Greece, creditors inch toward austerity agreement

ATHENS: Greece's finance minister were to meet again with international debt inspectors yesterday as they struggle to agree on the details of 13 .5 billion euros ($ 17.5 billion) in austerity measures for the next two years, a package essential for Greece to receive the next installment of its vital bailout funds.
The government hopes to finalize the deal before the European Union summit on Oct. 18 — although that was looking increasingly unlikely.
Yannis Stournaras has been meeting daily with the representatives of the European Commission, International Monetary Fund and European Central Bank, collectively known as the troika, and will hold yet more talks Friday evening.
"We think that an agreement could be close," Simon O'Connor, spokesman for the EU's financial and monetary affairs commissioner, Olli Rehn, said in Brussels.
The two sides have been locked in talks since late August over the package.
Greece has survived on two international bailouts since May 2010, after losing access to international money markets following years of profligate spending. But to secure the rescue loans, the government had to overhaul its economy, introducing harsh austerity measures that have included slashing pensions and salaries and repeatedly increasing taxes.
The new austerity package will be front-loaded, with the majority of measures to be applied next year. According to a preliminary draft of the 2013 budget, 7.8 billion euros of the cuts and tax hikes were to apply next year, and the remainder in 2014. But a senior government official said Thursday night that the troika was insisting on 9 billion euros being applied in 2013.
Greece has been seeking an extra two years to implement measures it promised in exchange for its second bailout, which was agreed on earlier this year and is to run to 2014. The extension would create a financing gap of about 12 billion euros, but the Greek government has insisted it would find that on its own.
The financial crisis and the austerity measures imposed to reform the economy have left the country struggling through a deep recession, projected to extend into a sixth year in 2013. Unemployment has reached record levels, topping 25 percent in July.
In the worsening financial climate, two of Greece's largest companies have announced they are pulling out of the country.
Coca Cola Hellenic, the second largest Coke bottler in the world in terms of volume and the largest company quoted on the Athens Stock Exchange, announced this week it would move to Switzerland and seek a premium listing on the London Stock Exchange.
The company, which has operations in 28 countries, said the move would have "no impact on Coca-Cola Hellenic's business, strategy and operations."
Earlier this month, major Greek dairy products company FAGE announced it was transferring its headquarters to Luxembourg. The family-run company exports its products to 29 countries.
The decisions by the two companies "are limited precedents for other euro zone corporates for now, despite incentives to reduce share price discounts or protect against the risk of a full-blown sovereign crisis," the Fitch ratings agency said yesterday.