Austria's centrist coalition agreed a 1.5 billion euro ($1.96 billion) economic stimulus plan on Tuesday, eager to show voters before September elections that the government is ready to counter any downturn. Spurred by the insolvency last week of Alpine Bau, the country's second-biggest construction group that employs nearly 5,000 people in Austria, the plan approved by the cabinet aims to lend the economy a hand over the 3-1/2 years to end-2016 without boosting public debt.
Chancellor Werner Faymann said the country's target of balancing the budget by 2016 remained intact but it also had to keep an eye on the impact of rising unemployment. Austria, which has the lowest unemployment rate in the EU at 4.9 percent in April, projects a 2013 state budget deficit of 2.3 percent of gross domestic product and debt peaking this year at nearly 74 percent of GDP
The stimulus plan envisions bringing forward public works projects and promoting housing construction. It also taps expected revenue from a September auction of radio frequencies that operators need to build superfast mobile broadband networks. Deputy Chancellor Michael Spindelegger said 250 million euros in auction proceeds would remain in the central budget, while 276 million or more would flow into the stimulus plan. Finance Minister Maria Fekter had earlier told a newspaper that she was counting on 600 million euros in proceeds from the auction for the federal budget.