Sweden predicts record budget surplus in 2007

Lower unemployment and windfall from the planned sale of state-owned companies are expected to boost Sweden's budget surplus.

Lower unemployment and windfall from the planned sale of state-owned companies are expected to boost Sweden's budget surplus to a record 138 billion kronor (euro14.7 billion; US$19.6 billion) this year, a government agency said Monday. The National Debt Office upped its earlier forecast in February by 26 billion kronor (euro2.8 billion; US$3.7 billion), citing "larger tax revenue than expected."

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Although Sweden's center-right government has trimmed tax levels since taking office in October, the debt office said higher employment levels and bigger corporate profits would boost tax income more than expected.

The Finance Ministry has forecast that unemployment will fall to 6.7 percent this year, from 8.4 percent in 2006.

The four-party government has vowed to reduce its control in Swedish companies and reduce debt by selling off stakes in six listed and unlisted companies - worth at least 150 billion kronor (euro15.9 billion; US$21.2 billion) - over the next three years. The listed companies are Nordic telecom operator TeliaSonera AB, banking group Nordea AB and stock market operator OMX AB, and the unlisted companies are real estate group Vasakronan AB, residential mortgage company SBAB, and liquor group Vin & Sprit AB, the maker of Absolut vodka.

It is unclear whether the government will sell off entire stakes or whether it intends to keep partial ownership in some of the companies. As a result, the National Debt Office said "the uncertainty of the forecast is greater than usual." It said tax cuts and "some slowdown in economic activity" would reduce the surplus to around 118 billion kronor (euro12.5 billion; US$16.64 billion) in 2008.