Measures during the coronavirus pandemic in 2020
Starting in 2020 during the COVID-19 pandemic, the Debt Office adopted several measures to support the Swedish economy.
The government borrowing requirement grew rapidly when the pandemic broke out in the spring of 2020. The Debt Office met this requirement by increasing the borrowing in all types of government securities.
The central government debt ended up at around SEK 1,280 billion at the end of the year, which was SEK 168 billion higher than in the preceding year. Measured as a share of GDP, the debt increased from 22 per cent to 26 per cent during the year – a continued low level both historically and by international comparison.
By 2021, the economy had already recovered from the drop during 2020, and the central government debt started to decrease again.
Measures and collaborative effort for financial stability
The agency had close contact with other government agencies responsible for maintaining financial stability: the Riksbank, Finansinspektionen (The Swedish Financial Supervisory Authority), and the Government Offices. Together, they monitored developments in the financial markets and stayed prepared for implementing various types of measures.
Among other things, the Debt Office extended the phase-in period for banks to meet certain MREL requirements, in order to make it easier for the banks to support the credit supply to businesses and households during the crisis.
The Government guarantee programme for companies
In light of the pandemic’s impact on the Swedish economy, the Government decided in March 2020 to issue a mandate to the Debt Office to implement a state guarantee scheme for new loans to mainly small and medium-sized enterprises. The guarantee scheme, named the Government guarantee programme for companies (Företagsakuten in Swedish), entailed that the central government took on the majority of the risk involved in the lending to companies that were adversely affected financially by the pandemic but otherwise viable.
The guarantee scheme was originally intended to be in place for three months but was extended and subsequently closed to new guarantees on 30 September 2021. At the end of the year, the Government decided to allow the possibility to extend the maturity of loans already granted from three to a maximum of five years.
By 30 September 2021, a total of SEK 2.7 billion in lending had been reported, of which SEK 1.9 billion was guaranteed. The number of loans granted amounted to 764.
Credit guarantee scheme and support for Swedish airlines
The pandemic caused a global crisis for the airline industry. In light of this, the Government created a special guarantee scheme for the industry. In 2020, the Debt Office got to provide credit guarantees to certain airlines that were adversely affected by the pandemic.
The guarantee scheme was available to airlines that on 1 January 2020 had a Swedish permit to conduct commercial aviation activities and had their primary operations or were domiciled in Sweden. Airlines for which passenger aviation was not part of their primary operations were not eligible for the guarantee scheme. The credit guarantees amounted to a total of SEK 5 billion, of which SEK 1.5 billion was for SAS.
In May of 2020, the Debt Office issued a credit guarantee for SEK 1.5 billion to SAS under the scheme. The guarantee was a joint measure whereby the Danish state made an equivalent guarantee commitment. In October of that year, SAS repaid the loan jointly guaranteed by the Debt Office and the Danish central government, and the credit guarantee was thereby terminated prematurely.
At the end of 2020, the Debt Office issued a credit guarantee to Braathens Regional Airways. The guaranteed amounted to SEK 180 million.
In July of 2021, the Government gave the Debt Office an assignment to provide a lending framework of SEK 1.5 billion to SAS to support the airline during the still ongoing crisis period of low demand for air travel. This was done in close collaboration with Denmark, which made an equally large commitment.