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 extremely important that we return to the fiscal framework,” Thedeen said in a speech.
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.
“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)
