Spain Debt Crisis 'Exaggerated': Prime Minister

Fault lines in Spain's fiscal health were "exaggerated" by the markets, Spanish Prime Minister Jose Luis Rodriguez Zapatero told CNBC Wednesday, adding that a stiff set of austerity measures adopted by the country have already boosted investor confidence.

"We have managed to change the market views on the Spanish sovereign debt," Zapatero said.

The prime minister also said that Spain's economy has begun growing again, though slightly. Risk premiums to hold the nation's debt have lowered, he said, and banks are "sufficiently capitalized."

"We're not expecting any surprises whatsoever," Zapatero said.

Still, he acknowledged that the nation, which recently announced it had cut its national deficit in half, must maintain "strict controls on spending."

"We still want our deficit to be reduced—it is essential for our credibility," Zapatero said. He also noted that he supports sanctions against countries who do not improve their fiscal state, like those proposed by fellow euro zone member Germany.

"What we have set for ourselves is being fulfilled," he said.