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Fiscal Sustainability in
Sweden
no 1
The Swedish National Audit Office
• The Government’s sustainability analysis
• Audit results
no 2
The Swedish National Audit Office
Why is Fiscal Sustainability
Important?
• Macro-economic stability
• Confidence in the welfare systems
=> willingness to pay high taxes
• Political contract between
generations
• Potential problems: Eroding taxbases, demographic development
no 3
The Swedish National Audit Office
The Government's Analysis
• Long-term projections presented in the
Budget Bill and in annual report to the EU
• Public sector revenues and expenditures
are projected in a 50 year (or longer)
perspective
• Central government debt used as
sustainability indicator
no 4
The Swedish National Audit Office
Swedish Population
Age Group 65+, Per Cent of Total Population
26
26
24
24
22
22
20
20
18
18
16
16
2000
no 5
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
The Swedish National Audit Office
General Government Income and
Expenditure
Per cent of GDP
58
58
56
56
54
54
52
52
50
50
48
48
2005
2010
Income
no 6
2015
2020
2025
2030
2035
2040
2045
2050
Expenditure
The Swedish National Audit Office
General Government Net
Lending
Per cent
of GDP
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
2005
no 7
2010
2015
2020
2025
2030
2035
2040
2045
The Swedish National Audit Office
2050
Central Government Debt
Per cent of GDP
60
60
50
50
40
40
30
30
20
20
10
10
2000
no 8
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
The Swedish National Audit Office
Auditing Public Finances
• Program started early 2006
• New area of performance auditing at SNAO
• 6-7 persons involved
• Focus on the Government's presentation in
the Budget Bills
• 9 reports published
no 9
The Swedish National Audit Office
The Audit Question:
Has the Government presented
transparent information about the
assumptions on which its analysis of long
term sustainability of public finances is
based?
no 10
The Swedish National Audit Office
SNAO conclusions
no 11
•
The Government's presentation and
analysis of fiscal sustainability has serious
shortcomings
•
The sustainability indicator is inaccurate
•
The link between the sustainability
analysis and short term fiscal policy is
weak
The Swedish National Audit Office
Labour Supply
Millions of hours worked
7800
7800
7600
7600
7400
7400
7200
7200
7000
7000
6800
6800
6600
6600
6400
6400
1995
2000
2005
2010
Budget for 2007
no 12
2015
2020
2025
2030
2035
2040
2045
2050
Budget for 2008
The Swedish National Audit Office
SNAO Recommendations
The Government should:
 Improve the presentation of the sustainability
of fiscal policy and develop the analysis
 Review the sustainability indicator
 Strengthen the role of the long term estimates
in the design of short term fiscal policy
no 13
The Swedish National Audit Office