Borg pares back municipal billions

As the economic recovery continues, Sweden's government has said local councils can expect 12 billion kronor ($867 million) less in state funding next year following a temporary 17 billion kronor cash injection for 2010.

“We can see that municipal finances are doing better than expected, meaning we can revise tax income upwards by around 10 billion kronor,” said Minister for Finance Anders Borg in a statement.

Last autumn’s budget saw an additional 17 billion kronor earmarked for the municipal sector in a bid to stave off rising unemployment. Included in the sum was a new, permanent, 5 billion kronor increase in the state’s annual payout to the country’s 290 municipalities.

The government said it has since observed a stabilization in the sector, with the municipal labour market showing a marked improvement in the months since the announcement of the 2010 bonus.

“We will however be following financial progress of the municipal sector carefully,” said Borg.

The minister is set to present the government’s full spring budget proposition next week.

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