Capital controls are eased but companies see it as insufficient

The government has proceeded to a further relaxation of capital controls regarding the international transactions of enterprises, as companies and market entities warn about the impact of restrictions on the country’s production structure.

With a new legislative act the government has expanded the daily limit of money that can be forwarded abroad per client from 100,000 euros to 150,000 euros, the cumulative limit per systemic bank from 3.4 million euros per day to 5 million (with a proportionate adjustment for smaller lenders) and the daily limit that banks committees can approve from 15 million euros to 22 million.

The new act also provides for the special Banking Transactions Approval Committee at the State General Accounting Office to grant some flexibility to bank committees so that they can create regional sub-committees according to their geographical dispersion and better serve the demands of their clients.

Market associations, however, warn that steps to ease capital controls are only on paper, adding that the increase in the limits is not sufficient to cover the needs of the corporations and the economy.

The Greek International Business Association (SEVE) noted in a letter sent to Alternate Finance Minister Dimitris Mardas that “the easing of capital controls, though generating expectations in the business community, are not put into practice, creating indignation among producing and exporting enterprises. For instance, banks delay indefinitely the approval even of the early ending of time deposits of corporations as provided by the legal framework.”

The SEVE letter adds that despite a sizeable reduction in imports in recent years, the country’s average monthly needs regarding imported goods in the last year-and-a-half has come to 3.9 billion euros. July, September and October are traditionally the months with the greater needs, reaching up to 4.5 billion euros.

Reports say that the daily amount banks have at their disposal for international money transfers comes to just 17 million euros in total. If that is correct, then it is not enough to cover even 10 percent of the total value of imported goods. Even if that changes in the coming days, the deficit compared to the real needs of the economy will be huge.