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Greece starts repaying some debts

A National Bank official opens the door of a bank branch while people wait to enter in Athens, Greece yesterday. Photo: Reuters

A National Bank official opens the door of a bank branch while people wait to enter in Athens, Greece yesterday. Photo: Reuters

Greece reopened its banks and ordered billions of euros owed to international creditors to be repaid yesterday in the first signs of a return to normal after last week’s deal to agree a tough new package of bailout reforms.

Customers queued up as bank branches opened for the first time in three weeks yesterday after they were closed to save the system from collapsing under a flood of withdrawals.

Increases in value added tax agreed under the bailout terms also took effect, with VAT on processed food and public transport jumping to 23 per cent from 13 per cent. The stock market remained closed until further notice. The bank closures were the most visible sign of the crisis that took Greece to the brink of leaving the euro earlier this month.

Limits on withdrawals will remain

Their reopening followed Prime Minister Alexis Tsipras’ reluctant acceptance of a tough package of bailout demands from European partners, but a revolt in the ruling Syriza Party now threatens the stability of his government and officials say new elections may be held as early as September or October.

“It is positive that the banks are open, though the effect is psychological for people more than anything else,” said 65-year-old pensioner Nikos Koulopoulos.

“Because to be honest nothing much changes given the capital controls are still in place,” he said.

Limits on withdrawals will remain, however, at 420 per week instead of €60 per day previously – and payments and wire transfers abroad will still not be possible, a situation German Chancellor Angela Merkel said warranted swift negotiations on a new bailout, expected to be worth up to €86 billion.

“Capital controls and restrictions on withdrawals will remain in place but we are entering a new stage which we all hope will be one of normality,” said Louka Katseli, head of the Greek bank association.

Greeks will be able to deposit cheques but not cash, pay bills as well as have access to safety deposit boxes and withdraw money without an ATM card.

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