Sweden to cut spending, borrows more to accommodate overwhelming refugees

By Money Times

Oct 27, 2015 03:22 AM EDT

With the hordes of refugees crossing its borders, Sweden needs extra $7 billion in 2016 and $8.2 billion every year until 2019 to provide for the needs of the people seeking asylum in the country.

HNGN reported that the multitudes of refugees seeking asylum in Sweden are overwhelming the country, but 190,000 more is expected to arrive by its migration agency. Now, the nation is planning to make across-the-board spending cuts and increase borrowing to accommodate foreigners fleeing the war in Syria and other regions in the Middle East and Africa.

Reuters reported that the Finance Minister Magdalena Andersson said the costs to accommodate the refugees were unsustainable in the long haul. She even called on other neighbouring countries to share the burden.

"Clearly, the budget shortfall is going to be bigger this year than in our most recent forecast," she said. "It is going to take longer for us to get back to balanced public finances. It is also going to mean that we are going to need to borrow money."

The government set aside 4 percent of its overall budget, which is about 40 billion crowns to accommodate the refugees, but this figure is based on the present 74,000 asylum seekers of 2015.

Saving would mean reducing the cost of sick leave and improving the effectivity of the asylum system. Andersson is also planning to ring-fence the spending on health, jobs, and schools.

National Institute for Economic Research chief economist Jesper Hanson said the AAA credit rating that Sweden currently have will not be affected by the extra borrowing.

Bloomberg reported that Sweden is one of the major destinations for people escaping the war in Syria. There are also refugees coming from Afghanistan and Iraq crossing the borders of Sweden.

Most Swedes have accepted the open policy of their country's government. However, the Sweden Democrats, who became the third-largest party in the 2014 elections, is gaining support for its anti-immigration ideals. Not all Swedes are very hospitable and welcoming as several fires have been set at asylum centers from various parts of the country.

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