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article imageGreek banks reopen with restrictions as prices soar

By Nathan Salant     Jul 25, 2015 in World
Athens - Banks in Greece were open at week's end for the first time in July but at a steep price — limits on cash withdrawals and higher prices on nearly everything people buy.
Greece agreed to pay for that last week when the government in Athens acquiesced to budget cuts and higher taxes demanded by the country's creditors in the European Union and International Monetary Fund.
The cuts enabled Greece to borrow more than 6 billion euros ($6.5 billion) to keep current its bailout loans from the European Central Bank and IMF, according to the Associated Press.
Greece is unable to borrow on international financial markets and is dependent on bailout loans to fund its deficit-plagued economy.
Greece has so far needed 240 billion euros in bailout loans since 2010 and already is negotiating for another 85 billion euro bailout when that money runs out.
But far from the financial capitals of Brussels and Frankfurt, the Greek people face a range of new challenges as they try to keep their country solvent and remain a full-fledged member of the eurozone.
The country's value-added sales tax is going up from 13 to 23 percent and will raise the price of nearly everything, cuts in pensions are being negotiated and the Athens Stock Exchange remains shut down.
Central Athens kebab maker Dimitris Chronis said the higher taxes could force his 20-year-old shop out of business.
"I can't put up my prices because I'll have no customers at all," said Chronis, who blamed banking restrictions for an 80 percent drop in sales since the end of June.
"We used to deliver to offices nearby, but most of them have closed," he said.
"People would order a lot and buy food for their colleagues on special occasions," he said, "but that era is over."
IMF spokesman Gerry Rice said his institution, which was repaid billions of euros from the latest loan, would "continue assisting Greece in its efforts to return to financial stability and growth."
But that is a lot easier said than done.
While budget cuts have reduced its annual deficit, Greece's debt burden has risen to 180 percent of gross domestic product because its economy has contracted 25 percent, the AP said.
Additional creditor-favored regulatory proposals are now before Greece's parliament, including measures to strengthen banks and streamline legal proceedings, but they are expected to be approved without controversy.
More-controversial measures to eliminate early retirement and raise taxes on farmers will be coming up shortly and could threaten the survival of the left-wing government now in power.
The Syriza party government headed by Prime Minister Alexis Tsipras was elected in January on an anti-austerity platform, but the country's negotiations with European institutions haven't worked out exactly as well as planned.
"The government was obliged to make a tactical retreat to save the country," the country's new labor minister, Giorgos Katrougalos, said on Monday.
"This was the result of a soft, post-modern financial coup," he said.
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