Spanish Minister for the Economy and Competition Luis de Guindos on Tuesday defended the government's plans to make cutbacks of around 10 billion euros (13.1 billion U.S. dollars) in the country's education and health services.

Speaking at the New Economic Forum Tuesday, De Guindos, a former director of the failed Lehmann Borthers bank, insisted that the government was preparing to "improve rationalization, eliminate duplicate services and improve the efficiency of the management."

The Spanish government on Monday announced that it is planning a 10-billion-euro spending cuts in the country's health and education services, reiterating its goal of reducing public deficit to 3 percent of GDP in 2013.

De Guindos highlighted that the health budget was one of the factors that dragged Spain's 17 autonomous communities in debt and that the deficit was "a center of attention for the markets."

De Guindos defended that the health service would continue to serve for all, but insisted that the government needed to look for sustainable solutions by redefining the basic range of services and "correcting abuses" of the system.

Denying that the government had any plans to increase sales tax from the current level of 18 percent, he said that the planned health and education cuts had been well thought through.

"This is not a punctual measure in the face of any circumstantial situation in the markets," he said.

Meanwhile on Tuesday, the FTSE Mib index in Milan plummeted 4.98 percent and the stock exchange in Madrid fell by 2.96 percent, which marks the biggest fall in this year.