Spain will continue to pursue its austerity policies according to the Prime Minister Mariano Rajoy.
He said that Spain supports the EU's fiscal pact on cutting budget deficits.
"Spain, which has signed the EU fiscal compact, holds that this treaty must remain in place in the future," the conservative leader said.
Rajoy said "deficit reduction measures are a good policy." as popular pressure grows on euro zone leaders to focus more on growth than on austerity.
Rajoy has promised to lower Spain's public deficit from 8.5% of gross domestic product last year to 5.3% this year and 3.0%- the EU ceiling - in 2013.
"The three grand pillars of the euro should now be first reducing deficits, secondly ensuring that debt is sustainable and thirdly undertaking reforms to unlock economic growth," Rajoy said at a press conference with his Portuguese counterpart Pedro Passos Coelho.
"It is not possible to grow with an unsustainable debt on your back," said Passos Coelho, whose country is implementing an austerity programme under an EU-IMF bailout worth €78 billion.
"Austerity policy is a first step towards recovery," he added.
New bank rules on property-related assets
Spain's government will announce new rules obliging banks to boost provisions against risky property-related assets on Friday, an Economy Ministry official said today.
"There will be new provisions," as part of a package of banking sector measures to be issued on Friday, a ministry spokeswoman said.
She gave no further details.
The extra financial cushion against risky loans and seized property linked to the distressed property sector could amount to €35 billion, said business daily Cinco Dias.That figure is in addition to the €53.8 billion in provisions already demanded in a reform announced February.
Spain's banking sector, overextended in a property boom that collapsed in 2008, is a major concern of international investors who fear the full losses on those assets have yet to be recognised.
In an attempt to soothe markets, the government has already said it will approve on Friday a new reform aimed at enabling banks to separate problem loans from their balance sheets.
At the same time, the government has said it will inject public funds into troubled Bankia, the fourth-biggest listed bank. Spanish media say the state will put in €7-10 billion.
Bankia, created from a merger of seven savings banks, or cajas, had €37.5 billion in exposure to the property sector at the end of 2011, of which €31.8 billion were classed as problematic.
Meanwhile, the interest rate on Spain's benchmark 10 year bonds rose above 6% today.
This is a borrowing rate widely believed to be unsustainable for the crisis-hit Spanish government.
Yields on the secondary market were 6.026%, up sharply from 5.817% at yesterday's close.
Investors are fretting over the possible fallout of the crisis in Greece where anti-austerity parties made huge gains in general elections on Sunday.
They are flocking to the safety of German sovereign debt amid talk of Greece reneging on commitments to international creditors agreed in return for rescue loans and a debt write-off earlier this year.
