Oct. 6 (Bloomberg) -- Sweden’s new government reached an agreement with the Left Party to work toward limiting profits at private providers of welfare.

“Tax money should go to the activity they are intended for and surpluses should in principle be reinvested in the business,” the government said in a statement. The main proposal will be presented in 2016, according to the statement.

The deal with the Left Party clears one of the hurdles that Prime Minister Stefan Loefven faces as he seeks to pass a budget after coming to power this month. Loefven’s minority government of Social Democrats and the Green Party ousted Fredrik Reinfeldt’s four-party coalition in Sept. 14 elections.

According to Ulla Andersson, the Left Party’s economic spokeswoman, the plan will allow private welfare providers to extract low interest rates on privately invested capital.

The issue over for-profit welfare became one of the main issues in the election amid concern eight years of tax cuts had eroded services such as education, elderly care and health care in the largest Nordic economy.

The government has until Nov. 15 to present a budget that it thinks it can push through the 349-member parliament. It will need help from the Left Party, which has conditioned its support on say in the budget.

To contact the reporter on this story: Niclas Rolander in Stockholm at nrolander@bloomberg.net To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net Niklas Magnusson