The Debt Office’s guidelines proposal for 2014 – 2017

27 September 2013

The Debt Office proposes that the benchmark of foreign currency share of 15 per cent is replaced by a ceiling at the same level. A ceiling is more ideal than a fixed benchmark since the possibility of reducing costs through currency exposure may change over time. The Debt Office expects to maintain the foreign currency share unchanged in principle in the coming year.

In this year’s proposed guidelines the Debt Office continues to analyse the foreign currency share by making a more thorough analysis of cost and financing risk aspects related to the currency debt.

It is the Debt Office’s view that central government debt should have a share of foreign currency exposure if that share contributes to reducing the expected cost while taking risk into account. Since the possibility of reducing costs may change over time, the currency share should not be fixed.

Consequently it is not ideal to have a fixed target for the currency share. The Debt Office suggests that the Government decide instead on a ceiling for the currency debt share and that this ceiling is set at 15 per cent, i.e. the same level as the current benchmark for the currency share.

The Debt Office expects to maintain the currency share unchanged in principle in the coming year. There are no evident cost disadvantages having the current currency share. Moreover, there is reason to await a decision on the Inquiry of the Riksbank’s financial independence and balance sheet that may affect currency exposure in central government debt and also the role that the Debt Office may have in financing the foreign currency reserve.

The Debt Office also proposes a complementary addition to the guideline for the benchmark of long maturities so it is clear that the benchmark is long-term. The proposal implies no change in practice but aims to clarify the current regulation.

For more information, please contact:
Linda Rudberg, press relations, +46 8 613 45 38

Central Government Debt Management - Proposed guidelines 2014-2017