Central government finances remain strong – but higher borrowing in 2020

Press release 25 October 2018

The economic boom in Sweden continues, but growth slows slightly in the next two years. Central government finances remain strong. However, in combination with expected withdrawals from tax accounts, the slowdown leads to a shift in the central government budget to a small deficit in 2020. This is presented in the Debt Office’s new forecast. To respond to the deficit and a larger volume of maturing loans, the Debt Office plans to increase borrowing in government bonds in 2020.

“The main reason for the turnaround in the budget balance at the end of the budget period is that we expect private individuals and companies to withdraw money from tax accounts when market interest rates rise, but the more subdued growth rate also has an effect. The underlying central government finances remain strong and will be maintained by factors including increased income from consumption taxes,” says Debt Office Director General Hans Lindblad.

The Debt Office’s forecast points to a budget surplus of SEK 96 billion this year and SEK 62 billion next year. This entails small changes from the June forecast. For the new forecast year of 2020, the Debt Office sees a shift, after four years of surpluses, to a deficit of SEK 12 billion instead. Then, capital investments in tax accounts are expected to decrease by SEK 50 billion, after having increased every year since 2015. The budget balance excluding withdrawals of capital investments from tax accounts is estimated at surplus in 2020, see table below.

In contrast, central government net lending, which is not affected by capital investments in tax accounts, shows a more even development and is estimated to gradually decrease to 1.1 per cent as a proportion of GDP in 2020. The decline in net lending reflects the economic slowdown being forecast by the Debt Office.

Swedish economy and central government finances
Previous forecast in brackets     201820192020

GDP (%)

2.4   (2.8)

1.9   (1.8)


Unemployment (% of labour force)

6.3   (6.3)

6.5   (6.5)


Budget balance (SEK billion)

96 (90)

62 (69)


Budget balance excluding capital investments in tax accounts (SEK billion)

78 (66)

56 (57)


Net lending (% of GDP)

1.5   (1.2)

1.3   (0.8)


Central government debt (% of GDP)

26 (26)

23 (22)


The estimates in the Debt Office’s forecast are based on the fiscal policy in the Budget Bill for 2018, since a new budget has not yet been presented. In addition, further reforms have been assumed that have a negative impact on the budget balance of SEK 10 billion in 2019 and SEK 15 billion in 2020.

Issue volume is increased in 2020 for first time in five years

Central government borrowing is conducted through the Debt Office selling government securities, primarily government bonds. Throughout 2019, the issue volume of government bonds stays at SEK 1.5 billion per auction, or an annual rate of SEK 30 billion. In 2020, when the volume of maturing loans increases and the central government budget shows a deficit, the issue volume is then raised. The Debt Office then expects to sell SEK 2 billion of government bonds per auction, corresponding to an annual rate of SEK 40 billion.

During 2020, the number of T-bill auctions increases, and the stock grows to SEK 40 billion.

Central government borrowing, SEK billion
Previous forecast in brackets201820192020

Government bonds

32 (32)

30 (30)


Inflation-linked bonds

9 (9)

9 (9)


T-bills (stock at year-end)

20 (20)

20 (20)


Foreign currency bonds

88 (88)

44 (44)


– of which on-lending to the Riksbank

88 (88)

44 (44)


Central government debt continues to decrease

The central government debt is estimated at SEK 1 236 billion at the end of 2018, SEK 1 119 billion at the end of 2019, and SEK 1 114 at the end of 2020. This corresponds to a GDP share of 26 per cent, 23 per cent, and 22 per cent, respectively.

The Debt Office’s forecast for the development of the central government debt means that the debt according to the Maastricht measure will reach the ‘debt anchor’ of 35 per cent of GDP at the end of 2019.

Read the report: Central government borrowing – forecast and analysis 2018:3


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