Sweden

II - Changes to the Budgetary Process

Budgetary process   
II.1
Describe the main characteristics of the budgetary process (cycle, actors, instruments, etc.) in Sweden

The Legal Framework

The Swedish budget procedure is regulated by the Instrument of Government (‘Regeringsformen’, a Constitutional instrument), the Riksdag Act (‘Riksdagsordningen’, also a Constitutional instrument), and the Budget Act (ordinary legislation). Constitutional practice, developed over the last 15 years, complements this picture.[1] The rules on the budget procedure in the Instrument of Government are of a framework character. They regulate the division of competence between the Parliament and the Government. These rules are specified in the Riksdag Act. The Riksdag Act also provides the basic rules for the budget procedure, but they are also somewhat of a framework character, and they mainly concern the working procedures in the Riksdag. The details of the budget procedure are provided in the Budget Act. It also stipulates the overall objectives of fiscal policy.

Legislative preparatory works have a significant role in Sweden; they are considered having the status of legal source. For example, Courts are frequently referring to the legislative preparatory works when in doubt how to interpret a legal rule. These preparatory works consist, inter alia, of proposals (sometimes referred to here as ‘opinions’) from Parliamentary Committees. Such legislative preparatory works are seen as giving a clear indication of the legislator’s intentions and also how the legislation should be implemented; they explain the basis for adopted legal acts. Thus, in addition to the legal instruments mentioned above, the Swedish budgetary framework also consists of constitutional practice by the Riksdag and the Government, in the form of legislative preparatory works. The practice is also based on political accords within the Parliament and between the Parliament and the Government. It can also be found in documents that are part of the budget process: the ‘Spring Fiscal Policy Bill’, the ‘Budget Bill’, and the ‘Central Government Annual Report’. The budget process is also governed by internal written guidelines within the Parliament and the Government.

As the Budget Process Committee points out in its interim report on the Swedish implementation of Council Directive 2011/85/EU, the established practice has a strong bearing as ‘deviations from the established procedure are judged likely to generate public criticism, from such sources as independent monitors of the application of the budgetary framework by the Riksdag and the Government’.[2] Thus, any deviations from established practice have to be motivated, and the political opposition and the financial organs would examine it. The economists Boije, Kainelainen and Norlin portray the Swedish fiscal policy framework in the following way[3] :

“To date, the Swedish fiscal policy framework has been regulated by law to only a small extent. Rules enshrined in legislation are likely to be more difficult to reverse or abandon than are rules not supported by law. Acting on government proposals, Parliament has therefore made the use of expenditure ceilings and a medium term net lending target compulsory, by law, from January 1, 2010 and August 1 2010, respectively. The level of the targets should not, however, be subject to legislation. The law concerning expenditure ceilings and the surplus target can be overruled by a simple majority, but changing this law may involve loss of reputation and is therefore likely to be politically costly. Regarding the status of the Fiscal Policy Council, the opposition parties were against its introduction in 2007. However, the opposition’s recent joint budget statement states nothing about the future of the Fiscal Policy Council.”

Instruments

There are two different bills that adopted in the Swedish budgetary process. The Government presents the ‘Spring Fiscal Policy Bill’ in April and the ‘Budget Bill’ in September. These bills are different in content. In the Spring Fiscal Policy Bill, the Government proposes directions and guidelines for the fiscal policy and the budget policy in the longer term; it gives its view on the economy in general; discusses economic-political challenges; and presents estimated effects of implemented measures and reform capacity. The Spring Fiscal Policy Bill also includes give an account of its distribution policy, and an assessment of the sustainability of public finances.

In the Budget Bill, the Government presents concrete proposals for the next fiscal year. It contains detailed budgetary proposals on the allocation of government expenditures and revenue to different areas. The Budget Bill proposes how to distribute the central government’s resources to 27 different expenditure areas, and the distribution to about 500 appropriations within these areas. The Government also proposes a net lending target for the general government sector (surplus target), and a ceiling for central government expenditures for the next three years (expenditure ceiling target). The expenditure ceiling is presented to show the available frameworks for expenditures and revenues in order to meet the surplus target.

The Cycle

The ‘central government budget process’ begins more than a year before the fiscal year.[4] In December, the Ministry of Finance presents economic forecasts to the Government. In January, the other ministries examine the implications of these forecasts for their respective expenditure areas. They submit ‘consequence estimates’ for the next three years to the Ministry of Finance, which analyses them and examines whether the budget objectives for the next few years will be achieved, and if it has to propose expenditure cuts or tax increases.

In February, Government Agencies submit annual reports with financial data and information about their activities, including accounts of how the Agencies have met their objectives. The Agencies are also required to present their budget for the next three years. The Government uses this material as a basis to decide how to calculate expenditure. In March, the Government discusses the general orientation of the government budget. It has to decide the preliminary spending framework for 27 expenditure areas (so-called framework preparation). The Swedish National Audit Office, an Agency under the Parliament, presents audit reports on the Government Agencies’ annual reports.

In April, the Government presents the Spring Fiscal Policy Bill (see above, under ‘Instruments’) to the Riksdag. The Government also presents a separate bill, on a proposed supplementary budget, which proposes certain changes in appropriations for the current year. It also submits an annual report for the central government sector (‘Central Government Annual Report’), in which it presents actual levels of income and expenditure in the previous fiscal year. The Swedish National Audit Office examines it. In June, the Riksdag takes a formal decision on the Spring Fiscal Policy Bill. The Riksdag also decides on the Central Government Annual Report and the Swedish National Audit Office’s audit report. In May, the Fiscal Policy Council submits its report on the Swedish fiscal policy to the Government. In its report, it evaluates the extent to which the fiscal objectives have been achieved.

In May, the Government starts drafting the Budget Bill. The ministries propose how to allocate funds to individual appropriations within the framework for the different expenditure areas (which the Government decided on in March). The Ministry of Finance examines the ministries’ proposals. When drafting the Budget Bill, the expenditure framework, previously agreed on, binds the Government. Also in May, the Government submits written communications to the Riksdag where it describes the achieved results in the different activity areas in the last few years. In June, the Government holds deliberations.

The work on the budget resumes in August (Swedes traditionally take their summer break in July), and the Ministry of Finance negotiates the details on the Budget Bill with the other ministries. In September, the government submits a proposal to the Riksdag on the Budget Bill. After that, the Government may not introduce any changes. When presenting the Budget Bill, the Government also presents a supplementary budget with changes in appropriations for the current year. Individual Members of Parliament from the opposition may submit alternative proposals or amendments on the Budget Bill (‘motions’). These proposals have to be submitted at the latest 15 days after the Government has presented the draft Bill. Each party generally presents an alternative budget.

The Riksdag then starts examining the draft Budget Bill. The Parliamentary Committee on Finance first examines the expenditure ceilings for the coming years and the allocation of expenditure to different areas. It then examines the estimate of central government revenue and expenditure. Other parliamentary committees than the Committee on Finance may also comment on the draft Budget Bill. The Committee on Finance formulates a proposal (‘betänkande’), which is debated in the Riksdag in November. Thereafter, the Parliamentary Committees submit proposals on how to allocate expenditure in the areas for which they are responsible. The Riksdag takes a decision on the Budget Bill in December. Before the end of the calendar year, the Government has to implement the Budget by issuing ‘appropriation directions’ to the Government Agencies. In these instruments, the Government specifies the Agencies’ objectives and the size of available funding.

General change           
II.2
How has the budgetary process changed since the beginning of the financial/Eurozone crisis?

No changes have been introduced since the beginning of the crisis.

Institutional change        
II.3
What institutional changes are brought about by the changes in the budgetary process, e.g. relating to competences of parliament, government, the judiciary and independent advisory bodies?

No changes introduced.

Change of time-line 
II.4
How has the time-line of the budgetary cycle changed as a result of the implementation of Euro-crisis law?

No changes introduced.

Miscellaneous
II.5
What other information is relevant with regard to Sweden and changes to the budgetary process?

No other relevant information.

[1] Information to this section mainly comes from the Budget Process Committee’s interim report on the Swedish implementation of Council Directive 2011/85/EU, pp. 41 to 42 (on the legal framework for the Swedish budget procedure). See also the English Summary of the Report, p 10.

[2] See the English Summary of the Budget Process Committee’s interim report on the Swedish implementation of Council Directive 2011/85/EU, p 10.

[3] Robert Boije, Albin Kainelainen and Jonas Norlin, ‘The Swedish fiscal policy framework’, Nordic Economic Policy Review, Number 1/ 2010, p 209.

[4] For an overview of the budget process in English, see http://www.regeringen.se/content/1/c6/10/22/20/645d8a9c.pdf