no 1 Fiscal Sustainability in Sweden The Swedish National Audit Office

no 2 The Swedish National Audit Office The Government’s sustainability analysis Audit results

no 3 Why is Fiscal Sustainability Important? Macro-economic stability Confidence in the welfare systems => willingness to pay high taxes Political contract between generations Potential problems: Eroding tax- bases, demographic development The Swedish National Audit Office

no 4 The Government's Analysis Long-term projections presented in the Budget Bill and in annual report to the EU Public sector revenues and expenditures are projected in a 50 year (or longer) perspective Central government debt used as sustainability indicator The Swedish National Audit Office

no 5 Swedish Population Age Group 65+, Per Cent of Total Population The Swedish National Audit Office

no 6 General Government Income and Expenditure Per cent of GDP The Swedish National Audit Office

no 7 General Government Net Lending Per cent of GDP The Swedish National Audit Office

no 8 Central Government Debt Per cent of GDP The Swedish National Audit Office

no 9 Auditing Public Finances Program started early 2006 New area of performance auditing at SNAO 6-7 persons involved Focus on the Government's presentation in the Budget Bills 9 reports published The Swedish National Audit Office

no 10 The Audit Question: Has the Government presented transparent information about the assumptions on which its analysis of long term sustainability of public finances is based? The Swedish National Audit Office

no 11 SNAO conclusions The Government's presentation and analysis of fiscal sustainability has serious shortcomings The sustainability indicator is inaccurate The link between the sustainability analysis and short term fiscal policy is weak The Swedish National Audit Office

no 12 Labour Supply Millions of hours worked The Swedish National Audit Office

no 13 SNAO Recommendations The Government should: Improve the presentation of the sustainability of fiscal policy and develop the analysis Review the sustainability indicator Strengthen the role of the long term estimates in the design of short term fiscal policy The Swedish National Audit Office