Council Opinion of 22 January 2002 on the updated convergence programme of Sweden, 2001-2004
Date: 2002-01-22
Institutions: Council of the European Union
Subjects: Economic and Monetary Union, Sweden, economic policy, economic stabilisation, gross domestic product

C 33/4

EN

Official Journal of the European Communities

6.2.2002

COUNCIL OPINION

of 22 January 2002

on the updated convergence programme of Sweden, 2001-2004

(2002/C 33/04)

requirement of a fiscal position (cid:145)close to balance or
in
surplus(cid:146). This remians valid in case economic growth should
be weaker and result in lower surpluses in the public finances
than projected in the programme, as the Commission’s autumn
2001 economic forecasts suggest. Furthermore,
the Council
welcomes the attention given in the programme to the sustain-
ability of public finances. The Council notes that Sweden’s
strategy on this hinges on maintaining a surplus of 2 % of
GDP in the long term. By lowering debt and interest
payments this will make room to cover much of the costs
related to ageing to be faced in later years. Given the relatively
high tax ratio in Sweden compared to other industrialised
countries,
the Council encourages Sweden to continue to
reduce it further.

fulfils

that Sweden at present

The Council notes
the
convergence criterion on price stability and it expected to
continue do so in the years to 2004. After several years of
low inflation, a sharp rise occurred in spring 2001 and it has
remained relatively high since. Inflationary pressures are, never-
theless, expected to be lower in 2002 and beyond, underpinned
by the expected subdued economic activity and continued wage
moderation.

rates

in Sweden have

the interest
fulfil

Long-term interest
remained at
historically low levels, even though they have generally fallen
less than in many other Member States during 2001, possibly
linked to the weakening of the krona and increased uncertainty
about global economic prospects. Sweden is expected to
continue to fulfil
rate convergence criterion.
the exchange rate convergence
Sweden does still not
criterion. The krona has been volatile since the submission of
the previous update and the Council reiterates that Sweden
needs to demonstrate its ability to stay in line with an appro-
priate parity between the krona and the euro over a sufficient
the
period of
stated in its opinion on the updated 2000
Council, as
convergence programme (2),
(cid:145). . . expects Sweden to decide to
join the ERM2 in due course(cid:146). In order to obtain high and
strategy of previous
sustainable
programmes is continued and structural measures in this
regard have been implemented. Among these measures, the
lowering of
the, still, high tax burden will provide better
incentives to encourage people to work, consistent with the
broad economic policy guidelines. The Council welcomes
these
Swedish
Government to implement these initiatives with determination.

time without severe tensions. To this end,

structural measures

and encourages

economic

growth,

the

the

THE COUNCIL OF THE EUROPEAN UNION,

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 and coordination
of economic policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

envisages

continued

government

On 22 January 2002 the Council examined Sweden’s updated
convergence programme, which covers the period 2001-2004.
the updated
The Council notes with satisfaction that
surpluses
programme
throughout
the period to 2004 as Sweden maintains its
medium-term objective of a budget surplus of 2 % of GDP
on average over the business cycle. The strategy of lowering
the expenditure ratio is supported by a commitment to adhere
to the ceilings for central government expenditure, which have
in strengthening the credibility of sound
been instrumental
public finances
in recent years, and a balanced budget
constraint for local governments. This is accompanied by a
lowering of the tax ratio, now extended with additional tax
considers
cuts proposed
this
for 2002. The Council
budgetary strategy appropriate and it
is in line with the
previous Council Opinion (2) and the broad economic policy
guidelines. The Council further notes with satisfaction that the
debt ratio fell below the reference value of 60 % of GDP in
2000, and is expected to continue to fall substantially over the
remainder of the programme period.

The macroeconomic scenario presented in the programme,
with GDP growth of 1,7 % in 2001 and 2,4 % in 2002
appears optimistic and the Council considers that there are
considerable downside risks to growth, especially in 2002, as
the global outlook has worsened since the macroeconomic
scenario in the programme was finalised. On the other hand,
a low-growth scenario is presented in the programme update,
which shows
a
substantially lower growth in 2002. For 2003 and 2004, the
projections in the programme appear sensible.

in surplus despite

the budget

that

is

The Council notes with satisfaction that with the budgetary
targeted in the updated programme, Sweden
surpluses
the stability and growth pact’s
continues to fully respect

(1) OJ L 209, 2.8.1997.
(2) OJ C 73, 6.3.2001.