Greek banks have finally reopened after three weeks of chaos, but a new era of austerity has also begun in the country, with new taxes meaning many goods and services are more expensive — from coffee to funeral homes to cooking oil.
In downtown Athens, people queued up in an orderly fashion as the banks unlocked their doors at 8am. Restrictions on most transactions remain, though the daily cash withdrawal limit has moved to a weekly one of 420 euros ($455).
Higher prices also took effect across the country, with sales taxes rising from 13 percent to 23 percent on many basic goods — including some meats, cooking oils, coffee, tea, cocoa, vinegar, salt, flowers, firewood, fertilizer, insecticides, sanitary towels, and condoms.
Popular services were also hit by the new taxes: restaurants and cafes, funeral homes, taxis, ferries, cram schools, and language schools.
It's working, VAT up to 23%, yesterday cappuccino 1,80€, today 1,90€ in — Susanna Turunen (@TurunenSusanna)July 20, 2015
The country's stock market remains closed.
After months of negotiations with creditors, and a dramatic referendum in which citizens rejected austerity, Greece was eventually forced to accept demands to impose pension cuts and sales tax hikes.
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Louka Katseli, head of the Greek Banking Association, said she felt it is too early to say how long the cash controls will last.
"I totally understand people who are anxious. But acting with fear produces the circumstances that people are afraid of," she told state-run ERT television. "Since 2008, 124 billion euros in deposits has been withdrawn, and 40 billion of that money has been removed in the last few months. If that had not been removed, the Greek banks would not have had a liquidity problem."
Greece's left-wing Syriza-led government is racing to finalize a new bailout agreement with creditors and faces another vote in parliament this Wednesday to impose more austerity measures.
VAT on basic foodstuffs2005: 8%2006: 9%2010: 11%2011: 13%2015: 23%Sharing the burden fairly & proportionately. — Theodora Oikonomides (@IrateGreek)July 20, 2015
Amid the pressure, Prime Minister Alexis Tsipras is struggling to contain a growing revolt in his Syriza party, as observers suggest that a snap election may be called within the next few months.
Cabinet-level dissenters were replaced in a reshuffle on Friday, but even their replacements have angrily denounced the new austerity measures.
"The government was obliged to make a tactical retreat to save the country," new Labor Minister Giorgos Katrougalos said on Monday. "This was the result of a soft, post-modern financial coup that was handled by the prime minister in a responsible way."
Meanwhile, economist and Nobel laureate Paul Krugman told CNN that he felt he may have "overestimated the competence of the Greek government."
"It didn't even occur to me that they would be prepared to make a stand without having done any contingency planning… amazingly, they thought they could simply demand better terms without having any backup plan," he said. "So certainly this is a shock."
The spending cuts and new taxes are likely to add at least two more years to Greece's punishing six-year recession, and have triggered a new round of strikes and street protests.
Since Greece has a big loan payment due Monday to the ECB, plus arrears owed to the International Monetary Fund, the European Union decided Friday to release a short-term loan of 7.16 billion euros to help Greece make those payments.
The money is part of a third bailout for Greece over which negotiations are expected to last several weeks.
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The Associated Press contributed to this report.