MercoPress. South Atlantic News Agency

Greece admits it is closer to be forced out of the Euro zone

In mid January negotiations for a second bail out are scheduled to begin

Greece faces an exit from Europe's common currency block unless it clinches a deal on a second 130 billion Euro bailout with its international lenders, a government spokesman said on Tuesday.

“The bailout agreement needs to be signed otherwise we will be out of the markets, out of the Euro,” Pantelis Kapsis told Skai TV. “The situation will be much worse.”

EU, IMF and ECB inspectors are expected in Athens mid-January to flesh out the new bailout plan agreed in principle by EU leaders in October.

Greece needs to push ahead with a series of unpopular reforms to pensions, privatisations and the labour market in the next couple of weeks otherwise talks with the “troika” of EU, IMF and ECB inspectors could run into trouble.

Debt-saddled Greece, which joined the Euro in 2001, is also in difficult talks with bankers on a debt swap deal that is a key aspect of the rescue plan. It needs the bailout to stay afloat and could default if there is no agreement with private bondholders before March.

“The next three to fourth months are the most crucial and that is the reason this government exists,” Kapsis said.

Prime Minister Lucas Papademos said in a New Year's Eve address over the weekend that Greece must stick to reforms to stay in the Euro.