GREEK CRISIS

Greece eases capital controls

The cash-strapped European nation has begun relaxing restrictions on foreign money transfers, giving some much-needed relief to companies that do business abroad and unblocking imports.

The Greek government on Friday partially loosened the capital controls it introduced last month to stave off a financial meltdown.

Yannis Stournaras, head of the country's central bank, said the Greece's commercial banks could now authorize bill payments to other countries of up to 100,000 euros ($110,000), up from 50,000 euros.

"In the next ten days, we will resolve the problems created" by the capital controls, Stournaras said after meeting with employers' representatives and finance ministry officials, according to a statement.

Greek businesses have been hit by limits on transferring money abroad to pay for imports of raw material and other items since capital controls started on June 29, and have had to apply to a special committee for permission to pay their foreign suppliers, a time-consuming process.

However, Stournaras said conditions for businesses were improving and authorities aimed to resolve pending issues in the next 10 days.

Greece agrees to reform banking sector

Committees to authorize companies' payments to other countries will also be created in all of the banks to speed up approvals by the central government commission, Stournaras added.

'A positive move'

"The lifting of the ceiling to 100,000 euros covers 70 percent of demands from professionals," Vassilis Korkidis, president of the Greek Merchants' Federation (ESEE), told the news agency AFP. "It came into force today. It's a positive move; we'll be able to see the effects of it next week."

The banks' three-weeks-long shutdown is estimated to have cost Greek businesses 3 billion euros, said the head of Athens Chamber of Commerce and Industry Constantinos Michalos, with many firms warning of closures as a result of the capital curbs.

Greece reopened its banks on July 20 after it secured a 7.2 billion euro bridge loan to pay its debt obligations. Athens also enacted tough reforms demanded by its international lenders to start negotiations on a third bailout potentially worth up to 86 billion euros.

However, talks on a new bailout deal - scheduled to begin on Friday in Athens - failed to start, with officials blaming security worries for delaying the negotiations with creditors who are detested by many Greeks.

"There are some logistical issues to solve, notably security-wise," a European Commission official said. "Several options are on the table," the official noted, without giving more details.

sri/cjc (AFP, Reuters)