Swedish finances improve, pave way for more govt spending

STOCKHOLM, April 6, (RTRS): Sweden’s minority government will run a surplus of around 15 billion crowns ($1.67 billion) this year, giving it room to spend more money and improve its prospects before an election in 2018.

After winning a general election in 2014, the Social DemocratGreen coalition said years of tax cuts under the centre-right had emptied the government’s coffers. But economic growth has improved tax revenues, allowing for voterpleasing spending measures.

“There will be more money for the economically disadvantaged, the environment and education — the usual targets,” said Knut Hallberg, an economist at Swedbank.

A forecast from the National Financial Management Authority (ESV) on Thursday showed central and local government and the pension system running a surplus of 0.3 percent of gross domestic product this year and 0.5 percent next year. The surplus was 0.9 percent of GDP in 2016.

While much of Europe continues to struggle with heavy government debt, Sweden’s finances are in rude health. In December, the government forecast socalled Maastricht debt would fall to around 34 percent of GDP by 2020. A decision to reduce Sweden’s foreign currency reserve will lower it further .

The government has set a target for debt of around 35 percent of GDP.

The Social Democrats and Greens will publish their spring budget later this month. They have already announced tax cuts for pensioners as well as tax hikes for small business and for airlines. Spending measures are likely to focus on boosting welfare services and employment.