specific and general grants in sweden

Ministry of Finance Sweden

Specific and general grants in Sweden

what has occurred after the grant reform in the 1990’s?


Questions for my paper

• Has a shift has taken place with respect to the use of general and specific purpose grants allocated to local governments in Sweden?

• Specifically:• Have the specific purpose grants increased? • How has the balance (policy-mix) between

general and specific purpose grants evolved over time?


Grant reform of 1990’s

• Emphasis on general grants • Though specific grants still in place

• 1993 municipalities • 1996 county councils


Specific grants before 1993

• Equalise service levels and• Secure an element of basic security

and fairness to citizens, irrespective of their place of living.

• Specific grants expanded the scope and the size of the public sector = intented impact.


Arguments for a general grant system

• Economic efficiency.• Better equalisation of costs and income.• Enhance local democracy, accountability,

flexibility and innovation. • 18 specific grants were abolished and

used to finance the general grants.

• Financial crisis played into the decision.


Grants in the early 1990’s

0

10

20

30

40

50

60

70

80

90

100

1990 1991 1992 1993

General grants (VAT compensation excluded)

Specific purpose grants

Sum of general & conditional grants


Criteria for specific grants that should remain

• Payments for services undertaken on behalf of the state,

• for investment and development, • existed due to labour market

considerations, • for public housing, • were paid on equal terms to local

governments and other organisations and

• for renewal and development projects.


Specific purpose grants 1990-1993

0

10

20

30

40

50

60

70

80

1990 1991 1992 1993

Municipalities

County councils


Specific grants have increased

0

20

40

60

80

100

120

140

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008


Specific and general grants 2003-2008

0

20

40

60

80

100

120

140

2003 2004 2005 2006 2007 2008

General grants

Specific grants

Sum of grants


Specific purpose grants 2003-2008

0

5

10

15

20

25

30

35

2003 2004 2005 2006 2007 2008

Municipalities County councils


Grants as proportion of local government income

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2003 2004 2005 2006 2007 2008

General grants

Specific purpose grants

Sum of grants


Conclusions

• The grant reform of the 1990’s had impact on the policy mix between conditional and general grants.

• Speficic purpose grants fell from 17 % of local governments income in 1992 to 7 % in 1993.


• The number of conditional grants grew between 1993 and 2001.

• But declined slightly thereafter.• Especially grants intented for a

particular group of municipalities and county councils.

• Could be harmful to equalisation and economic efficiency.


The last five years

• Grants from the central government accounted for 15 % of local government income in 2008.

• Specific purpose grants have grown in size, and to a certain extent in numbers, but their significance as a source of finance has in fact declined of lated.

• Specific purpose grants represent app. 7-8 % of local governments income (2003-2008).

• General grants slightly bigger.


The composition of the specific grants has changed

• In the last five years, specific purpose grants have grown more important for county councils

• Specific grants have declined in significance for the municipalities compared to the early 1990’s

specific and general grants in sweden

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