Scottish Deputy First Minister John Swinney has told NHS workers fighting for pay increases that he has "nowhere else to go" to fund an increased offer.
NHS unions are currently balloting on strike action, and ambulance workers and physiotherapists have already voted for walkouts.
But Mr Swinney told them yesterday: "I have nowhere else to go to fund pay deals beyond what the Government offers."
Finding additional cash for public service pay would have "ever more significant consequences", he added, and he insisted: "I am not prepared to do that."
The Press and Journal says his comments came in light of the Scottish Government's emergency budget review on Wednesday, in which he announced a further £615million of savings.
This includes £400million of spending "reprioritisation" within the health and social care sector to support a pay offer for staff - with opposition politicians in Holyrood claiming funding for areas such as mental health are being reduced as a result.
Well supported
Mr Swinney said: "Fundamentally I have got to make sure health service workers are able to attend their work because they feel well supported by a pay deal."
He insisted the pay offer on the table is a "very substantial deal", saying it represents a 7% rise for health staff on average and "over 11%" for lower earners.
"It is much more than is being offered south of the border and it is very substantial deal," Mr Swinney said.
He added the current offer is "all the Government could afford to put on the table".
Mr Swinney, who is responsible for finance while Kate Forbes is on maternity leave, was adamant that he has "nowhere else to go to fund pay deals beyond what the government offers".
He added: "The government is unable to fund any more deals because if people are concerned about the gravity of decisions I took and announced yesterday, the next stage of what I would have to free up any more money would have ever more significant consequences, and I am not prepared to do that."
Tax rises
Asked about the prospect of tax rises to fund pay rises for public sector workers, Mr Swinney said that is "of course an option" but changes cannot be made until the next financial year.
Decisions on tax will be made after the UK Budget on November 17.
But Keir Greenaway, of the GMB Scotland union, said the government needs to invest in workers.
He told the Press and Journal: "The lesson that every political leader should have learned after the last decade of failed austerity is that you can't cut your way out of a crisis, you must invest.
"The managed decline of public services on the Scottish Government's watch means they don't have clean hands.
"GMB is clear the only way government at any level is going to confront the many crisis points across our public sector is to value staff properly and invest in their services, so we can recruit and retain the people needed to deliver them for the communities that depend on them."