ABSTRACT
The chapter first examines the characteristics of the Swedish fiscal system are described. This is followed by a content-analysis of the consolidation programs that were implemented in response to the economic crisis. Next, the chapter takes a closer look at the Swedish budget system: a short historical overview is followed by an in-depth examination of the 1996 State Budget Act and the reformed budget process. The new social democratic government announced the fiscal consolidation plan in November 1994 and carried out the programs that combined tax increases with expenditure cuts. In spite of being a minority government, the Social Democrats secured cooperation from the Left Party, as well as from the Center Party, which wanted to keep its distance from a Moderate Party that insisted on the fiscal consolidation solely through expenditure cuts. The Swedish fiscal consolidation programs in the 1990s were implemented by the Social Democrats on a large scale both in terms of expenditure reductions and revenue enforcements.
