Liquidity management

The Debt Office’s liquidity management is to ensure that central government payments are made in time and at as low a cost as possible – while taking risk into account. We also work to improve the liquidity of the market and reduce the risk of disruptions.

Central government revenue and disbursements provide a daily deficit or surplus which is to be funded or alternatively invested. The average daily deficit is SEK 15–20 billion although it can be as large as SEK 50 billion. There is a surplus on a quarter of the days and these surpluses can vary between SEK 10 billion and SEK 40 billion.

Deficits are mainly funded with short-term T-bills, commercial papers and deposits. When there is a surplus to invest we mostly use repos, commercial papers and deposits.

In foreign currency

The Debt Office not only handles payments in kronor. Maturing foreign currency loans and interest payments on the foreign currency debt must also be paid. When making such payments we exchange kronor for the currency needed. We thus also counter inflows and outflows in our foreign currency accounts within liquidity management.

Maturing loans and borrowing in foreign currency are not evenly distributed over time. The exchange risk in payments of, for example, maturing loans can be evened out by using forward contracts. We strive to achieve an even spread of net exchanges – the net of interest payments, borrowing, maturing loans and forward contracts.

Depending on our requirements we can either buy foreign currency in advance on a forward contract, or purchase foreign currency spot and at the same time sell foreign currency on a forward contract. Both techniques can be used to achieve an even foreign currency exposure over the year.

Daily borrowing need for a typical month

Daily borrowing need for at typical month, graph
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Daily borrowing need for a typical month 

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Article from Central Government Borrowing: Forecast and Analysis 2005:1 (1 MB)