Greece has revealed it is to introduce a surcharge for all cashpoint withdrawals and financial transactions in a desperate attempt to prevent citizens withdrawing their money from the country’s beleaguered banks.
Ministers hope the controversial move could raise as much as €180 million, which the Athens government hopes will help the country avoid defaulting on debts owed to international creditors.
As the Greek economy teeters on the verge of bankruptcy, millions of panicking citizens have completely cleared their accounts – pulling more than €28 billion out of banks and pushing the total cash revenue held in the country’s financial institutions to a 10-year low.
The controversial introduction of mandatory cashpoint charges still requires approval by the European Central Bank but is expected to amount to €1 for every €1,000 transaction.
While the measure is unlikely to impact on day-to-day withdrawals, Greece hopes it will deter citizens clearing out their bank accounts.
Clarifying that the charge will not apply to money paid in to a bank account, a senior finance ministry official told The Times: ‘The surcharge is just one of a grab-bag of measures we are considering if things get tough.’
The official added that Greece is also considering a ceiling on bank transfers over €1 million in what could fire the starting pistol for capital controls if Greece does go bust over the coming months.
The news comes as the EU upgraded its growth outlook for the eurozone on the back of cheaper oil and a weak currency – but a sudden worsening of Greece cast a pall over the brightening situation.
The improved Spring Forecast report said the eurozone would avoid much feared deflation as the 19-country area claws its way back to levels last seen before the global financial crisis.
Germany, Europe’s economic powerhouse, is expected to grow by 1.9 per cent in 2015, above the EU average, helped by domestic demand and an improving labour market.
France’s sluggish economy should expand by a much slower 1.1 percent but its budget deficit outlook has improved, making Paris less likely to face embarrassing penalties for breaking EU rules on public spending.
Even Italy and Portugal saw modest growth, while Ireland – which recently left an international bailout programme – had the fastest growing economy in the region.
Cyprus however is stuck in recession three years after its bailout and will not return to growth until next year, the Commission said.
But the gloomiest prognosis is for Greece, due to the drawn-out battle between the new leftist government of Prime Minister Alexis Tsipras and the debt-hit nation’s EU and IMF creditors.
With fears growing of a Greek exit form the euro, Greece’s economy slumped severely in the first three months of the year.
The Commission accordingly slashed its overall 2015 growth outlook to 0.5 per cent, a huge tumble from its earlier estimate of 2.5 percent.
It predicted Greece would rebound strongly with 2.5 per cent growth in 2016.
‘In light of the persistent uncertainty, a downward revision has been unavoidable’ Moscovici told a news conference ahead of a meeting with Greek Finance Minister Yanis Varoufakis.
The ‘meagre’ 2015 growth estimate is also on condition that Greece reaches a deal with its creditors by June on its bailout, added the EU’s Commissioner for the euro, Valdis Dombrovskis.
Greece’s debt, already the highest in the eurozone, would meanwhile soar to 180.2 percent of annual economic output this year, before falling slightly to 173.5 percent in 2016.
The Commission predicted that consumer prices will edge up by a minimal 0.1 percent in 2015, but then gain momentum to 1.5 percent in 2016, after the eurozone came out of deflation last month.
Deflation can be dangerous, risking a spiral of ever weaker demand, slowing the economy and pushing up unemployment.