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Borg sees the light for State’s finances

TT/Stuart Roberts · 4 Dec 2009, 10:17

Published: 04 Dec 2009 10:17 GMT+01:00

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In presenting the government’s new prognosis on Friday, Finance Minister, Anders Borg said that the new estimate for the budget position next year is a deficit of 89 billion kronor ($13 billion), compared with a deficit of 107 billion in earlier budget estimates.

In 2011, the State finances will be in better shape to the tune of 10 billion kronor, compared with earlier estimates, with a deficit of 57 billion kronor. In 2012 the deficit is expected to be 18 billion kronor.

Consequently, Borg says that the government will make savings in reduced spending on workplace measures, while estimated income tax revenue will be higher than the government’s earlier estimates.

According to Borg, a very expansive economic policy for Sweden is appropriate. “It will remain expansive throughout 2010,” Borg said at a press conference. To a certain degree, the expansive economic policy ought to continue throughout 2011, while after that the policy settings will soften, according to Borg.

Borg stated that other European countries would need to handle their economies properly when the worst of the crisis is passed, with increased taxes and fiscal tightening, but Sweden will be able to avoid such pain, he says. “We are not in that situation,” Borg said.

Borg is already preparing for the next downturn, and he therefore believes that the State’s finances must be in surplus as quickly as possible when the current crisis dissipates. “We must be in proper shape before the next downturn,” he said. Borg estimates a surplus in the State’s finances by 2013 and 2014, of 0.4 percent and 1.1 percent, respectively.

Story continues below…

With this upwardly revised estimate of the State’s finances, the national debt will peak next year, when it will be 38.4 percent of GDP, compared with 37.2 percent this year. In 2011 national debt will plateau, and will then fall to 37.6 percent in 2012, according to Borg’s prognosis.

TT/Stuart Roberts (news@thelocal.se)

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Your comments about this article

12:11 December 4, 2009 by Plowbridge
Guess work and sound bites.
12:18 December 4, 2009 by Audrian
I think it is difficult to make an observation on the state of the Swedish economy from the above article.

The burden of deficit is often examined against the country's the size of the GDP and GDP growth rate to finance the dificit (i.e. GDP growth rate determines tax revenue growth rate). We do not have this information in the above article.

The gap between estimate of deficit ($107) and actual deficit ($13b) is an usually very large. It represents failure to make forecasts. In this perspective, it difficult to trust his claim that the government budget would show a surplus in 4 or 5 years.
13:04 December 4, 2009 by jack sprat
Early electioneering?

Maybe the true facts and details will begin to emerge in 12 months time.
16:39 December 4, 2009 by JosefEugen
On the eve of the recession Borg and also the Rikbankers were oblivious to the obvious: that the dollar slide meant trouble for a small exporting nation like Sweden. Instead they were concerned with inflation and raised the Rikbank's repo rate more than once when they should have been tracking the dollar and lowering the rate. After the dollar safe haven bump, the dollar is moving downward again. Why? Because there is a game of currency chicken or "how low can you go" being played between the US and China. This means that for all countries addicted to the US import market, things could (will) get worse. Mercedes is actually building in the US to get on the other side of the dollar. Sweden needs to grasp that it is not alone in the world.
22:01 December 4, 2009 by Keith #5083
In most ministerial statements from governments one reads between the lines and/or looks for the 'coded signals'. Statements are made in democracies to show a certain 'openness' from government.

Of course, no mature adult wants any politician to be really open about everything that's going on for and about it's country.

I remember when George Soros bought shares in a gold mining company - not gold, but shares in the company whose land and assets made it a good investment. Within months of Soros doing this the rumour had gone round 'Soros is into Gold', consequently the price of gold soared upwards.

The rumour had been invested with more trust than had the actual actions of George Soros.

Hey,Ho - such is the nature of greed and investment opportunists.

Down on the ground I don't see any starving, any denied sick care, any schools closed, any long queues of unemployed at soup kitchens - in short, it seems the Swedish economy has weathered the imported storm quite well so far.

(oh, ps, as a foreigner I don't vote so I'm not pushing any political angle here).
10:42 December 5, 2009 by Kooritze
Jobless Recovery?

Statistic manipulation, cagey statements. The polititians and media make real infomation on current affairs within the swedish state very hard to attain for the average person. Does anyone agree?

I,m still shocked after 3 years here about the newspaper information that most people read.......GT, Aftonbladet & Expressen..........I mean 99% of the info given is on trash. It is not normal!.....but I guess a way to keep the people sweet in their bubble.
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