Saturday August 2, 2014 Search
Weather | Athens
31o C
24o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
General payments freeze takes hold

By Vassilis Ziras

Political uncertainty and fears of a Greek eurozone exit that have recently come on top of the protracted recession and choking lack of liquidity seem to have accelerated the downturn in the real economy, which is near crash condition.

Together the rise of the black economy and the freeze in payments, the clearest sign of disintegration is in public revenue collection. After showing a timid rise in the beginning of May, it nosedived right after the May 6 elections. By May 20 the fall was in the order of 20 percent, with taxpayers putting off paying dues and the practice of discounts for not issuing a receipt spreading even to the catering sector.

The government, meanwhile, facing the threat of a delay in the disbursement of bailout installments from the troika, has suspended rebates and payments to suppliers of the public sector.

The effects of this mutual suspension of payments between private and public sector are further exacerbated by two factors:

First, the inability of banks to maintain a satisfactory level of liquidity in the economy. Loans have been cut off even to businesses with a sound financial base. Since the beginning of the crisis, deposits have been reduced by about 70 billion euros, while withdrawals have accelerated since the May 6 election. Bank officials estimate the drain in the last 20 days at about 2.5 billion euros. Loans to households and enterprises have fallen by about 11 billion euros in the last two years.

Second, the suspension of credit between businesses, which prefer not to sell at all instead of selling on credit and post-dated checks that may never be paid. This is indicated by the decline in the number of bouncing checks, which is due to anything but brisk business. A recent survey by business consultants ICAP showed that for 74 percent of businesses the priority is not an increase in sales but a reduction in bad credit and the protection of their viability.

The prevailing uncertainty about the economic future of the country has also caused a partial black-out in transactions with foreign firms, some of which have begun suspending payments over fears that either that they will lose their money or that Greek products and services will soon cost less, being denominated in drachmas. For instance, Italian tour operator Veratour notified Greek partner hoteliers on Thursday that, we shall not be able to make further down payments, at least until the situation in the country becomes a little clearer and stabler we have to take some time to evaluate likely future scenarios concerning your country.

Foreign suppliers are refusing to send merchandise to Greece if they are not paid cash or without letters of guarantee from foreign banks -- as those from Greek banks are not accepted.

Credit is not refused just by foreign firms but also by European institutions. The European Investment Bank (EIB) demanded a change-in-currency clause in its loan contracts with Greek enterprises, such as the Public Power Corporation (PPC). The demand created an uproar and was dropped but EIB seems to be withholding disbursement on various pretexts until the situation becomes clearer.

ekathimerini.com , Sunday May 27, 2012 (23:05)  
Greek PMI drops to nine-month low in July
Property tax surplus may lead to more installments or cuts
Athens-Patra in just two hours
Plans to tackle Russian crisis
Libya evacuees set to reach Piraeus on Saturday
A Greek frigate carrying 186 people evacuated from conflict-ridden Libya is expected to reach the port of Piraeus early Saturday, the Greek Defense Ministry said. The evacuation operation to...
Coast guard seeks boost in Aegean
Efforts to boost the number of coast guard officers serving on Aegean islands where authorities have to deal with large numbers of undocumented migrants who are smuggled by traffickers from ...
Inside News
SOCCER
One win and one loss in Europa League
Greece had a hit and a miss in the first-leg games for the third qualifying round of the Europa League on Thursday, as Atromitos scored a 2-1 win at Sarajevo while Asteras Tripolis lost 1-0 ...
SOCCER
Goalless draw at Liege puts Greens in driving seat
Panathinaikos got the upper hand in the battle for entry to the Champions League playoffs after snatching a goalless draw at Standard Liege on Wednesday. If anything, the Greek cup holders m...
Inside Sports
COMMENTARY
In trying to conquer, Putin unites Europe
President Vladimir Putin is obliged to feign indifference to the sanctions that the European Union and the United States imposed on Russia this week. But, being the player that he is, he mus...
EDITORIAL
Our own worst enemies
A new study has come to exemplify the cliche notion that Greeks find it easier to excel abroad, where they fare much better than they do at home. According to research by epidemiologist John...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
RECENT NEWS
1. Greek PMI drops to nine-month low in July
2. Property tax surplus may lead to more installments or cuts
3. Athens-Patra in just two hours
4. Plans to tackle Russian crisis
5. Fifth straight day of losses on Greek bourse
6. Libya evacuees set to reach Piraeus on Saturday
more news
Today
This Week
1. Greece evacuates embassy staff, foreign nationals from Libya
2. Greek exporters worried about impact of Russia sanctions
3. Greek bond yields dip as investors anticipate ratings upgrade
4. Britons stranded at sea off Zakynthos towed to safety
5. Human rights watchdog criticizes decision to file Farmakonisi case
6. Jean-Claude Juncker to make first official visit to Athens on Monday
Today
This Week
1. Wine cup used by Pericles found in grave north of Athens
2. Defense Minister Avramopoulos to represent Greece at European Commission
3. Worlds largest solar boat on Greek mission
4. What lessons can we draw from antiquity?
5. Greece names fifth privatization agency chief in four years
6. Greek coast guard picks up 77 migrants off Myconos
Find us ...
... on
Twitter
... on Facebook
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright 2014, H KAΘHMEPINH All Rights Reserved.