Bad checks hit 1.6 billion euros

The value of checks that bounced in the first half of the year hit 1.6 billion euros, more than triple 2008 levels, as businesses struggle to find cash in tight liquidity conditions that are likely to persist until the end of the year. Data from Tiresias, a nonprofit group jointly owned by Greek banks that provides credit profiles and other payment information, showed yesterday that 1.6 billion euros of checks were not honored between January and June, versus 511.1 million euros in the same period last year, representing an increase of 320 percent. The checks – mostly used among wholesale and retail traders for payment – that were not honored in June reached 338.3 million euros, representing an annual increase of 289 percent, according to Tiresias. Economists said a slowdown in bank lending and deteriorating economic conditions, which have led to lower turnover and profits for businesses, are contributing to growing cash-flow problems. «Liquidity conditions remains tight and this is shown in the higher number of bounced checks,» an economist from a leading Greek bank told Kathimerini English Edition. Data from the Bank of Greece show that credit expansion has been continuing to slow since last year but has yet to bottom out. Credit extended to businesses and households in April slowed to an annual 10.2 percent clip from 10.8 in the previous month. In April last year, it stood at 22.3 percent. «As the economy slows, conditions will remain difficult until the end of the year,» added the economist. «The figures are not that scary given the extent of the slowdown.» Greece’s 250-billion-euro economy is expected to shrink by 0.90 percent this year and enter its first recession in 15 years, according to the European Commission. The International Monetary Fund has said it expects Greece’s economy to shrink by about 2 percent in 2009 before starting to recover in 2010.