Spain's economy minister said on Friday that the government had created a public fund worth up to 18 billion euros ($21.9 billion) to help embattled regions.
The fund is to be financed by "a loan from the national lottery of six billion euros and the rest by the Treasury," Economy Minister Luis de Guindos said after a cabinet meeting.
But according to government spokeswoman Soraya Saenz de Santamaria, regions must in exchange adopt strict measures to cut deficits.
"(Regions) have a deficit they can no longer finance. If they turn to the extraordinary measures, the conditions will be extraordinary," she said.
Spain's 17 powerful regions, which control health and education and account for half of all state spending, have sown deep distrust on the markets after splurging during the property boom.
Spain registered a public deficit of 8.9 percent of economic output instead of the promised 6.0 percent last year; and the regions posted a deficit of 2.94 percent of output instead of the required 1.3 percent.
In Brussels Monday, eurozone ministers agreed to extend a deadline for Spain to cut its public deficit to the European Union's limit of 3.0 percent of gross domestic product by one year to 2014.