Greece could be forced out of the euro if negotiations fail, admits IMF's Christine Lagarde

The Greek government says it wants to reach a deal by Sunday

(AP)

Greece could leave the euro if negotiations over the country’s sovereign debts do not go to plan, the head of the International Monetary fund has acknowledged.

Speaking to the German media Christine Lagarde insisted that a so-called ‘Grexit’ would not mean the end of the European single currency.

“It’s a potential,” Ms Lagarde told the newspaper Frankfurter Allgemeine Zeitung, referring Greek exit from the single currency.

She added that it was "very unlikely that we will reach a comprehensive solution in the next few days” and that she had no wish for a Grexit to take place.

The Greek government has said it wants to reach a deal in negotiations by Sunday. Greek public opinion is strongly behind remaining both the European Union and keeping the euro as its currency.

A default on debts could force the country to leave the eurozone, however.

Greece’s left-led government was elected on a mandate to seek a less harsh deal with the country’s creditors.

The Mediterranean country has been crippled by austerity measures and has dramatically reduced its expenditure but is still reliant on bailout cash to pay interest payments to its creditors.

If bailout conditions are not met Greece could stop receiving the bailout money, which it would then not be able to hand to the financial institutions it pays interest to.