Two-and-a-half months after Greece’s banks were forced to shut down, with the special three-week holiday and the imposition of capital controls, conditions in the credit market have more or less reverted to normality. However, problems remain as far as the operation of enterprises is concerned, especially small and medium-sized businesses.
Although the Bank of Greece, in cooperation with the commercial lenders, has in recent weeks relaxed the capital controls to make doing business easier and allow for the timely processing of transactions, the situation is still a long way from ideal.
Due to the increased country risk, enterprises in Greece are usually required to pay up front for merchandise before it is sent from abroad, while corporations are trying to deal with the resulting cost increase by raising the level of orders. The capital controls have also resulted in delays in the approval and processing of transactions, in some cases to such an extent that companies have had their own orders canceled, generating not only economic losses but also staining corporate reputations.
According to Theodoros Kalantonis, deputy chief executive officer at Eurobank, the impact of the capital controls has been “greater for small and medium-sized enterprises, which do not have the necessary liquidity or spacious storage facilities. Therefore, they are forced to resort to more frequent imports of smaller quantities of merchandise, often at higher prices.”
Data compiled by the Banking Transaction Approval Committee for the period from June 29 to August 18 showed that international transactions worth 2.97 billion euros were approved. That concerned 725 million euros in the interbank market, 702 million euros for energy, 296 million euros for food and 152 million euros on pharmaceutical products, while the remaining 1.1 billion euros concerned other sectors, such as expenditure by airlines and shipping companies, raw material imports, cars, apparel, tobacco products, toys and books, among others.
In total there were 10,331 applications for transaction approvals, of which 8,509 were approved, 332 were rejected, 373 were revoked and 579 require further processing.