Spain's borrowing costs still don't reflect the country's economic and fiscal adjustment, despite their recent easing, Economy Minister Luis de Guindos said on Saturday.

"What is an adequate level? We believe that with the effort that Spain is making in terms of the commitment to fiscal adjustment and the commitment to economic reforms, the risk premium should be below (current levels)," de Guindos said at a news conference following an informal meeting of European Union finance ministers in Nicosia.

The premium investors demand to hold Spanish debt rather than German benchmark paper fell sharply, especially on the shorter-term maturities, after the European Central Bank unveiled earlier this month a plan to buy bonds of distressed countries.

The spread on the Spanish 10-year paper was 412 basis points at the close on Friday compared to record highs at more than 650 bps in July.