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Greece Minister: Failure to Meet Bailout Terms Not Our Fault

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As Greece looks set to miss a key reform deadline set by international lenders, which could jeopardize further financial aid, a Greek government minister said it wasn't Greece's fault that it couldn't live up to the demands of a flawed bailout program.

"There are failures [by Greece],but you assume that the program that has been effectively imposed on us is perfect, which is far from the case," Nikos Dendias, minister of Public Order and Citizen Protection, told CNBC on Thursday.

His comments come after Greek finance ministry officials said on Wednesday that Greece would not meet targets on reforming its public sector by the deadline set by international lenders, putting further financial aid in jeopardy.

(Read More: Trouble Brewing: Greek Tragedy Mark Two?)

The "troika" of lenders - the European Union, European Central bank and International Monetary Fund (IMF) threatened to hold back a further 8.1 billion euros ($10.5 billion) of aid unless it meets its bailout obligations by Monday, when euro zone finance ministers meet.

Dendias told CNBC Europe's "Squawk Box" that the bailout program had been criticized by the IMF and governments around the world and that Greece was doing its best.

(Read More: Greek Minister Hints at Further Debt Relief)

"The plan is hardly our fault. We're co-responsible in a sense [for Greek debt levels before the bailout] but I'm sure that the European institutions saw a bubble being created in Greece and nobody really warned us about being more careful. I'm not saying we're not at fault, but there are others at fault."

"I see Europe as a family and as European friends and partners, so it's everybody's fault. But the main question is how we go forward, not to start a blame game…We will do better in the future I am confident about that," he added.

(Read More: From Developed Back to Emerging: Greece's Full Circle)

European officials signaled this week however that they might not be willing to give Greece more time to meet its reform goals, such as reducing the number of public sector staff or increasing taxes. It has already been accused of delaying unpopular cuts and of reversing others - such as the spending cuts to the state TV broadcaster.

A senior euro zone official told Reuters that lenders may freeze emergency aid for three months and the German Foreign Minister Guido Westerwelle ruled out granting the country a second round of debt relief.

Greek news agency Kathimerini reported that Greek Prime minister Antonis Samaras will meet with troika officials this afternoon.

On Thursday morning, Greek ten-year bond yields traded at 11.64 percent, up from 11.59 percent at the close on Wednesday, while the Athens Stock Exchange was trading up 1.2 percent.

Economists said there was no appetite in Europe to let Greece go under, just yet, given Germany's national elections in September.

(Read More: Why the EuroZone Crisis is Over…UntilSeptember)

"Clearly, the German government will want to be in denial about the likelihood of debt relief until after the elections. Only then are we likely to see a more honest debate about the options," Chris Scicluna, economist at Daiwa Capital Markets, told CNBC on Thursday.

"But it was always clear, under the current bailout, that the euro area had made a commitment to the IMF that it would ensure that Greece's debt stock is ultimately sustainable. So, debt relief has to be back on the table in due course."

He said a "short-term fudge" would be found "to allow this all to be resolved (with official sector debt relief) after the German elections."

Raoul Ruparel, head of economic research at think tank Open Europe told CNBC that the situation boils down to whether the IMF and EU are willing to ease targets once again. "And I think they may roll over and ease them."

(Read More: Greece Aid Suspension Talk 'Premature': Senior IMF Official)

"We've got German elections coming up in September and no one wants to have that talk of how we're going to fund Greece for the next three or four years. So they just want to kick the can down the road until after the elections," he added. "They will come to some agreement but it's clear that Greece is well behind track on its program once again and it's only a matter of time before a new funding gap opens there."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt

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