IMF Issues Statement On Article IV Consultation With Sweden

by Mike Godfrey, Tax-News.com, Washington

19 June 2009

The IMF has issued a Mission Concluding Statement on its Article IV Consultation with Sweden. The statement confirmed that Sweden entered the downturn in good fiscal health. Debt was low and falling - the “fiscal balance sheet” reflecting long run sustainability, was strong, reported the IMF. Major corrective actions followed and, in the view of the IMF, these were sufficient.

The same global factors which supported Sweden's boom have left it highly exposed to the international financial crisis, reports the IMF. As an investment goods and consumer durables exporter, Sweden was hurt by weakening external demand long before the major contraction in global trade late in 2008, says the IMF. The Swedish economy has been hit hard and immediate prospects for recovery are very dependent on developments abroad, according to the IMF.

In terms of specific tax issues the IMF stated:

'Accordingly, the scale of the change in the structural fiscal balance projected by the mission — a weakening of 2.25% points of GDP in 2009, and a further 0.25% point in 2010 — appropriately balances the need for a decisive fiscal response to a uniquely sharp fall in demand, with sustainability concerns. The stimulus package includes permanent cuts in personal, social contributions and corporate income tax. These steps have merit in supporting supply side efficiencies, even though their immediate demand impact is likely limited.'

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