Swedish Finance Minister Hints at Fiscal Boost to Keep Debt Up

(Bloomberg) -- Sweden’s finance minister said planned “reforms” are likely to keep debt levels from falling too low, batting back criticism that she’s keeping too tight a grip on fiscal policy as economic growth slows.

“I can assure you that in the coming years, the government will do more reforms so the public debt isn’t going to decrease in the same way that’s in the figures,” Magdalena Andersson said at press conference Thursday in Stockholm. “Not that quickly.”

A long economic boom and successive years of budget surpluses have decreased Swedish debt to about 35 percent of gross domestic product, which is at the self-imposed debt anchor in the country’s fiscal framework.

The National Financial Management Authority, a budget watchdog, recently predicted that debt will sink below 35 percent this year and breach 30 percent in 2021. Fiscal rules stipulate than any deviation of more than 5 percentage points from the anchor requires an explanation to parliament.

Andersson has run a tight fiscal ship over the past years, even as unemployment has remained elevated and inflation has posed little risk while Sweden’s central bank has resorted to unprecedented stimulus in the wake of the financial crisis to lift inflation.

There’s now a long list of measures promised in the new coalition agreement in January, which haven’t been taken into account in most forecasts. The Finance Ministry is releasing new forecasts on Monday.

Andersson signaled that she’s well aware of the debt anchor, which has been agreed on by a broad majority in parliament. There’s a seven-party agreement on where we want the debt to be, and “I think it’s a sensible agreement,” she said.

Economists have been questioning why the government isn’t spending more and borrowing more, especially since Sweden is in need of increased spending on everything from infrastructure and health care to jobs and welfare.

To contact the reporter on this story: Amanda Billner in Stockholm at abillner@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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