Spain's ratio of debt to gross domestic product (GDP) has soared since 2008, when the end of a decade-long property boom triggered an economic slump that caused unemployment to jump and tax revenues to plunge.
It rose to 85.9 percent of GDP at the end of 2012 from 68.5 percent of output at the end of 2011.
The government had forecast in its 2013 budget that the debt-to-GDP ratio would stand at 90.5 percent at the end of this year.
The Spanish Treasury will need to issue €243.9 billion ($330 billion) in debt next year to cover maturing debts and new financing needs, according to the draft budget presented in parliament.
The government draft budget for 2014 which was approved on Friday at a cabinet meeting includes further unpopular austerity measures for pensioners and public workers even as it slightly improved the outlook for jobs and economic growth.
It forecasts the jobless rate will dip under 26 percent while economic growth will reach 0.7 percent next year.
For 2013, the government forecasts the economy will shrink by 1.3 percent while the jobless rate will end the year at 26.6 percent.