Spain has announced a detailed timetable for economic reforms and a tough 2013 budget based mostly on spending cuts.
It is being seen by many as an effort to pre-empt the likely conditions of an international bailout.
Government ministries saw their budgets slashed by 8.9% for next year, as Prime Minister Mariano Rajoy's battle to reduce one of the eurozone's biggest deficits was made harder by weak tax revenues in a prolonged recession.
However, the conservative government said tax revenue would be higher in 2012 than originally budgeted for, and would grow 3.8% next year from this year.
Spending cuts would be worth 0.77% of GDP in 2013, while adjustment in revenue would be worth 0.56% of GDP.
"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.
Spain, the eurozone's fourth largest economy, is at the centre of the European economic crisis.
The government is in talks with European leaders about the terms of a possible European aid package that would trigger a European Central Bank bond-buying programme and ease Madrid's unsustainable borrowing costs.
Economy Minister Luis de Guindos reiterated that the government was still analysing potential conditions for aid.
Uncertainty over Spain's ability to control its economy, and especially the regional governments which make up around half of total spending, has been further rattled by rising demands for independence in the wealthy north-eastern state of Catalonia.
The deputy prime minister said today the region was not permitted to hold a referendum on independence before consulting with the rest of the country.
Saenz de Santamaria said the government would detail 43 new laws to reform the economy over the next six months, including a reform of the pension system, one of the state's most expensive costs, before the end of the year.
Spain's detailed timetable for economic reforms goes beyond what the European Commission has asked of Spain and is an ambitious step forward, the EU's top economic official said in response to the government’s announcements.
The reforms are clearly targeted at some of the most pressing policy challenges," EU Economic and Monetary Affairs Commissioner Olli Rehn said in a statement.