Riksbank Governor concerned – “must warn in time”

TT

Published 16.23

 

Riksbank Governor Erik Thedéen in Almedalen. Photo: Jessica Gow/TT

Riksbank Governor Erik Thedéen sees a tendency for politicians to ignore the fiscal policy framework. Something that worries him.

– You have to warn in time, he says.

Thedéen says that it is “an enormous position of strength” that Sweden has a low national debt, order in the state’s finances and a fiscal policy framework that all parties support.

– We still have that, but now a number of deviations have been made, he says, referring, among other things, to Sweden borrowing to upgrade its defense.

He thinks that politicians have “started to ignore” the framework and therefore wants to warn against too many and too long-term deviations from it.

– If we do that, we risk having worse government finances.

– The important thing is that international investors continue to see Sweden as a country that has its government finances in order.

A lower level of international confidence would mean that Sweden has to pay higher interest rates on its government debt. That would hit the entire economy.

– We see a number of examples of countries with high government debts that are having major problems, we are far from ending up there, but it is important to warn in time.

– We are now borrowing more than 2 percent of GDP this year and next year, which is quite a lot of money. If you do that for many years in a row and then maybe have an economic downturn, then you are in a bad situation.