October 11, 2012 / 7:16 PM / 7 years ago

UPDATE 1-Greece's biggest firm leaves, jobless rate soars

* German economic experts urge new debt restructuring

* Greece’s biggest company CCH quits for Switzerland

* IMF backs giving Athens two more years to meet debt target

By Harry Papachristou and Lefteris Papadimas

ATHENS, Oct 11 (Reuters) - Greece said its jobless rate had topped 25 percent and its biggest company announced on Thursday it would quit the country, in a fresh blow to an economy German experts warned cannot be “saved” without writing off more debt.

The announcement by drinks bottler Coca Cola Hellenic (CCH) that it was switching its primary listing from Athens to London and moving its corporate base to stable, low-tax Switzerland is a bitter blow to the debt-crippled nation.

The firm, which bottles Coke and other drinks in 28 countries from Russia to Nigeria, is Greece’s biggest by market value and is 23 percent owned by The Coca-Cola Co of the United States. It said its Greek plants would be unaffected.

CCH’s announcement coincided with data that showed Greek unemployment climbing for a 35th consecutive month in July to 25.1 percent from a revised 24.8 percent in June. The jobless rate has more than tripled since the country’s now five-year-old recession began.

Fifty-four percent of Greeks aged 15-24 years are out of work, fuelling violent protests against the tax hikes, spending cuts and public sector job losses demanded by the European Union and International Monetary Fund in exchange for more than 200 billion euros ($258.03 billion) in loans since 2010.

Greece is still far off target.

IMF chief Christine Lagarde, speaking in Tokyo, backed calls to give the country two more years to meet its budget deficit reduction targets..

Greek officials said such an extension would require an extra 11.5-12 billion euros in funding, and that even more money might be required because of slippage in the privatisation process and the deeper-than-expected recession.

The IMF is also pressing official lenders such as euro zone paymaster Germany to take a “haircut” on their Greek debt similar to that swallowed by private bondholders this year.

With elections in 2013, Berlin is resisting, but Germany’s leading economic institutes warned on Thursday that without further debt restructuring the Greek economy would not make it.

“Yes, we don’t think Greece can be saved,” Joachim Scheide, head of forecasting at the Kiel-based IfW institute, said when asked whether investors in Greek debt would have to accept another haircut.

“We need a restructuring of Greek debt. That would help Greece best,” he said.


German Chancellor Angela Merkel, who was greeted with angry protests on Tuesday on her first visit to Greece since the debt crisis erupted, opposes any further restructuring, at least until after Germans vote next September.

Her visit came with the Greek government locked in talks with its “troika” of international lenders on more austerity measures to secure a next tranche of loans worth just over 31 billion euros. Without further aid, Athens says it will run out of money by the end of next month.

The sides are trying to strike a deal by Oct. 18, when EU leaders are due to meet.

“We are close to a deal,” a finance ministry official, speaking on condition of anonymity, said after a meeting between troika officials and Finance Minister Yannis Stournaras.

“We hope to have a deal by the EU summit,” the official added, though it would still then have to pass parliament.

Data released by the finance ministry showed Greece had narrowed its central government budget deficit by 37 percent in the first nine months of the year.

But the figures did not include spending on local municipalities and social security - the areas of most concern for the troika, which comprises the IMF, the European Union’s executive Commission and the European Central Bank.

Even after steep tax hikes, net government revenue stagnated at 36.7 billion euros, 1.3 billion euros short of an interim target set under the bailout plan.

Private businesses say the tax hikes are suffocating them. Coca Cola Hellenic had complained about the tax measures.

Its Greek operations, which account for five percent of its bottling business, will be unaffected, but the move was bad news for a nation struggling to compete inside the euro zone.

Chief executive Dimitris Lois said the decision to switch the company’s primary listing to London and its corporate base to Switzerland made “clear business sense”.

It follows Greek dairy group FAGE’s relocation to Luxembourg this month. “This is a healthy company that does not want to suffer from Greece’s high country risk,” said an analyst, who spoke on condition of anonymity.

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