(MADRID) - Spain's newly re-elected government Friday announced an 18-billion-euro plan to revive the economy, which is suffering a slowdown after a decade-long boom that had been the envy of the rest of Europe.

The plan involves cash injections of 10 billion euros (15.8 billion dollars) this year and around 8.0 billion euros in 2009.

It was announced at a news conference by Deputy Prime Minister Maria Teresa Fernandez de la Vega following the first regular session of the new government, elected on March 9.

The aim is to "maintain the vigour of our economy in this period of deceleration," she said.

Spain's economy grew by 3.8 percent last year, well above the eurozone average of 2.6 percent.

But the Bank of Spain has predicted this will drop to 2.4 percent in 2008, its lowest rate in over a decade, as the global credit crunch and rising interest rates put the brakes on an economic boom that was led by the housing sector.

Earlier Friday, the government announced that house price gains had slipped below the inflation rate for the first time in a decade.

Socialist Prime Minister Jose Luis Rodriguez Zapatero had promised during his re-election campaign to dip in to the country's vast budget surplus to stimulate growth, and has since pledged to make the economy the top priority of his second term.

Economy Minister Pedro Solbes said the plan constituted "a first package of measures" to "stimulate demand, support the real estate sector" and the "financing of small and medium-sized businesses".

He estimated that the measures would boost GDP growth by 0.2 and 0.3 percent this year, and by up to half a percentage point in the longer term.

One of the main features is an across-the-board income tax rebate of 400 euros, a measure the government said would cost 6.0 billion euros this year.

Solbes said it "will help increase the available income and have a positive impact on consumer spending," which has been hit by a recent rise in inflation and the skyrocketing price of oil.

It also includes help for families struggling to pay their mortgages and the speeding-up of public works programmes to revive the construction industry, which had been the driving force of the economic boom and which employs 13 percent of the country's workforce.

The overall unemployment rate hit 8.6 percent last year in the first rise since 2003, with the construction sector particularly badly hit.

The government also plans to withdraw wealth tax, at a cost of 1.8 billion euros.

The package will help businesses obtain capital, in particular by increasing credit guarantees and speeding up the reimbursement of VAT (sales tax), which will be paid monthly instead of annually as before.

Most of the measures had been promised by the Socialist Party during the election campaign.

Solbes had announced a cash injection last weekend, but put the total figure at only 10 billion euros. That plan that sparked criticism from the governor of the central bank, Miguel Angel Fernandez Ordonez, who warned that it could "almost wipe out" the budget surplus next year.

Solbes however said Friday that government's "fundamental objective" is to "maintain budgetary stability."

Spain had a budget surplus for the third year running in 2007, equivalent to 2.23 percent of total economic output, or 23.4 billion euros and a 33.2 percent increase over 2006.

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