Athens - Greece risks bankruptcy unless strict austerity measures are implemented, Prime Minister George Papandreou said on Friday, while reports said the EU wants even more belt-tightening.
"The dilemma is - are we going to let this country go bankrupt or are we going to react?" Papandreou told lawmakers in Athens.
"If our country goes bankrupt, if it can no longer borrow, the first victim would be the most underprivileged," he said.
"We have an obligation to the Greek people to do everything we can now, today, to face immediate dangers because tomorrow will be too late."
Papandreou also emphasised that "no other country will pay our debts" amid speculation of possible emergency financing from the European Union.
His comments came after reports that Greece had to delay a bond issue this week because of financial market turbulence and that some major German banks said they would no longer buy Greek bonds owing to increased risks.
Greece has the highest public deficit in the eurozone and its fiscal crisis has dragged down the value of the euro and raised fears on Europe's economy.
Analysts at Wall Street giant Goldman Sachs said in a note that Greece faced "imminent refinancing challenges" and possible "liquidity shortages.">
Greece has so far this year raised some €14bn out of an estimated €55bn in financing needs, the analysts said. The country also has €20bn in debt service payments due in April and May.
"Our view for some time now has been that the government will be hard-pressed to push through this financing hump with only commercial or internal sources of funding," the bank said.
"Some external assistance may therefore ultimately be required, likely in the form of bilateral aid or loan guarantees from individual member states."
Christoph Weil, an economist at Germany's Commerzbank in Frankfurt, said: "The focus is on the question whether Greece will find any buyers at all for the bonds it will have to issue to prevent default by April at the latest."
Papandreou said earlier that Greece's borrowing needs are covered only until mid-March and has called for the EU to intervene to lower the rate at which Greece can raise funds to a level comparable to its eurozone partner.
The yield, or interest rate, that Greece must pay in order to sell its debt on bond markets has risen sharply in recent months because of a perceived risk of default and is now more than twice as high as Germany's.
The yield on Greece's 10-year bonds, however, dipped to 6.605% on Friday afternoon from 6.640% late on Thursday - still high compared to 3.113% for the equivalent German bonds.
Financial markets have become wary of Greek bonds since the country raised its 2009 public deficit estimate to 12.7% of output from 3.7% initially, highlighting disastrous finances and unreliable book-keeping.
The government has since unveiled a series of austerity measures including new taxes, public sector benefit cuts and hiring freezes to save in order to shave off four percentage points from the deficit this year.
But the European Union is now pressing for even tougher action in the Greek programme, Dow Jones Newswires reported, citing a senior Greek official.
"They are telling us the current measures will only cut two percentage points. They are pushing very hard for another package of around €4bn," the government official was quoted as saying on Friday.
Heightening investor fears, Moody's and Standard & Poor's have warned of possible further downgrades of Greece's credit rating, a move that could leave government bonds at a speculative level and roil financial markets.
Luxembourg Finance Minister Luc Frieden meanwhile said in an interview published on Friday that fellow eurozone states would have to step up to aid Greece if necessary in the interests of European cohesion.
"We don't have any other choice. Europe is a community of solidarity," Frieden told the German business daily Handelsblatt. "We are not going to allow Greece to become a risk for the eurozone," he said.