Madrid, Feb 21 (IANS/EFE): Spain's budget deficit came in below 7 percent of the gross domestic product last year, while the target agreed to with the European Commission was 6.3 percent, Prime Minister Mariano Rajoy said.

The deficit was cut by more than 21 billion euros (nearly $28.1 billion), or approximately 2.1 percent of GDP, well above the target of 16.5 billion euros ($22 billion) set when the government took office in December 2011, Rajoy said Wednesday.

The public sector deficit totaled 8.9 percent of GDP in 2011 and came in at around 6.9 percent in 2012, the prime minister said.

"The reduction should have been bigger, but the commitment was kept," Rajoy said, adding that increased revenues and cuts in public spending helped get the deficit to the lower level.

Reducing Spain's 26 percent unemployment rate and creating jobs are the government's priorities, the prime minister said in his wide-ranging address.

Joblessness is a "terribly hard reality" in Spain, Rajoy said.

The country, however, has made much progress, the prime minister said.

"Among those looking at us from the outside, no one was betting on Spain a year ago, and today no one thinks Spain will not move forward," the prime minister said.

"We have achieved much, but there is still much more for us to do," Rajoy said in his first address on the state of the nation since taking office.