The Spanish government is ready to implement further austerity measures to defend this year's budget deficit target and is confident that demand for Spanish bonds will stay strong, Jose Manuel Campa, Secretary of State for the Economy, told CNBC.
Spain has pledged to cut its budget deficit to 6 percent this year but some analysts have said it would be difficult because economic growth is likely to be weak.
The International Monetary Fund has forecast economic growth of just 0.6 percent for 2011, compared with the Spanish government's official forecast of 1.3 percent.
"As you know, the government has it clear that the 6 percent target is an unconditional target and is our top priority of economic policy," Campa told CNBC in an interview.
"So we’ll do whatever it takes and we’ve said … that the 6 percent deficit is not in question or at risk as you suggest," he added.
Yields on the sale of Spanish government debt have been rising on worries that the country will have to prop up its savings banks, the embattled cajas.
"We’re fully confident, on the appetite of investors … about our paper. We’ve been issuing regularly, we’ve been following our finance strategy’s plan even in the periods of higher turbulences, we never have observed any lack of appetite," Campa said.
"It’s true that the spread, as you mentioned, the yield … above… the market conditions, but we have no concerns about whether it’s going to be successful or not," he added.
He said he was not worried by the fact that the European Central Bank had stopped buying bonds in Europe.
"I think that they are very clever in what they do," Campa said.
The government will help the cajas raise capital in order to boost confidence in them, he added.
"The main reason we want to raise minimum capital requirements is to give a full guarantee to the financial markets on the solvency of institutions… of banking institutions in Spain," Campa added.