COUNCIL OPINION of 8 February 1999 on the convergence programme of Sweden, 1998-2001
Date: 1999-02-08
Institutions: Council of the European Union
Subjects: Sweden, economic convergence, economic policy, inflation

C  68/4

EN

Official  Journal  of  the  European  Communities

11.3.1999

COUNCIL  OPINION

of  8  February  1999

on  the  convergence  programme  of  Sweden,  1998(cid:220)2001

(1999/C  68/03)

THE  COUNCIL  OF  THE  EUROPEAN  UNION,

pursue  its  inflation  target  in  such  a  way  as  to  ensure
consistency  with  the  ECB’s  objective  of  price  stability.

Having  regard  to  the  Treaty  establishing  the  European
Community,

Having  regard  to  Council  Regulation  (EC)  No  1466/97
of  7  July  1997  on  the  strengthening  of  the  surveillance  of
budgetary  positions  and  the  surveillance  and  coordi(cid:220)
nation  of  economic  policies(cid:216)(˛),  and  in  particular  Article
9(1)  and  (2)  thereof,

Having 
Commission,

regard 

to 

the 

recommendation  of 

the

After  consulting  the  Economic  and  Financial  Committee,

HAS  DELIVERED  THIS  OPINION:

envisages 

programme 

2001.  The 

On  8  February  1999  the  Council  examined  Sweden’s
Convergence  programme  which  covers  the  period  1998
to 
continued
government  surpluses  throughout  the  period  to  2001  as
the  authorities  make  further  progress  towards  their
medium  term  objective  of  a  budget  surplus  of  2(cid:216)%  of
GDP  over  the  cycle.  The  Council  considers  this  target  to
be  appropriate,  especially  in  view  of  the  projected  ageing
of  the  population  and  also  welcomes  the  emphasis  in  the
programme  on  securing  macroeconomic  stability.  At  the
same  time  the  Council  considers  that  the  programme  is
in  line  with  the  Broad  Economic  Policy  Guidelines  of  the
Member  States  agreed  at  the  Cardiff  Council.

In  the  macroeconomic  framework  of  the  programme
GDP  growth  is  projected  at  2,4(cid:216)%  per  annum.  The
Council  considers  that  although  the  growth  profile  in  the
convergence  programme  implies  some  increase  in  the
potential  growth  rate  of  the  Swedish  economy,  this
nevertheless  seems  realistic  and  attainable  in  light  of  the
record  of  economic  performance  of  recent  years.

inflation  convergence
Sweden  comfortably  fulfils  the 
criterion  at  present.  The  outlook  for  inflation  remains
good  and  expectations  for 
inflation  have  for  several
years  been  consistent  with  price  stability.  Given  Sweden’s
historical  wage(cid:220)setting  pattern,  the  Council  recommends
to  wage  developments.  The
vigilance  with  regard 
to
Council  also  encourages  Sweden 

to  continue 

(˛)(cid:217)OJ  L  209,  2.8.1997,  p.  1.

the 

long(cid:220)term 

the  enhanced  credibility  of 

Sweden  has  also  fulfilled  the 
interest  rate
convergence  criterion  for  some  time.  This  reflects  the
improving  stability  of  the  Swedish  economy  and  the
stability(cid:220)oriented  macroeconomic
recognition  of 
policy  as  well  as  recent  success  in  budgetary  consoli(cid:220)
dation.  However, 
the
economic  policy  background  has  not  yet  fully  translated
into  exchange  rate  stability.  Moreover,  the  Council  notes
that  qualification  for  EMU  will  require  that  Sweden
demonstrate  its  ability  to  stay  in  line  with  an  appropriate
parity  between  the  krona  and  the  euro  over  a  sufficient
period  of  time  without  severe  tensions.  To  this  end,  the
Council  expects  Sweden  to  decide  to  join  the  ERM2  in
due  course.

through 

The  Council  welcomes  the  convergence  programme’s
the  recent  record  of  budgetary
aim  of  continuing 
the  achievement  of  growing
consolidation 
government  surpluses.  The  budgetary  targets  of  the
programme  provide  a  safety  margin  for  the  general
government  budget  not  to  breach  the  3(cid:216)%  of  GDP
reference  value  in  normal  circumstances.  Therefore,  the
Council  considers  that  Sweden  is  in  compliance  with  the
requirements  of  the  Stability  and  Growth  Pact.  The
Council  welcomes  the  measures  taken  to  improve  the
control  of  government  expenditure,  as  recommended  in
the  Broad  Economic  Policy  Guidelines.  The  Council  also
welcomes  the  recent  decline  in  the  government  debt  ratio
and  notes  that  the  government  gross  debt  ratio 
in
expected  to  fall  below  60(cid:216)%  of  GDP  in  2001.

the  Council  welcomes 

The  Council  considers  that  the  programme’s  objective  of
increasing  the  employment  ratio  is  welcome,  especially  as
this  should  help  broaden  the  tax  base  and  thereby
increase  the  scope  for  reductions  in  the  tax  burden.  In
addition, 
the  objective  of
increasing  the  employment  ratio  and  urges  the  auth(cid:220)
orities  to  focus  on  private  sector  employment  creation  in
pursuing  this  target.  The  Council  notes  that  the  recent
efforts  in  structural  reform  have  not  been  mentioned  at
length  in  the  programme;  also,  the  programme  does  not
provide  details  of  future  directions  in  structural  reform
and  little  detail  is  given  with  regard  to  government
investment 
strategy.  The  Council
recommends  that  Sweden  continue  to  build  on  the
structural  reforms  of  recent  years  and  particularly
welcomes  the  proposed  reform  of  the  pensions  system
which,  in  light  of  the  projected  ageing  of  the  population,
is  of  importance  to  the  long(cid:220)term  stability  of  the  public
finances.

priorities 

and