First Minister Carwyn Jones says schools, skills and hospitals will be priorities in the assembly government's draft budget next week.
He told Sunday's BBC's Politics Show Wales that devolution will show it "makes a difference" in priorities.
He said: "We will obviously be looking to protect those areas we have already identified as priorities."
In an interview, he said Wednesday's budget would keep both free prescriptions and hospital parking.
Mr Jones said the said the "difficulty" of Wales' budget settlement following last month's Spending Review was known.
The Welsh Assembly Government has said its budget will be cut by £1.8bn in real terms over the next four years.
Mr Jones has called on opposition parties to be "constructive" over the draft assembly budget but has warned of "tough decisions" ahead for the NHS in Wales.
He said: "It's very challenging. Things are as bad as we thought with the revenue settlement, much worse that we thought with the capital settlement.
"But we will be producing our draft budget on Wednesday and we will obviously be looking to protect those areas we have already identified as priorities.
"I've said that we will look to prioritise schools, skills and hospitals and, indeed, universal benefits.
"And what our budget this week will demonstrate is the way that devolution makes a difference in terms of arranging the priorities that we think are important for the people of Wales and delivering according to those priorities."
Mr Jones said it was "cloud cuckoo land" to suggest that capital and revue spending could be raised in the NHS over the next four years but ministers had "looked to protect hospital services particularly".
He said: "The budget will show that we have done the best that we can to protect budgets like health."
He added that he expected the Welsh Assembly Government to see its staff numbers cut by "at least 400" through retirements and voluntary redundancy by next May.