Fight for cash heats up as Greeks struggle to pay for imports

With the nation running out of money, drug and food companies are ramping up pressure to loosen capital controls for their goods. They’ve appealed to Bank of Greece Governor Yannis Stournaras and government ministers to press the case.

Greece needs to make sure that “at least these two sectors will find solutions,” said Constantine Michalos, president of the Athens Chamber of Commerce, who estimates the country has only about 500 million euros ($555 million) in cash reserves left in its banks. That wouldn’t have covered last weekend’s ATM withdrawals.

Greece shut banks and limited withdrawals on June 29, following the collapse of talks with creditors and the decision of the European Central Bank to freeze its lifeline to Greek lenders. Payments and transfers were banned. Companies seeking to pay foreign suppliers need to apply to the Committee to Approve Bank Transactions. If approved, set-asides for food and drugs would only amplify cash shortages for everyone else.

A Bank of Greece spokesman wasn’t immediately available for comment.

The Panhellenic Exporters Association estimates imports could fall by 600 million euros a week if banks don’t reopen, while the loss of exports is estimated at 80 million euros.

“If capital controls are not lifted, this will be the main challenge,” said Nikos Archontis, chief operating officer for the Panhellenic Exporters Association in Athens.

Greece’s main imports were fuel, cars, electronics, pharmaceuticals, meat, dairy and other foods.

It’s not just foreign transactions, said Natalia Toubanaki, spokeswoman for the Hellenic Association of Pharmaceutical Companies. Their domestic commerce is hindered too because checks can’t be processed, she said.

“They need to help us out,” said Toubanaki, adding her organization is also lobbying the government to open up bank branches for businesses to make domestic transactions.

[Bloomberg]