Sweden Plans to Ease Budget Rules

STOCKHOLM (Reuters) – Sweden plans to ease tight budget spending rules as it looks to boost spending in areas like infrastructure and defence, Finance Minister Elisabeth Svantesson said on Thursday.

The government coalition, including the Sweden Democrats and the opposition Social Democrats, have agreed to target a balanced budget instead of aiming for a surplus of 0.33% of GDP over a business cycle. Svantesson told reporters, "This gives us both the potential to maintain a low level of government debt but nevertheless … have the ability to invest in those areas where Sweden really has need."

Hans Lindberg, head of a parliamentary committee that recommended the shift, stated in a news conference that the change would provide the government an extra 25 billion crowns ($2.38 billion) a year to spend.

While countries like France are struggling to cut spending, Sweden's public finances remain strong. Recent debate has revolved around the country's public debt, which is around 30% of GDP, significantly below the European average of 90%. Critics argue that tight fiscal rules, established after a financial crisis in the early 1990s, may be stifling economic growth.

However, Svantesson cautioned against increasing debt levels, calling it a mistake. "It's the wrong way to go," she stated. "There would be a real risk that (the debt) would just keep increasing."

The government has already promised to boost spending by around 60 billion crowns next year. Sweden has faced challenges in maintaining necessary investments in infrastructure and needs to upgrade transport and energy systems to transition to a fossil-free economy. Additionally, the defence budget has doubled over the last four years and is expected to increase further as Sweden expands its military commitments as a NATO member.

($1 = 10.5216 Swedish crowns)