Spain announced a crisis budget for 2013 based mostly on spending cuts in what many see as an effort to pre-empt the likely conditions of an international bailout.
Ministry budgets were slashed by 8.9 per cent for next year and public sector wages frozen for a third year as Prime Minister Mariano Rajoy battles to trim one of the euro zone's biggest deficits.
"This is a crisis budget aimed at emerging from the crisis ... In this budget there is a larger adjustment of spending than revenue," Deputy Prime Minister Soraya Saenz de Santamaria told a news conference after a marathon sixhour cabinet meeting.
Beset by anti-austerity protests and threats of secession by the wealthy northwestern region of Catalonia, Rajoy is resisting market and diplomatic pressure to apply for a rescue, partly out of concern for national sovereignty but also because European Union paymaster Germany insists Spain doesn't need help.
The central government sees budget savings of 13 billion euros in 2013, with spending down 7.3 per cent - not including social security and interest payments - and income rising four per cent thanks to a 15 per cent leap in value-added tax take.
The budget goes to parliament on Saturday and debates could last weeks.
The country's 17 autonomous regions still must present budgets and find an additional five billion euros in adjustments to meet overall public deficit reduction goals.
