STOCKHOLM: Sweden's centre-left government wants to remove the country's budget surplus target and replace it with a balanced budget target to free up money for important investments, the finance minister and the prime minister said on Tuesday.
Sweden introduced a budget surplus target of 1 percent over a business cycle in 1997 in the wake of a financial crisis which saw budget deficits and sovereign debt skyrocket. Since then Sweden's national debt has decreased to around 40 percent of GDP from 70 percent.
The Social Democrats and the Green Party, which came into power after last year's election, have asked the National Institute for Economic Research to evaluate the consequences of a change to a target of a balanced budget instead.
"A balanced budget may be more appropriate for Sweden in the future," said Finance Minister Magdalena Andersson, Prime Minister Stefan Lofven and Financial Markets Minister Per Bolund in a signed article in Swedish daily Dagens Nyheter.
A change would not lead to any big differences in the short term as Sweden is currently running a deficit and any new reforms would have to be fully financed.
"But in the longer term it will free up space for urgent public investment in infrastructure, housing, climate adaptation, research and education," they said.
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