And, finally, before 1 April the following year, the Minister of Finance and General Government has to submit a report to the Government on the degree of fulfilment by all tiers of government of the objectives in the initial budget. I consider that these reports should in fact offer this complete picture of the budgetary projection that we are today lacking. I would further remind you that the Government has announced the creation in 2013 of an Independent Fiscal Authority to ensure compliance with budgetary regulations. This type of institution has proven useful in other developed countries in enhancing budgetary policy credibility. It is, however, crucial that such an institution should enjoy a degree of independence, effective responsibilities and resources in line with best international practices. I will now discuss the essential features of the State and Social Security budget for 2013. Macroeconomic setting and fiscal deficit The draft State Budget for 2013 is part of a macroeconomic setting in which real GDP is estimated to decrease by 0.5% as a result of a negative rate of change in national demand of 2.8%, which would be partially offset by a 2.3 pp contribution from the external sector. BIS central bankers’ speeches  5  This projection of a 0.5% decline in GDP in 2013 is clearly optimistic compared with the fall of around 1.5% currently projected by most international organisations and analysts. That said, I would like to make two observations.
It was difficult to predict the large fall in share prices and property prices. The decline in demand was substantial in any case and production and employment fell considerably. Unemployment reached the highest level of the post-war period. The  2  BIS Review 43/2006  budget deficit and government debt (as a percentage of GDP) also increased to all-time highs as a result of the crisis. Sweden and Finland were the European countries that suffered the most from the crisis, but other countries also experienced serious problems (see Figure 4). For most countries, this proved to be dearly-bough experience. Monetary policy was reformed to inflation-targeting policy, the exchange rate was allowed to float and a deficit target and an expenditure ceiling were introduced as norms for fiscal policy. We have had this new policy in Sweden for around 10 years now, and many other countries have chosen a similar policy. The labour market situation Most people would probably agree that the period from the mid-1990s, when inflation targeting was introduced, has been a relatively successful time in macroeconomic terms. Inflation fell fairly quickly from levels close to 10 per cent to around the inflation target of 2 per cent. Inflation has remained at a low level since then, albeit slightly too low in recent years (see Figure 1). Annual GDP growth has on average been twice as high over the past ten years as during the period 1980-1993. Employment growth has also been higher (see Figure 5).