MADRID - Spain's government expects to slash the budget deficit next year to 5% of gross domestic product from this year's projected 8.4%, the Budget Minister said on Thursday, as EU payments to support a post-pandemic recovery kick in.

The 2022 deficit figure given by Maria Jesus Montero was unchanged from a previous projection.

Buoyed by the injection of 27.6 billion euros ($32 billion) of European Union funds, the 2022 budget will include record investments of more than 40 billion euros ($46 billion), Montero said.

"The spending and investment increases don't mean a widening of the public deficit. The (EU) fiscal rules were suspended, but not fiscal responsibility. We are still committed to deficit reduction," she told a conference detailing the government's budget draft.

An expected economic growth rate of 7% in 2022 after projected growth of 6.5% this year will further contribute to the narrowing of the deficit as a percentage of GDP.

Overall government spending is set to rise 2.3% to around 242 billion euros.

The budget gap is forecast to narrow further to 4% of GDP in 2023.

($1 = 0.8653 euros)

($1 = 0.8645 euros)

(Reporting by Belén Carre?o, Inti Landauro and Nathan Allen Editing by Andrei Khalip and John Stonestreet) ((n.allen@thomsonreuters.com; +34 617 792 131;))