Exports hurt by capital controls

Since 29th June 2015, life in Greece operates under capital controls. As things stand, Greeks with debit/credit cards can withdraw €60 a day (in practice €50 as most cash machines have run out of €20s), can make online transfers within the country and can pay with their cards in shops that still accept them.

What does this all mean for businesses?
conteinerr-thumb-largeWhereas individuals may be able to survive off €60 a day, at least for a while, businesses cannot. One particular problem is that Greek businesses rely heavily on imports (especially of raw materials) which they can no longer access easily; this means that, for example, a lightbulb factory reliant on copper from Chile can only make lightbulbs as long as its existing inventory holds out. Exports also fall; Greek manufacturers have already had to cancel orders from buyers abroad and more will follow soon. Domestic suppliers have begun to insist on up-front cash payments (those that didn’t already, at least). This causes similar supply-chain problems; as drivers and petrol stations demand payment in cash, which isn’t readily available, delivery delays grow, occasionally leading fruit and vegetables to go off. Redundancies are already starting to happen as businesses slim down to counter losses.

Whereas some of the bigger businesses with bank accounts abroad or foreign income streams are able to circumvent some of these controls by using their foreign bank accounts to pay suppliers, most family-run businesses and smaller firms—the backbone of the Greek economy—are not so lucky. In theory, they can apply to a special bank committee that assesses applications; in practice this is proving wholly insufficient.

Therefore, it is more than necessary to unlock payments to foreign banks to support Greek exports with raw materials from abroad. Addionally, money transfers from international customers need to be marketed as secure to overcome a situation where foreign buyers of Greek products are receiving warnings from their banks that the money they forward to Greece for the payment of their Greek suppliers may be tied down and never reach the Greek enterprises.

Unless, urgent measures to support greek imports/exports regarding banking services are taken, greek exports will be limited to a level of no return and the respective, more than vital, money flows from abroad will drop dramatically.

There is no more time to lose. Do act!