Greece is seeking to restructure its $350-billion debt and has agreed to the pension cuts and tax increases demanded by its lenders in exchange for a fresh bailout package of $95 billion over the next three years. Varoufakis stepped down on July 6, saying he was made aware that his resignation could help the prime minister reach an agreement with the country's creditors.
"This program is going to fail whoever undertakes its implementation," Varoufakis told the BBC. "It has failed already."
Varoufakis said Greek Prime Minister Alexis Tsipras had to agree to austerity reforms because he had no other choice.
"We were given a choice between being executed and capitulating. And he decided that capitulation was the ultimate strategy," Varoufakis said.
The Greek cabinet has been reshuffled, as senior officials who voted against the austerity package were replaced, with new ministers and their deputies sworn in earlier on Saturday.