Swedish debt office: state finances deteriorating

STOCKHOLM — Sweden's state finances are deteriorating due to the global financial crisis, with recent budget surpluses likely to swing to deficits in coming years, the national debt office said Tuesday.

It said the central government finances "are greatly affected by the economic downturn," mainly though lower tax income, and in 2009, it said the Swedish economy will probably show zero growth "in the light of the reduction in global demand."

The debt office trimmed its forecast for the 2008 budget surplus by 15 billion kronor (US$1.9 billion) to around 148 billion kronor (US$19.2 billion). For 2009, it slashed its expectations by 106 billion kronor (US$13.8 billion). It now predicts a deficit of 23 billion kronor (US$3 billion) next year.

Matters will only get worse in 2010, when the debt office expects the budget deficit to widen to 35 billion kronor (US$4.5 billion).

Household consumption is forecast to dampen, while corporate profits are expected to drop.

And "the state of the labor market looks considerably worse than it did a few months ago," the deb office added

It also said it expects the financial downturn to affect the government's sale of state-owned assets, with no sales at all forecast in 2010 because of the situation on the world's financial markets.