To be sure, in recent years we have been showing some real restraint in our approach to fiscal policy. Yet, despite terminating a number of programs, the ratio of federal nondefense, noninterest, spending to GDP still stands at nearly 14 percent, double what it was in the 1950s. This may be one reason why inflation premiums, embodied in long-term interest rates, still are significant.
With regard to the sustainability of its fiscal position, the outlook is for a further decline in the debt ratio to 61.3% in 2000 and Sweden is expected to comply with the medium-term objective of the Stability and Growth Pact of having a budgetary position that is close to balance or in surplus.