STOCKHOLM (Reuters) -It is important that Sweden quickly returns to budget discipline and meets the requirements of its fiscal framework, central bank Governor Erik Thedeen said on Monday. "It is
Sweden Must Prioritize Fiscal Discipline, Says Central Bank Governor
Importance of Fiscal Discipline in Sweden
STOCKHOLM (Reuters) -It is important that Sweden quickly returns to budget discipline and meets the requirements of its fiscal framework, central bank Governor Erik Thedeen said on Monday.
Current Spending Rules and Future Plans
"It is extremely important that we return to the fiscal framework," Thedeen said in a speech.
Commitments to Defense Spending
Sweden's political parties have agreed to suspend strict spending rules until 2028 to allow borrowing of 300 billion crowns ($31.86 billion) to fund rearmament after NATO accession in 2024 and to support Ukraine in defending itself against Russia. Both are excluded from the normal budget.
Political Landscape and Budgeting Challenges
"It's not a problem for Sweden now ... but I think it is a bit of a warning signal that they have decided to exclude (spending on Ukraine and defence) and there isn't a very clear plan about how to get things back," Thedeen said.
Sweden has committed to spending 3.5% of GDP on defence and a further 1.5% on civil defence, meaning a permanent increase in spending which will need to be funded in the regular budget in the years ahead.
Sweden's political parties have agreed to return to balanced budgets from 2028, but neither the government nor the biggest opposition party, the Social Democrats, have said how they would achieve that.
($1 = 9.4155 Swedish crowns)
(Reporting by Simon Johnson, editing by Terje Solsvik)
