The Debt Office provides guarantees and loans to both government and private entities following approval by the Riksdag (Swedish Parliament) and the Government. A fee is charged for the service.
A guarantee undertaking means that we stand surety for another party's payments. The most common type of guarantee is a credit guarantee, in which we guarantee interest payments on and amortisations of another party's loan.
The Government provides guarantees and loans primarily because it is sometimes difficult for businesses to borrow, even when they are creditworthy. This may be because of temporary disruptions to the credit market or because some projects involve political risks that private lenders find difficult to assess.
Our largest guarantees and loans have long been in investments in infrastructure. During the global financial crisis that started in 2008 and the following economic recession, we gained new assignments in the automotive industry.
The financial crisis also brought new guarantee assignments as part of government measures to protect the stability of the financial system. The bank guarantee programme is part of our assignment within the area of bank support. Deposit insurance and investor compensation are also part of the Debt Office's mandate.
Costs are covered by fees
When we grant guarantees or loans, we consider the financial risks involved for the central government. We then charge a fee for the risk of each undertaking in accordance with insurance principles. This means that in the long term, these fees should cover any losses that arise. The fees we charge must also cover our administrative costs.