Swedish National Olympic Committee president Stefan Lindeberg said lengthy discussions with the government failed to convince officials to guarantee the Ostersund bid.
He said 600million euros of infrastructure investment was needed, plus one billion euros for the operation of the Games, reports aroundtherings.com
The race for 2014 could be between just two cities by the end of the July, the deadline for applications. Pyeongchang, South Korea is certain, while Salzburg, Austria is believed to be close to a decision.
Both cities were runners-up in the 2010 contest.
