Greece prepares to reopen Athens stock market

ATHENS, Greece - The Athens stock exchange, which has been closed for nearly a month due to Greece's debt crisis, is expected to reopen in a few days after receiving approval from the European Central Bank, a stock market source told AFP Tuesday.

"The ECB gave its green light to reopen the stock market in Greece, (and) we are waiting for a ministerial decision which will specify the conditions of the reopening," the source said.

A spokesman for the Greek finance ministry said that a decision would be published later Tuesday but did not indicate when the Athens stock exchange would resume trading.

The stock market in the Greek capital closed on Friday June 26, a few hours before Prime Minister Alexis Tsipras announced a referendum on the bailout conditions demanded by Greece's international creditors.

Greeks rushed to their banks' cash machines over that weekend prompting the government to impose capital controls from Monday June 29, followed by the closing of the banks and the stock exchange.

The aim was to protect the banking sector which has seen huge withdrawals over the past six months by people nervous about Greece's economic and financial future.

The banks reopened after three weeks on July 20, but withdrawals and money transfers abroad remain under tight controls. Greeks can only withdraw up to 420 euros ($464) a week.

For businesses the capital controls were slightly eased last week but economic activity especially imports continues to encounter numerous obstacles.

source: www.abs-cbnnews.com

Banks reopen, taxes rise as Greece pays billions to creditors

ATHENS, Greece - Greece's government hiked taxes and paid billions of euros to its creditors on Monday, as banks reopened just days after the debt-laden country reached a reforms-for-cash deal with its European partners.

Greeks woke up to widespread tax rises -- on everything from sugar and cocoa to condoms, taxis and funerals -- as part of the tough reform package agreed last week in exchange for a three-year bailout of up to 86 billion euros ($93 billion) aimed at keeping Greece from crashing out of the eurozone.

The nation's banks were thronged with customers after a three-week shutdown estimated to have cost the economy 3.0 billion euros. The banks were ordered to close on June 29 to prevent mass cash withdrawals that could have caused the financial system to collapse.

Banks are continuing to offer only limited services -- with a ban on most transfers to foreign banks among the capital control measures still in place -- but a daily cash withdrawal limit of 60 euros ($65) has been relaxed.

Bank tellers were dealing with a hectic stream of customers, many expressing frustration over continuing restrictions on financial services.

"I came today to collect my pension but unfortunately I could only get a small percentage of it," said Spyros Papasotiriou as he left his bank in the northern Athens suburb of Neo Psychiko. "It's a big hassle."

A source close to the Greek finance ministry meanwhile confirmed that the government had completed payments of billions of euros that were due to the European Central Bank and International Monetary Fund on Monday, after the EU granted emergency bridge funding of 7.16 billion euros.

The IMF separately announced that Greece was no longer in default on its loans after remitting about two billion euros ($2.2 billion) to make up for missed repayments, while an ECB spokesperson said: "The ECB confirms it has been repaid."

Value-added tax (VAT) has gone up from 13 percent to 23 percent on a wide range of goods and services, although the tax on medicines, books and newspapers eased from 6.5 percent to 6.0 percent.

Tryphon Alexiadis, the new finance vice minister in charge of tax, vowed that "not a single euro from the tax rise will escape state coffers", adding that "a wave of inspections will be launched" to prevent tax evasion in a country where the problem is notoriously rife.

Along with the tax hikes, the Greek government -- led by the radical-left Syriza party that came to power in January promising to end austerity -- is also set to overhaul its ailing pension system as part of the reforms deal, and launch privatisations it had previously opposed.

'Crash test'

Louka Katseli, the head of Greece's bank association, said some 40 billion euros have been withdrawn from Greek banks since December by customers anxious over the safety of their deposits, seriously damaging the banks' ability to function normally.

She urged people to bring their savings back to the banks to support the crisis-hit financial system.

"If we take out the money from our safes and our houses -- where, in any case, it isn't safe -- and we deposit it in the banks, we will reinforce liquidity," she told the Mega TV channel.

Greeks are now able to withdraw a maximum of 300 euros at once until Friday, when a new weekly limit of 420 euros takes effect.

They can also use their credit cards for foreign purchases again, and certain exceptions to the capital controls have been introduced to help Greeks who are studying or undergoing medical treatment abroad.

But most people remain unable to take out large sums, transfer money to other countries or open new bank accounts.

The capital controls are taking a heavy toll on Greek businesses, with 23 percent of firms saying they are seeking to move their headquarters abroad to improve stability and cash-flow, according to a survey released Monday by non-profit group Endeavour Greece.

The austerity package caused a mutiny among lawmakers of Prime Minister Alexis Tsipras's ruling Syriza party -- forcing him to carry out a limited cabinet reshuffle on Friday -- and he faces a fresh challenge on Wednesday when parliament must approve a second wave of reforms tied to the rescue package.

Pro-government newspaper Avgi said the vote would be a "crash test" that could even result in Tsipras's resignation.

"If there are new losses, in whatever form, (Tsipras) will hand back his mandate," the daily said.

Analysts have said the divisions within the ruling party could force early elections.

Government spokeswoman Olga Gerovassili ruled out another vote while Athens was still negotiating the bailout.

"Elections are not useful at the moment and the government has no intention of organising any," Gerovassili told state news agency ANA.

"The goal is to finalise the deal (with Europe) and restore normality and stability," she said.

source: www.abs-cbnnews.com

Greece prepares to reopen banks

ATHENS -- 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 $3.3 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 privatizations it had previously opposed, in exchange for a bailout of up to $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.

"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 centralized 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.

source: www.abs-cbnnews.com

Greece licks wounds after bailout vote, ECB move expected

ATHENS - Greece awoke with a political hangover on Thursday after parliament approved a stringent bailout program, thanks to the votes of the pro-European opposition, amid the worst protest violence this year.

The vote, vital to unlocking emergency financing from European partners as early as Thursday, left Prime Minister Alexis Tsipras weakened by a revolt in his leftist Syriza party but clinging to power for now.

The European Central Bank's governing council, meeting in Frankfurt, was expected to ease its funding squeeze on shuttered Greek banks, the first step toward permitting them to reopen after nearly three weeks' closure while cash rationing and other capital restrictions will remain in place.

European finance ministers were to hold a conference call on Thursday morning to agree on a plan for 7 billion euros in bridging funds to enable Greece to meet its immediate debt service needs and avoid defaulting on the ECB next Monday.

All 28 EU countries are expected to contribute, despite the reluctance of non-euro members such as Britain and the Czech Republic, after a compromise was found to use euro zone funds to guarantee their ring-fenced contributions.

Tsipras won 229 out of the 300 parliamentary votes in favor of the agreement he struck on Monday with euro zone partners on austerity measures and liberal economic reforms tougher than those rejected by voters in a July 5 referendum.

Some of the key measures, including an increase in value added tax, take effect immediately, although it will only be extended to hotels in October, after the tourist season.

But 32 out of his radical left Syriza's 149 lawmakers voted against the plan, six effectively abstained and one was absent, leaving the government without a majority of its own supporters.

"Tsipras continues wounded, until further notice," the front page of left-leaning Efimerida Ton Syntakton said. "Governments fall when they lose the support of the people, he says."

Among the dissenters were four members of the government, one of whom resigned, the speaker of parliament, and outspoken ex-finance minister Yanis Varoufakis, who compared the Brussels deal to the 1919 Versailles Treaty that imposed unpayable reparations on a defeated Germany after World War One.

'FORCED TO ACCEPT'

Tsipras told lawmakers he had accepted a package he did not believe in and which would harm Greece, but the only alternative was a disorderly bankruptcy that would be more catastrophic.

"I acknowledge the fiscal measures are harsh, that they won't benefit the Greek economy, but I'm forced to accept them," he said before the vote in the early hours of Thursday.

He is expected to reshuffle his cabinet to remove dissident leftists but he has ruled out early elections and said this week the captain does not leave the ship in a storm.

German Finance Minister Wolfgang Schaeuble, one of the toughest critics of Greece in the euro zone, said on German radio he still believed Athens would do better to leave the currency area temporarily to receive a debt writedown.

But Schaeuble said he would vote in favor of opening talks on a third bailout loan for Greece "with full conviction" when the German Bundestag debates the plan on Friday.

"We are a step further," Schaeuble told Deutschlandfunk radio after the Greek parliament voted to approve the entire package demanded by European partners. "This is an important step."

He said it would be hard to make Greece's debts sustainable without a "haircut" or writedown on the principal by European lenders, which Berlin says would be illegal under EU treaties.

The International Monetary Fund highlighted the issue in a stark report released this week, saying the only alternatives to "deep upfront haircuts" would be for European lenders to grant Athens a 30-year debt service holiday on present and future loans or make large annual fiscal transfers to the Greek budget.

All those options are deeply unpalatable to German and other euro zone creditor governments that do not want to tell their taxpayers that the money lent to Greece is not coming back.

Klaus Regling, head of the euro zone's bailout fund, said he expects it to contribute 50 billion euros to the third bailout of up to 86 billion euros.

"If everything should fail, then the Greek banking system will collapse," Klaus Regling, head of the European Stability Mechanism, told German broadcaster ARD.

The rest would come from 16 billion euros in remaining undisbursed IMF funds, once Athens has cleared arrears to the global lender, as well as privatization receipts and possible limited borrowing on the market near the end of the three-year program.

In Athens, cleaners removed overnight the debris of a pitched battle on the central Syntagma Square outside parliament between black-masked anti-bailout militants and riot police.

Protesters threw dozens of petrol bombs and hurled stones at the police, who responded with clouds of tear gas.

Tsipras won the vote thanks to the support of the center-right New Democracy, center-left Pasok and centrist To Potami opposition parties.

"The responsible opposition assumed the burden to rescue the country as did the prime minister, even though it was at the last minute," the conservative daily Kathimerini said in an editorial. "He deserves credit for this, but he lost the support of a large part of his party's lawmakers."

"He now has the big responsibility to ensure the country will have a government that keeps its pledges to creditors and implements them. Otherwise, his bold step will stall and with it the country’s European prospects," the paper said.

source: www.abs-cbnnews.com

Greece accepts reforms needed to get bailout

ATHENS - The Greek parliament passed sweeping austerity measures demanded by lenders to open talks on a new multibillion-euro bailout package to keep Greece in the euro, but dozens of hardliners in the ruling Syriza party deserted Prime Minister Alexis Tsipras.

The package was approved with 229 votes in the 300-seat chamber. There were 64 votes against it and six abstentions. But Tsipras required the support of pro-European opposition parties to push the measure through, leaving a question over the future of his government.

Tsipras said there was no alternative to the package, which he acknowledged would cause hardship, but he stood by the decision. "I am the last person to shirk this responsibility," he told parliament.

Government spokesman Gabriel Sakellaridis acknowledged the vote laid bare a split in Syriza, but he said the government's priority was to secure the bailout, suggesting that there would be no immediate move towards new elections.

In exchange for funding worth up to 86 billion euros ($94 billion), Greece has accepted reforms including significant pension adjustments, increases to value added taxes, an overhaul of its collective bargaining system, measures to liberalize its economy and tight limits on public spending.

It has also agreed to sequester 50 billion euros of public assets in a special privatization fund to act as collateral on the deal.

The measures were branded "social genocide" by the firebrand speaker of parliament Zoe Constantopoulou and there were violent clashes between protestors and police outside parliament as the debate went on before the vote.

Among the 38 Syriza rebels was former Finance Minister Yanis Varoufakis, who was sacked by Tsipras last week and who denounced the bailout deal as "a new Versailles Treaty" - the agreement that demanded unaffordable reparations from Germany after its defeat in World War One.

Energy Minister Panagiotis Lafazanis and Deputy Labor Minister Dimitris Stratoulis also voted against the package.

Amid speculation that both ministers could lose their jobs in a reshuffle, possibly as early as Thursday, Lafazanis said he remained loyal to the government but was ready to offer his resignation, joining Deputy Finance Minister Nadia Valavani, who stepped down earlier on Wednesday.

"We support Syriza in government and we support the Prime Minister. We don't support the bailout," he said after the vote.
Elected in January on an anti-austerity platform, Tsipras made an about-turn following grueling all-night negotiations in Brussels on Monday, giving in to lenders' demands for immediate reforms to prevent a chaotic exit from the single currency.

Speaking in parliament before the vote, Tsipras made clear he was supporting the package against his will but there was no alternative if Greece was to avoid financial collapse.

"I acknowledge the fiscal measures are harsh, that they won't benefit the Greek economy, but I'm forced to accept them," he said as he made a final appeal for support.

'A NEW VERSAILLES TREATY'

With Greek parliamentary approval secured, the way has been cleared for other national parliaments to approve the start of bailout talks and for the release of funding to allow Greek banks to re-open, more than two weeks after capital controls were imposed to prevent them from collapsing.

Eurozone finance ministers are due to hold a conference call on Thursday at 10 a.m. (0800 GMT) to discuss the vote.

With Greece facing an urgent deadline on July 20, when a 3.5 billion euro payment to the European Central Bank is due, EU officials raced to agree a bridge financing accord that would enable Athens to avoid defaulting on the loan.

Despite strong objections from Britain and the Czech Republic - EU countries that do not use the euro - a 7 billion euro loan is expected to be extended to Greece from the European Financial Stability Mechanism (EFSM), an EU-wide fund not intended for euro zone funding needs.

Given the hurdles facing the agreement, doubts have surfaced about how long it could hold together, with one senior European Union official saying it had a "20-, maybe 30-percent chance of success".

After its deepest crisis since World War Two, the Greek economy has lost more than a quarter of its output and more than one in four of its workforce is unemployed. It is unclear how it can sustain the burden of one of the most far-reaching austerity programs ever imposed on a euro zone country.

A study by the International Monetary Fund issued on Tuesday called for much more debt relief than Greece's euro zone creditors, particularly Germany, have been prepared to accept so far.

Berlin, which along with the other creditors knew about the IMF study before agreeing to new bailout talks, may wince at providing huge debt relief to a country it scarcely trusts to honor its promises.

But Germany insists on having the IMF in the negotiations to help keep Greece in line. It may countenance extending repayment periods for Greek debt but has said it will not accept a writedown, with the finance ministry insisting it could not accept "a debt haircut via the backdoor".

'EUROPE'S BANKRUPT CHILD'

The European Commission published its own assessment of Greece's debt burden on Wednesday that also offered the prospect of debt relief. While ruling out any write-offs, the Commission said debt reprofiling was possible, as long as Greece implemented the reforms to which it has agreed.

Washington has stepped up pressure for a deal between the euro zone and NATO member Greece. U.S. Treasury Secretary Jack Lew is making a short-notice trip to Frankfurt, Berlin and Paris this week to press for a quick agreement.

Although the bailout package is much tougher than the Greek people could have imagined when they resoundingly rejected a previous offer from the creditors in a referendum on July 5, most want to keep the euro.

With banks shut and the threat of a calamitous exit from the currency bloc hovering over the country if it cannot conclude a deal, many Greeks see the package as the lesser of two evils.

"We are Europe's bankrupt child and as a child, Europe has been supporting us for five years and told us what we needed to do to get out of this situation," said Yannis Theodosis, a 35-year-old civil engineer. "We did nothing and now we are paying the consequences."

Civil servants held a strike on Wednesday, as did pharmacists, whose industry would be opened up under the reform package, in demonstrations that passed peacefully until a small group threw petrol bombs at police, who responded with tear gas and flash bombs.

Calm later returned but nearby streets were empty and garbage bins were still burning. About 30 people were detained, according to a police source.

source: www.abs-cbnnews.com

IMF calls for Greece debt relief ahead of bailout vote

ATHENS/BRUSSELS - An International Monetary Fund (IMF) study published on Tuesday showed that Greece needs far more debt relief than European governments have been willing to contemplate so far, as fractious parties in Athens prepared to vote on a sweeping austerity package demanded by their lenders.

The IMF's stark warning on Greece's debt came as Prime Minister Alexis Tsipras struggled to persuade deeply unhappy leftist lawmakers to vote for a package of austerity measures and liberal economic reforms to secure a new bailout.

In an interview with state television, he said that although he did not believe in the deal, there was no alternative but to accept it to avoid economic chaos.

The IMF study, first reported by Reuters, said European countries would have to give Greece a 30-year grace period on servicing all its European debt, including new loans, and a dramatic maturity extension. Or else they must make annual transfers to the Greek budget or accept "deep upfront haircuts" on existing loans.

The Debt Sustainability Analysis is likely to sharpen fierce debate in Germany about whether to lend Greece more money. The debt analysis also raised questions over future IMF involvement in the bailout and will be seen by many in Greece as a vindication of the government's plea for sweeping debt relief. A Greek newspaper called the report, which was initially leaked, a slap in the face for Berlin.

Late on Tuesday, a senior IMF official, who spoke on condition of anonymity, said, "We have made it clear ... we need a concrete and ambitious solution to the debt problem.

"I don't think this is a gimmick or kicking the can down the road ... If you were to give them 30 years grace you are allowing them in the meantime to bring down debt by ... getting some growth back."

German Finance Minister Wolfgang Schaeuble said in Brussels on Tuesday that some members of the Berlin government think it would make more sense for Athens to leave the euro zone temporarily rather than take another bailout.

The Greek Finance Ministry said it had submitted the legislation required by a deal Tsipras reached with euro zone partners on Monday to parliament for a vote on Wednesday.

Assuming Athens fulfils its end of the bargain this week by enacting a swathe of painful measures, the German parliament is due to meet in a special session on Friday to debate whether to authorize the government to open new loan negotiations.

"The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date - and what has been proposed by the ESM," the IMF said, referring to the European Stability Mechanism bailout fund.

An EU source said euro zone finance ministers and leaders had been aware of the IMF figures when they agreed on Monday on a roadmap to a third bailout.

A ONE-WAY STREET

In the interview on Greek state television, Tsipras defended the deal he signed up to, saying it was better than the alternative of being forced out of the euro zone.

He said banks, closed for the past two weeks to prevent a flood of withdrawals that would collapse the banking system, would reopen once the deal had been fully ratified by parliaments in Greece and other European countries.

Tsipras could not conceal the bitterness left by last weekend's acrimonious euro zone summit.

"The hard truth is this one-way street for Greece was imposed on us," he said.

Lawmakers from his ruling Syriza party and their allies argued behind closed doors about whether to back sweeping reforms the government must ram through parliament as it races to meet the terms of the bailout deal.

A poll in To Vima newspaper showed that more than 70 percent of Greeks believed there was no alternative to a deal and that parliament should pass it.

Having staved off a financial meltdown, Tsipras has until Wednesday night to pass measures tougher than those rejected in a referendum days ago. With as many as 30-40 hardliners in his own ranks expected to mutiny, Tsipras will likely need the support of pro-European opposition parties to muster the 151 votes he needs to pass the law in parliament.

source: www.abs-cbnnews.com