Economic slowdown and increased borrowing from 2020

Press release 23 October 2019

The Swedish economy slows and the central government budget is expected to shift to a deficit starting next year. The deficit and large bond redemptions cause the central government borrowing requirement to increase. Therefore, starting in January 2020, the Debt Office will progressively increase borrowing.

Today, the Swedish National Debt Office is publishing its new forecast for economic development, the budget balance, and central government borrowing up to and including 2021.

The slowdown in the economy entails slower growth in tax income while expenditure increases, contributing to a budget deficit in coming years. The larger borrowing requirement means that we will increase borrowing from the current historically low levels, mainly by issuing more government bonds,” says Debt Office Director General Hans Lindblad.

Weak growth contributes to the budget balance shifting to a deficit in 2020

In its new forecast, the Debt Office expects a weak economic development. Both GDP growth and the labour market have slowed more than expected in the previous forecast from June. Next year, the Swedish economy is expected to grow slowly, while unemployment rises. Growth increases somewhat towards the end of the forecast period, primarily driven by household consumption, but GDP growth continues to be below the historical average.

This year, the central government budget surplus is expected to be SEK 113 billion, boosted by the Riksbank repaying loans amounting to SEK 67 billion. Compared with the previous forecast, this entails a somewhat lower surplus. The effects of the economic slowdown become more distinct next year, and the surplus turns into a deficit of SEK 17 billion in 2020 and SEK 27 billion in 2021.

Central government net lending, which better reflects the underlying development of state finances, is instead expected to decrease more gradually during the forecast period, from 0.8 per cent of GDP this year to 0.2 per cent in 2021.

Sweden's economy and central government finances
Previous forecast in parentheses201920202021

GDP (%)

1.3 (1.8)



Unemployment (% of labour force)

6.7 (6.5)

7.1 (6.7)


Budget balance (SEK billion)

113 (121)

-17 (-19)


Central government net lending (% of GDP)

0.8 (0.9)

0.5 (0.5)


Central government debt (% of GDP)

22 (22)

21 (21)


Issuance volumes in government bonds and treasury bills increase

In order to manage the coming budget deficit, as well as large bond redemptions at the end of 2020, the Debt Office is gradually increasing the issuance volume of nominal government bonds. The auction volume will be raised from the current SEK 1.5 billion in several steps starting in January 2020, to reach SEK 3 billion per auction in January 2021. This corresponds to a pace of SEK 60 billion annually. In the second half of 2020, borrowing in treasury bills also increases.

The size of next year’s green bond issuance by the Debt Office is yet to be determined and therefore not included in the borrowing plan. The Debt Office has accounted for this. Under the present borrowing requirement forecast, the planned borrowing in government securities will not be affected by the green bond issuance.

The Debt Office has also examined whether to issue an ultra-long bond in kronor, in light of the current low interest rate environment. The Debt Office’s overall assessment is that there is not scope in this issuance plan for a bond of this kind. Nevertheless, the Debt Office will continue to analyse the conditions for potentially issuing, and demand for, long-term bonds.

Central government borrowing, SEK million

Previous forecast in parentheses




Nominal government bonds

30 (30)

51 (30)


Inflation-linked bonds

8 (9)

9 (9)


Treasury bills (outstanding at year-end)

20 (20)

40 (30)


Foreign currency bonds

19 (19)

60 (59)


– of which on-lending to the Riksbank

19 (19)

60 (59)


Central government debt levels out

According to the forecast, the central government debt will no longer decrease as it has in recent years and is expected to amount to SEK 1,115 billion at the end of 2021. This corresponds to 21 per cent of GDP. The debt according to the Maastricht measure is expected to reach the debt anchor of 35 per cent this year and remain at that level until the end of 2021. The Maastricht debt measure comprises the entire general government sector.

Central Government Borrowing – Forecast and Analysis 2019:3, PDF


Debt Office press telephone: +46 8 613 47 01

The Debt Office is the central government’s financial manager. Our mandate includes central government borrowing and debt management. The objective is to do so at as low a cost as possible while keeping risk to a minimum.

In the report Central Government Borrowing – Forecast and Analysis, published three times a year, forecasts are presented for the economic development and central government budget balance for the next two years. On the basis of these forecasts, the Debt Office calculates the borrowing requirement and establishes an issuance plan that is also presented in the report.