Swedish Business and Industry has made an unparalleled discovery. Sweden’s national debt is four percent lower than previously reported. This is because the municipalities’ loans are reported twice.
Misleading about Sweden’s muscles
It becomes misleading for how strong economic muscles Sweden really has.
– We have much greater opportunities to borrow to carry out investments than we previously thought, says Svenskt Näringsliv’s chief economist Sven-Olof Daunfeldt to The newspaper Näringslivet.
Swedish business
Svenskt Näringsliv is Sweden’s largest employers’ organization – an interest organization that represents thousands of Swedish companies in terms of both opinion formation, negotiations with trade unions and investigations.
Svenskt Näringsliv also conducts lobbying against politicians both in Sweden and abroad, in order to improve policy in the direction of member companies.
In addition, they run the newspaper Näringslivet, which has now interviewed Sven-Olof Daunfeldt.
That’s how big Sweden’s national debt is
The Swedish national debt amounted to 33 percent of GDP in 2022.
The state’s share was then 20 percentage points, while the municipalities accounted for 12 percentage points. The pension system also had less than one percent in debt, according to Statistics Sweden.
But the municipalities’ debt is largely loans, which they in turn lend to municipal and regional companies.
Shouldn’t count
Since the loans are made to companies exposed to competition with commercial activities, even if they are municipal, they should not be included in the national debt, according to Swedish Enterprise.
National debt according to the Maastricht method is based on the assumption that only debts for administrative authority activities are counted. It is most of the activities at municipalities, regions and for the state. But not for commercial companies.
More space for investments
This means that Sweden could borrow more to make investments. Sweden has a goal of staying below 35 percent of GDP in government debt. Currently, the national debt is at 31 percent, which is already some way below the target. However, according to Svenskt Näringsliv’s way of calculating, the national debt would be 27 percent of GDP – far below the target.
– We believe that the total national debt is exaggerated because of these loans to municipal companies that conduct commercial activities. This means that the real national debt is actually 27 percent of GDP, and that we are therefore far below the debt anchor of 35 percent, says Sven-Olof Daunfeldt.
Municipal debts doubled
The municipalities’ loans have doubled in the last twelve years, seen as a share of GDP.
On the one hand, it is a source of income, because the municipal companies pay interest to the municipalities. But on the other hand, it is unnecessarily expensive for taxpayers because the state gets cheaper loan terms than the municipalities.
Sweden’s Municipalities and Regions agree
Annika Wallenskogchief economist at Sweden’s Municipalities and Regions, thinks it would be good if the loans that do not belong to the administration were excluded from the national debt.
– It is not reasonable that all the loans that the municipalities’ companies make are included in the national debt, because many of them are not used for municipal administrative activities, even if some do, the purpose of the loans should be distinguished, she tells the newspaper.
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