The Greek government has reportedly accepted to discuss an additional package of measures worth 3.5bln Euros in the event its proposal to the Quartet to raise 5.4bln Euros through tax hikes fails to produce any results.

Following extensive contacts between Greece’s Finance Minister Euclid Tsakalotos and Economy Minister George Stathakis with IMF and EU officials in Washington, it is becoming apparent that the Greek side is considering to sign a ‘zero divergence clause’ agreement with its lenders that would essentially mean it is willing to implement an added 2.7-3.5bln Euros measures until 2018.

This means if the government fails to deliver on its fiscal targets through its proposed 5.4bln Euro measures to reach the agreed primary surplus with the Quartet, an automatic system of measures would ‘kick in’ to compensate for the fiscal gap. The Greek government is struggling to close the review of its rescue package to receive a disbursement by the EU in order to cover its debts that are due in summer.

According to sources, this ‘automatic compensation formula’ was tabled by Germany and was presented in the sidelines of the IMF-World Bank meeting in Washington. The Greek side confirmed that such a proposal existed, late Sunday and that it was open to discuss it, if it was accompanied by a promise that a debt relief would be included.

Sources say the proposal provides that the Greek government would be compelled to adopt the additional measures only if the primary surplus goal had not been reached in 2018. Given the possibility of an additional 3.5bln Euros on top of the agreed 5.4bln, the Greek people will called to pay a ‘bill’ totalling 8-9bln Euros! The Quartet is expected to return to Athens on Monday, April 18 with talks scheduled to resume Tuesday. The goal is to close the review until the April 22 Eurogroup of in an emergency session of the group on April 26.