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Greece 'threatens' early elections if reforms rejected

Greece's finance minister has raised the temperature in Europe yet again as he warned that his country could face a referendum or early elections if its reform plans are rejected.

In an interview with Italian newspaper Il Corriere della Sera Sunday, Greek Finance Minister Yanis Varoufakis said that if Brussels rejects its reform proposals, "there could be problems."

"As my prime minister has said, we are not yet glued to our chairs. We can return to elections, call a referendum."

Louisa Gouliamaki | AFP | Getty Images

In a statement released later on Sunday reported by Reuters, the Greek Finance Ministry said Varoufakis was responding to a hypothetical question and that any referendum would "obviously regard the content of reforms and fiscal policy" and not whether to stay in the euro, as Corriere della Sera had suggested.

The comments come ahead of a meeting of euro country finance ministers – where discussions are expected to center on Greece's new action plan to reform its economy and the way it does business.

Read MoreGreece lashes out aspressure to reform rises

Late last month, Greece was granted a four-month extension on its bailout agreement. In return for the deal, which Athens desperately needed to pay its way, the government rolled back on its previous tough anti-austerity stance and pledged to present a series of reforms – including measures to cut down on corruption, tax evasion and change labor laws.

These plans have already made headlines for all the wrong reasons in the last few days, however. On Friday, it was reported that Varoufakis had sent the head of the Eurogroup, Jeroen Djiselbloem, a letter in which he proposed to hire tourists to work as undercover tax inspectors.

Although such a proposal is likely to be met with scepticism in Europe, it demonstrates Greece's efforts to placate its international lenders.

One analyst told CNBC Monday that while Greece was trying to appease lenders, the euro zone was content to let Greece sweat a little before approving its reform plans.

Read MoreIs Greece alreadyrolling back on its pledges?

"The new Greek government is realizing that it has to shift somewhat and is coming up with ideas." Michael Gallagher, director of research at IDEAGlobal, told CNBC Monday.

"But it suits the Europeans to haul the Greeks over the coals because countries like Spain don't want parties like Podemos (a left-wing, anti-austerity party like Syriza) top gain from the politicking in Greece and they don't want this to be the first of a wave of new left-wing governments (in Europe)."

Time's running out

Greece is in dire need of a last tranche of aid to continue paying back its bailout loans. On Friday, Greece repaid the first 310 million euro installment of a loan from the IMF but it has more installments to pay in March, Reuters reported Friday.

Greece's desperation for funds puts it in a weaker position with Europe now, analysts at Daiwa Capital Markets said in a note Friday, meaning Varoufakis' latest remarks about a referendum or elections a risky move.

Read MoreWhy the drachmacan't save Greece: Goldman

"Given the new-found sense of urgency, the Greek government will want to appear fully committed to pushing through the promised structural reforms quickly, and Varoufakis might (finally) adopt a conciliatory negotiating position."

"But judging by (last) week's working-level discussions in Brussels of the latest Greek reform proposals, the country doesn't seem close to qualifying for its first cash disbursement from its euro area creditors yet."

As such, Daiwa believed Greece would have to resort to greater use of emergency liquidity assistance (ELA) and that public sector entities' bank deposits "may remain the main stop-gap for the cash-strapped government for weeks to come."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld