[LINK] "Sweden Risks Breaching Budget Ceiling to Pay for Refugees"

[rfmcdonald]

Bloomberg's Amanda Billner notes that the surge in refugee flows in Sweden is on track to cause havoc with public finance.

Magdalena Andersson risks becoming Sweden’s first finance minister to breach the budget ceiling since the current fiscal policy framework was put in place in 1997.

Her finances are buckling under a wave of refugees that could reach more than 350,000 people this year and next, equal to almost 4 percent of the population. The migration agency sees refugee costs reaching 60 billion kronor ($7.1 billion) next year, double its earlier forecast.

That spells trouble for the ruling Social Democrat-led coalition, which in its 2016 budget only has a buffer of 17 billion kronor before it hits the spending ceiling. While breaching that limit has no legal ramifications, it would be politically difficult for the minority government. It’s struggling in the polls and coping with a legacy of deficits left over from the financial crisis.

“If they breached the ceiling without saying so, that would go against tradition,” said Anna Breman, an economist at Swedbank AB. “It’s more likely that they’d try to ask for a raised ceiling and refer to the fact that it’s an extraordinary situation.”

The government already gave itself more room earlier this year, lifting the ceiling for next year by 4 percent. The former administration, ousted in 2014, kept increases within 1.2 percent a year this decade.