Greece loosens capital controls on foreign payments

Greece on Friday partially relaxed the capital controls introduced nearly a month ago to protect the debt-crippled country from financial collapse, giving some much-needed relief to firms that do business abroad.

Bank of Greece chief Yannis Stournaras said the country’s commercial banks, which have seen their services severely limited since the capital controls were brought in on June 29, could now authorise bill payments to other countries of up to 100,000 euros ($110,000), up from 50,000 euros.

“In the next ten days, we will resolve the problems created” by the capital controls, Stournaras said after meeting with employers’ representatives and finance ministry officials, according to a statement.

As part of the measures introduced to stop a panicked flight of cash from the Greek financial system, companies have been forced to wait for a government commission to approve foreign transfers, a process that has proved so slow that some suppliers have begun demanding payment in advance.

“The lifting of the ceiling to 100,000 euros covers 70 percent of demands from professionals,” Vassilis Korkidis, president of the Greek Merchants’ Federation (ESEE), told AFP. “It came into force today. It’s a positive move; we’ll be able to see the effects of it next week.”

Committees to authorise companies’ payments to other countries will also be created in all of the banks to speed up approvals by the central government commission, Stournaras said.

Despite the continuing restrictions on banking services, he pronounced the situation “quite satisfactory”, adding that the level of foreign payments authorised by the government over the last few weeks has been “very close to what the Greek economy performs in monthly imports normally”.

The central bank said 1.5 billion euros worth of bill payments were approved by the government between June 29 and July 23, across sectors from food and energy to pharmaceuticals and raw materials.

Greek companies have continued to express concern over the capital controls which have been put in place with no specific end date complaining that they could face shortages if they are unable to replenish their stocks from foreign suppliers.

Professional associations have reported that thousands of shipping containers remain stuck in Greek ports due to unsettled bills and suppliers’ demands of increased cash payments.

Theodoros Fessas, the president of the Greek Employers’ Federation (SEV), said after the meeting with the central bank that Greek imports are worth around 40 billion euros a year, or 150 million euros per day.

The president of the Athens Chamber of Commerce has said that the capital controls, which also saw banks forced to close for three weeks, have cost the Greek economy an estimated three billion euros.