Capital Controls in Greece Could End This Autumn

FILE - People line up at an ATM outside a Piraeus bank branch in Athens, Monday, June 29, 2015. (AP Photo/Thanassis Stavrakis)

ATHENS – Four years after they were imposed by the then-ruling Radical Left SYRIZA, capital controls in Greece – which were being gradually eased – should be fully lifted by September or October, the Bank of Greece said.

That was the recommendation to the new New Democracy government of Prime Minister Kyriakos Mitsotakis and would end a long run during which most people had limits on how much they could withdraw from their accounts and saw international transfers banned for a time to prevent a run on the banks.

They were put in place during the tumultuous summer of 2015 when the then six-month old SYRIZA administration was under crushing pressure, facing the shut off emergency liquidity from the European Central Bank (ECB) unless then-Premier Alexis Tsipras agreed to austerity measures as part of a third bailout, this one for 86 billion euros ($95.49 billion.)

He had to renege on promises to reject the conditions and had threatened to take Greece out of the Eurozone before conceding to the country’s creditors, the Troika of the European Union-ECB-European Stability Mechanism.

“The central bank of Greece has recommended to the government the full lifting of capital controls,” a senior official with knowledge of the matter told Reuters. “I anticipate that this will be done in the first two months of autumn.”

Mitsotakis has been eager to lure back foreign investors scared off by a 29 percent corporate rate set under SYRIZA, which he has promised to cut to 29 percent over two years and bring Greece back to the markets almost a year after 326 billion euros ($361.99 billion) in three rescue packages.

After hard core element in SYRIZA also tried to keep out foreign businesses, Mitsotakis wants to make Greece friendly to investors and the full lifting of capital controls will make The limit on cash withdrawals was fully lifted in October 2018, but restrictions on moving money abroad have remained, making it difficult to do international business. A business must seek permission to transfer more than 100,000 euros ($111,039) a day and individuals are limited to 4,000 euros ($4441.56.)

The Greek central bank is conducting an impact assessment study of the impact of the end of the controls to send to the government and lenders, leaving it up to New Democracy whether to follow the recommendation to do that.