Source: ForexYard
In a pledge to keep the budget balanced as the economy experiences reduced growth, Swedish Finance Minister Anders Borg hinted that a budget crisis may be underway for fiscal year 2012. Economists were not expecting Sweden to get hit very hard by the downturn in Europe, but some adjustments have been made.
The Swedes have kept a budget surplus of roughly 0.1% over the past fiscal year, and the pledge Borg made was in trying to keep this surplus intact through what is anticipated to be a sluggish period. He noted that monetary measures made over the past 12 months have given the Riksbank room to maneuver should financials get tight.
It should be remembered that Sweden was briefly in a period where it was hiking interest rates at every meeting. Should a crisis emerge, those rates can be reduced back to where they were just one year ago. Though this would undoubtedly harm Sweden’s economic and business outlook and optimism levels, it would do the job at keeping the krona (SEK) strong.
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