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'''FIGURE 15. Sources of central government tax revenue, FY72 (U/OU)''' (chart)

of Treasury bills. As of 31 December 1971, the national debt stood at US$8,063.6 million, or 21% of the GNP.

The measures taken in 1970 to restrain public expenditures and cool the overheated economy let to an atypically small deficit in FY71 (Figure 11). In the latter half of 1971, however, a reversal of policy in an attempt to stimulate business activity pushed the deficit to a new estimated high of US$936 million in FY72. Anticipating an upturn in the domestic economy and in foreign demand, Sweden's FY73 budget proposal was restrictive, calling for a relatively small increase in total spending and a decline in the overall deficit.

Taxes accounted for nearly 92% of central government revenue in FY71 and covered approximately 86% of total expenditures. Since FY65, receipts from direct taxation have doubled, while indirect tax receipts have increased more rapidly, by about 150%, providing over half of the total revenue since 1960. The value-added tax is the most important indirect tax, while the income and property taxes yield the lion's share of direct tax revenues (Figure 15).

About half of the government's combined current and capital outlay is concentrated in three areas — education and research (18%), social security benefits (18%) and defense. The defense budget for the period 1 July 1968 through 30 June 1973 averaged 13% annually of the central budget. Communications (including roads) and electric power together add another 9%. In the previous five budgets, the growth rate of expenditures has ranged from a low of 6% to the high of 17% posted in FY71. The restrictive FY73 budget projects a growth in expenditure of 5%. Rather than raise the already high general level of taxes during a recovery, the government has chosen to restrain expenditures. Priority, however, has been given to increases in expenditures for labor support programs, child support, electric power development, and environmental protection.

D. Banking and commerce (U/OU)

1. Banking and monetary policy

The Swedish banking system is generally similar to banking systems elsewhere in Western Europe and North America. A network of commercial banks with numerous branches nationwide, a large number of savings banks, and a central bank — the Swedish National Bank (Sveriges Riksbank) — account for most

'''FIGURE 16. Deposits by the public in selected credit institutions (U/OU)''' (chart)

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