Summary of the Fiscal Sustainability Report 2019

An ageing population will put pressure on public finances in the coming decades. The NIER’s Fiscal Sustainability Report 2019 shows that Sweden’s current strong public finances provide much-needed space to meet demographic challenges, but the margins are small.

The buffer built up since the crisis of the 1990s will be used up within a few decades. This demographic outlook demands fiscal prioritisation in the form of lower growth in public expenditure or higher taxes to ensure that public finances are long-term sustainable. A situation where demographic changes are permitted to impact fully on public finances is not compatible in the long term with the current surplus target. If the surplus target were to be replaced with a balanced-budget target in 2027, as part of the scheduled review, fiscal policy would have some scope to adapt to demographic developments, while long-term fiscal sustainability would improve compared to the report’s baseline scenario.