Luxembourg prime minister Jean-Claude Juncker, who chairs the Eurogroup of euro zone finance ministers, told Greek newspaper Eleftherotypia that the government in Athens should adopt further measures to reduce public deficit or face sanctions, Reuters said.

Greece's budget deficit rose to 12.7 per cent of gross domestic product (GDP) in 2009, well above the three per cent figure mandated by euro zone rules. The socialist government of George Papandreou has drafted a proposal to cut the deficit to within three per cent by 2012 and has to present detailed plans to do so by March 16 amid continued skepticism whether it would be, in fact, able to stick to its plans.

"Greece must intensify its efforts and move to further actions to reduce its deficit. If it doesn't convince us then it will possibly face sanctions. Greece must understand that the taxpayers in Germany, Belgium or Luxembourg are not ready to fix the mistakes of Greece's fiscal policy," Juncker was quoted as saying.

"Euro zone finance ministers have agreed that more efforts are required from Greece."

Papandreou is scheduled to meet with German chancellor Angela Merkel on March 5, hoping to persuade the euro zone's largest economy to participate in an immediate rescue effort – Greece plans to issue bonds in excess of 20 billion euro in March to cover maturing debt over the coming months.

His task has been made all the more difficult by the spats between the media in the two countries. A magazine cover in Germany on February 22, which portrayed Greece as the "betrayer in the euro family" has prompted retaliation in Greece, dredging up the contentious issue of World War 2 reparations.