Eurogroup's Juncker Warns of Possible Greek Default

The possibility of a sovereign default by Greece cannot be ruled out, Jean-Claude Juncker, head of the Eurogroup of finance ministers from the single currency zone, said in a German magazine on Saturday.

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In an advance copy of comments to news weekly Der Spiegel, Juncker was quoted as saying Greece could no longer expect solidarity from other euro zone members if it cannot implement reforms it has agreed.

“If we were to establish that everything has gone wrong in Greece, there would be no new program, and that would mean that in March they have to declare bankruptcy,” he said.

The very possibility of bankruptcy should encourage Athens to “get muscles” when it comes to implementing reforms, he added.

Greece's government on Saturday continued talks with lenders to secure a 130 billion euro ($171 billion) bailout before turning to the trickier task of persuading political leaders to back unpopular reforms involved in the rescue.

On the brink of bankruptcy, Greece must wrap up talks with foreign lenders on the bailout and quickly get political approval to ensure funds begin flowing in time for it to pay back 14.5 billion ($19 billion) euros of bonds falling due in mid-March.

But negotiations with its “troika” of international lenders have stumbled over their demands that include cutting labour costs by axing holiday bonuses and lowering the minimum wage — proposals strongly opposed by Greek political party leaders.

In his comments in Der Spiegel, Juncker cited a promised privatization drive and the struggle against rampant corruption in state administration as two areas that needed particular attention.