Central government finances are still favourable but can deteriorate quickly
The strong growth in the Swedish economy in recent years has resulted in large surpluses in the central government finances. It is estimated that this year´s budget balance will be SEK 84 billion. This is slightly less than SEK 20 billion lower than last year´s surplus which reflected non-recurring effects in the same amount. 2009 will see a marginal increase in the budget balance surplus which will continue to grow until 2011.Central government budget revenues will be constrained this year and next year by a reduction in taxes on capital. Revenues will subsequently grow in line with GDP growth. Expenditure is expected to show slow growth as a result of lower interest costs on central government debt and transfers to households remaining at a relatively low level.
The budgeting margin is satisfactory and central government net lending remains strongly positive throughout the forecast period. The large surpluses mean that there will be a continued significant reduction in the central government debt. As a percentage of GDP, the central government debt will fall by half during 2007 and 2011.
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