Fiscal Sustainability in Sweden

1
Fiscal Sustainability in Sweden

• The Swedish National Audit Office

2
The Swedish National Audit Office

• The Governments sustainability analysis
• Audit results

3
Why is Fiscal Sustainability Important?

• Macro-economic stability
• Confidence in the welfare systems gt willingness
  to pay high taxes
• Political contract between generations
• Potential problems Eroding tax-bases,
  demographic development

The Swedish National Audit Office
4
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

The Swedish National Audit Office
5
Swedish PopulationAge Group 65, Per Cent of
Total Population
The Swedish National Audit Office
6
General Government Income and ExpenditurePer
cent of GDP
The Swedish National Audit Office
7
General Government Net LendingPer cent of GDP
The Swedish National Audit Office
8
Central Government DebtPer cent of GDP
The Swedish National Audit Office
9
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

The Swedish National Audit Office
10
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?

The Swedish National Audit Office
11
SNAO conclusions

• 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
12
Labour SupplyMillions of hours worked
The Swedish National Audit Office
13
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

The Swedish National Audit Office