change in the coming days and months the cases of bankruptcies will increase, because in an attempt to reduce the risks and ensure liquidity inflows, banks are pressing the companies that are unable to meet their obligations.

Greece is already at the zero point. Time is up and the tactic of the government to bring the discussion to the edge by continuous postponements and delays and to play with fire creates risks that can turn into a disaster. Hopefully, even at the last moment, reason will prevail and we will not face a collision that will send the already seriously injured Greek economy...back to prehistoric times.

Tags: PoliticsNegotiationsCreditorsGreek governmentRestriction on capital movementATMsCompanies
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