"Small, insignificant problems of liquidity should not divide Europe," he said in the Günther Jauch talk show on German broadcaster ARD.
Prime Minister Alexis Tsipras later joined in the defence, insisting his government was not facing a cash shortage as it braced for another week of pressing debt repayments.
"There is absolutely no problem with liquidity," Tsipras told reporters after meeting Varoufakis.
The finance minister had earlier told Alpha TV: "There is no problem in securing funds for salaries and pensions."
The denials came as Greece prepared to issue 1.0 billion euros ($1.1 billion) in three-month treasury bills on Wednesday to meet debt repayments.
The government this week must repay over 900 million euros to the International Monetary Fund and redeem 1.6 billion euros in three-month treasury bills, To Vima weekly reported Sunday.
Greece has drawn no loans from its 240-billion-euro EU-IMF rescue package because the new government is still locked in talks with its international creditors on a revised reform plan.
With a 6.0-billion debt bill in March overall on Athens' books, Germany's Frankfurter Allgemeine Zeitung on Sunday warned that Greek civil servants should brace themselves for downsized salaries and pensions this month.
European parliament president Martin Schulz also told the daily: "Tsipras urgently needs money."
The German politician, who met Tsipras last week, said Athens had to convince eurozone nations and the European Central Bank of its determination to carry out reforms.
To cover the cash shortage, the radical government this week submitted a law that directs the cash reserves on pension funds into state debt purchases.
Financial daily Naftemboriki on Saturday reported that pension funds have 2.5 billion euros deposited at the Bank of Greece, and another 1.9 billion in private banks.
Analysts have described the move as "scraping the barrel".
In addition to holding back promised funds, the European Central Bank has limited the power of Greek banks to assist the state by buying its short-term treasury bills.
Greece's harshest critic, German Finance Minister Wolfgang Schäuble this week warned that a disorderly "Grexident" - playing on the terms "Grexit" and an accident - that could push Athens out of the euro could not be excluded.
"To the extent that Greece is solely responsible and decides what is to happen, and we don't know exactly what Greek leaders are doing, we can't exclude it," Schaeuble told Austrian broadcaster ORF.