A balanced budget
Sweden's national debt to GDP ratio has mostly fallen since 1995, and has remained lower than the Euro Zone average. All three leading credit agencies give Sweden the highest credit rating, which is rare, even among developed economies.
Since the crisis of the 1990s, successive Swedish governments have managed to maintain control over public spending, and continued to do so even in the wake of the 2008 global financial crisis.
This was made possible by Sweden reinventing its economic governance with a series of regulations. First, in 1996, a ceiling for public spending (utgiftstak) was introduced. This was accompanied by the addition of the ‘surplus goal’ (överskottsmålet) for the government budget – measures that remain largely intact.
Long-term solutions
These reforms have helped prevent the accumulation of debt and ensure that the national debt is kept in check. The 'debt anchor' (skuldankare), introduced in 2019, is a complement aimed at keeping long-term debt at 35 per cent of GDP.
Additionally, the Swedish Fiscal Policy Council (Finanspolitiska rådet) was established in 2007. This committee of experts audits the government’s policy decisions regarding public finances and aims to ensure that these remain consistent with the goals of growth, employment and long-term financial sustainability.
