The Central Government Budget

Twice a year, in April and September, the Swedish Minister for Finance deliver the Governments plans for using the money at its disposal to the Speaker of the Riksdag.

The Riksdag later takes a decision on the proposals. These proposals are known as the Spring Fiscal Policy Bill and the Budget Bill.They are the two stages of a process that leads to the Governments proposed budget for the central government sector.

The two bills differ in content.The Spring Fiscal Policy Bill contains the Governments proposed broad guidelines for economic and budget policy over the next few years. When the Budget Bill is delivered in the autumn, the plans have been fashioned into a budget for the next year. This budget provides detailed proposals on the allocation of government expenditures and revenue to different areas, depending on the Governments priorities.

Two norms

There are two important rules the Government has to take into account when it makes its budget proposal: the expenditure ceiling and the surplus target.

The surplus target means that public finances are required to show a surplus of one per cent over the course of a business cycle. The reason for this is to avoid exposing welfare and its funding to major fluctuations.

Central government must be able to meet its expenditure commitments in good and bad times alike. The main purpose of the target is to strengthen public finances in preparation for the challenges ahead. A buffer is needed not only for economic fluctuations but also because of demographic changes, as the number of pensioners is set to rise in future. As a result, a dwindling proportion of the population will be working to support the rest.

The expenditure ceiling limits the annual amount of money central government is allowed to spend: government expenditure must not exceed the level determined by the Riksdag each year.

Expenditure ceilings were first introduced in 1997 and have been met every year since then.