Greece said today its banks will reopen after a three-week shutdown, as a revamped government took up the task of enacting unpopular fiscal reforms amid doubts over the viability of the country’s planned bailout. Scenes of desperate Greeks queueing for hours at ATMs in the sweltering heat looked set to end on Monday when the banks will again open their doors, the government announced after receiving a crucial short-term loan from the EU.
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But capital controls remain in place, including a block on capital transfers abroad which has hit businesses hard. Fresh-faced cabinet members were sworn today, after Prime Minister Alexis Tsipras reshuffled to fill the vacancies left by rebellious ministers who were axed for voting against the reforms demanded by international creditors.
Tsipras faced down a mutiny from his party in parliament last week, with over 30 of his 149 Syriza lawmakers refusing to approve the package of tax hikes, pension reform and privatisations demanded by lenders. The leftist premier had to move fast to get his house in order. Greece must approve a second batch of banking and justice-related reforms on Wednesday to qualify for the three-year bailout of up to 86 billion euros (USD 94 billion).
The 40-year-old decided not to replace the cabinet rebels with technocrats, sticking instead with members of his own coalition, including a TV soap opera comedian as junior labour minister — a decision which raised some eyebrows. Despite signing up to the agreement with creditors, Tsipras and other members of his government have publicly admitted they do not believe the draconian austerity reforms will benefit the debt-laden country with its soaring
Tsipras’s outspoken former finance minister Yanis Varoufakis has cast doubt on the government’s ability to enforce the unpopular reforms, telling the BBC that the “programme is going to fail whoever undertakes its implementation.” European leaders have said they expect negotiations on the country’s third bailout since 2010 to be fraught and take weeks to hammer out.
In a hint of how difficult they may be, German Finance Minister Wolfgang Schaeuble said in an interview today that he was prepared to resign rather than go against his convictions in negotiations on the Greek debt crisis. Some German officials have suggested it might be better for Greece to take a five-year “time-out” from the euro. And the International Monetary Fund has left a question mark over its participation in another rescue package, saying
it will not join unless there is “dramatic” debt relief to make the country’s finances more sustainable.
The three-week shutdown of Greek banks has cost the country’s struggling economy some 3.0 billion euros (USD 3.3 billion), the Kathimerini daily said today citing commerce groups.