Prime Minister Mariano Rajoy said Saturday his government would announce plans to cut taxes within a year and predicted that the Spanish economy was "on the cusp" of growth.

Speaking at a political rally in this northwestern city, the premier forecast that the country's economic situation would improve sufficiently to enable his administration to lower taxes, though he did not provide specifics.

Although Spanish conservatives had consistently called for taxes to be lowered in the past, Rajoy's administration raised them after taking office in a bid to narrow a large budget deficit.

The economic situation "is not good yet, but it's better than a year ago," Rajoy said, recalling that the country's risk premium - the extra return investors demand to hold the country's benchmark 10-year bond compared with equivalent German debt - is no longer weighing heavily on the country's finances.

Several days prior to the victory of Rajoy's conservative Popular Party in Spain's November 2011 general election, the country's risk premium stood at 460 basis points.

It climbed to as high as 550 basis points in June 2012 but has fallen since and ended at 268 basis points at Friday's close.

"I know there's still lots to do. I know the objectives have not been met," Rajoy said, though he pointed to positives such as the fact that Spain will post its first trade surplus in decades this year and exports are at a record high.

The prime minister said Spain's economy was "gaining ground" quarter-by-quarter and predicted that the data would improve further in the coming months and that Spain would soon emerge from a long recession.

Spain's gross domestic product has fallen for nine consecutive quarters, although the figures have improved lately and the government says the economy may grow slightly in the third quarter.

Rajoy also defended reforms aimed at spurring job growth in a country where the unemployment rate stood at 26.2 percent in the second quarter. EFE