Somewhat quicker recovery in Swedish central government finances

3 March 2010 - Press release

Swedish central government finances will recover somewhat more quickly as the labour market downturn will be less sharp than expected. The Debt Office's new forecast indicates smaller budget deficits in 2010 and 2011 than the previous forecast, although the changes are minor. Accordingly, the plan for central government borrowing is largely unchanged.  

The budget deficit is estimated at SEK 53 billion in 2010 and SEK 37 billion in 2011. This is a reduction of SEK 11 billion and SEK 4 billion compared with the previous forecast.

The change in the 2010 forecast is mainly explained by lower unemployment than previously expected, leading to higher revenue from wage- and consumption-based taxes. At the same time, unemployment insurance payments will be lower. The forecast for 2011 is almost unchanged.

The main reason behind the stable forecasts is that we have only made small changes in our macroeconomic assessment.

Some brightening in the labour market

We have anticipated for a long time that the recovery of the real economy would begin at the end of 2009. We now estimate GDP growth of around 2.5 per cent for 2010 and just below 3 per cent for 2011.

The downturn in the labour market will not be quite as sharp as we expected in October. We have therefore reduced our forecast of unemployment slightly. We still expect an increase in 2010 compared with 2009, but next year unemployment will decrease.

Central government debt still below 40 per cent of GDP

The central government debt will be SEK 1,240 billion and SEK 1,277 billion respectively at the end of 2010 and 2011. This corresponds to 39 and 38 per cent of GDP.

Central government debt including the Debt Office's financial assets is estimated at SEK 1,133 billion and SEK 1,169 billion. This corresponds to 35 per cent of GDP both years.

Borrowing largely unchanged

The stable forecasts for the budget balance mean that we do not need to make any significant changes in the borrowing plan.

The issue volume in nominal government bonds remains at SEK 3 billion per auction. The stock of T-bills increases during 2010 in accordance with our previous forecast, while inflation-linked borrowing decreases from SEK 10 billion to SEK 9 billion per year. Borrowing in foreign currency bonds will be SEK 29 billion in 2010 and SEK 71 billion in 2011.

For further information, please contact:

Håkan Carlsson, forecasts, +46 8 613 47 33
Thomas Olofsson, borrowing, +46 8 613 47 82