Austria to spend 2.9 billion euros to stimulate economic growth

Oct 22, 2008, 16:26 GMT

Vienna - The Austrian government decided Wednesday to spend a total of 2.9 billion euros (3.9 billion dollars) on an economic stimulus package focused on medium-sized business and infrastructure projects.

In 2009 and 2010, around 1 billion euros will be allocated each year to an investment fund for medium-sized companies, the government announced. The money will also be used to finance small loans.

Faced with slowing economic growth, politicians 'should not discuss, but act fast,' Infrastructure and Transport Minister Werner Faymann said after the cabinet meeting where the measure was decided upon.

Over the next four years, infrastructure projects will be brought forward, with a total of 700 million euros allocated to railway infrastructure and 200 million euros to road construction projects, Werner's ministry announced.

The International Monetary Fund (IMF) and Austrian research institutes predict Austria's economy will grow by between 0.8 and 1.2 per cent in 2009, after growing by 2.0 per cent in 2008.

With an estimated gross domestic product of 284 billion euros for 2008, Austria's economy is the seventh biggest in the eurozone, according to IMF data.

On Monday, parliament passed a bail-out package for banks worth 100 billion euros to stimulate lending among banks, thereby insuring that businesses get access to loans.