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By Michele Sinner
LUXEMBOURG, Jan 27 (Reuters) - Greece will not go bankrupt or leave the euro zone, the chairman of the single currency area's finance ministers said on Wednesday, adding that he approved of Greek budget consolidation measures so far.
"I think that the risk (...) of state bankruptcy does not exist in Greece. I entirely exclude that hypothesis," Eurogroup Chairman Jean-Claude Juncker told reporters.
"Greece has to know, and knows, that it has to make very serious efforts in order to consolidate public finances. It is doing it. We approve the (consolidation) efforts known to this date," Juncker said.
He dismissed as "absurd" speculation that Greece might leave the 16-country euro zone as a result of its debt problems.
A sharp upward revision of Greece's budget deficit for 2008 and a doubling of the deficit forecast for 2009 to 12.7 percent of gross domestic product have triggered downgrades by debt rating agencies and speculation on whether Athens would be able to service its obligations or be forced out of the euro zone.
In response, Greece said it would reduce its budget deficit this year to 8.7 percent of GDP through welfare cuts, tax reforms and savings on public-sector wages.
A stability plan aims to bring the shortfall to 2.8 percent in 2012, within the European Union's 3 percent limit, but markets doubt whether proposed spending cuts are realistic in a country where street protests often stymie reforms.
"The programme as it was presented by the Greek finance minister at the last Eurogroup meeting seems to be an important step in the right direction, but we will base our final judgment on the European Commission report and the ensuing debate in the Eurogroup," Juncker said.
The Commission, the EU's executive arm, is preparing an opinion on the Greek consolidation plan, but has not yet announced a publication date.
Asked whether there was a plan to bail out Greece if it failed in its consolidation efforts, Juncker said:
"I don't subscribe to the hypothesis where it would be necessary for others to intervene in addition to the efforts that the Greek government has to undertake itself." (Reporting by Michele Sinner, writing by Jan Strupczewski, editing by Dale Hudson)