Greek banks open; prices on many goods rise as VAT almost doubles

ATHENS, Greece — Greeks will finally see their banks reopen at 8 a.m. local (0500 GMT) Monday morning, but many restrictions on transactions, including cash withdrawals, will remain.

Also, many goods and services will become more expensive as a result of a rise in Value Added Tax approved by Parliament last Thursday, among the first batch of austerity measures demanded by Greece’s creditors.

The parliament also agreed to deep reforms in the pension system including a gradual phasing out of all early retirement options.

In a decree published Saturday, the Greek government kept the daily cash withdrawal limit at 60 euros ($65) but added a weekly limit. For example, a depositor who doesn’t withdraw cash on Monday can withdraw 120 euros ($130) on Tuesday, and so on, up to 420 euros ($455) a week.

Bank customers will still not be able to cash checks, only deposit them into their accounts, and will not be able to get cash abroad with their credit or cash cards, only make purchases. There are also restrictions on opening new accounts or activating dormant ones.

The decree also pushes back by a month, to August 26, the deadline for filing income tax returns.

The decree came on the same day as Greece’s coalition government swore in its new, reshuffled cabinet. Five prominent dissidents from the radical left Syriza party, the senior coalition party, were replaced. Four of them had voted against the agreement with Greece’s creditors Thursday and the fifth had resigned before the vote.

The most urgent business for the reshuffled government is to pass another batch of austerity measures by Wednesday or early Thursday.

Among the goods that Greeks will find more expensive Monday morning are some meats, coffee, tea, cooking oils other than olive oil, cocoa, vinegar, salt, flowers, firewood, fertilizer, insecticides, sanitary towels and condoms. All these will see the VAT rise from 13% to 23%.

Services whose VAT also goes up from 13% to 23% include restaurants and cafes, funeral parlours, taxis, cramming and tutorial schools – very popular with Greek students who want to make up for the deficiencies of the school system – language institutes and computer learning centres. Public transport fares are expected to rise early next month.

Greece closed its banks beginning June 29 to prevent a bank run after the European Central Bank did not increase emergency funding as Greece’s second bailout expired. After the Greek Parliament passed an agreement Thursday to seek a third bailout, the ECB raised its emergency funding to the cash-strapped Greek banks.

Also, on Friday, the European Union decided to release a short-term loan of 7.16 billion ($7.75 billion) to help Greece pay back a loan due Monday to the ECB plus arrears owed to the International Monetary Fund.

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