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Fiscal Sustainability in Sweden

The Swedish National Audit Office examines the government's analysis of fiscal sustainability and highlights shortcomings, inaccurate indicators, and weak links to short-term fiscal policy. Recommendations are provided to improve presentation, review indicators, and strengthen the role of long-term estimates.

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Fiscal Sustainability in Sweden

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  1. Fiscal Sustainability in Sweden The Swedish National Audit Office

  2. The Swedish National Audit Office • The Government’s sustainability analysis • Audit results

  3. 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 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

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