The Debt Office has large commitments in the form of guarantees for infrastructure projects, credit institutions and pensions for employees of government agencies that have been privatised, such as the former Swedish Post Office.
A guarantee constitutes a risk, which is usually shared by the central government and the lender. For this reason, a guarantee should never cover the full amount. There are different types of guarantee commitments.
Standing surety for someone else’s loan, i.e. acting as guarantor, is the type of guarantee most commonly provided by the Debt Office. The borrower pays a fee to compensate for the risk accepted by the Debt Office.
When government agencies started being privatised in the early 1990s, their pension undertakings were transferred to the new company and are guaranteed by the Debt Office. These relate to former government agencies such as the Post Office, the National Forest Enterprise and the National Board of Public Building. The single largest undertaking is PostNord. Some of these undertakings are insured with PRI Pensionsgaranti. This means that the Debt Office has issued a supplementary guarantee, should the company or PRI be unable to pay out pensions.
On 31 December 2018, the pension guarantees amounted to approximately SEK 8 billion, of which SEK 5.5 billion was insured with PRI.
A guarantee to inject capital under certain future circumstances is a type of guarantee that is becoming increasingly uncommon. Only the Riksdag and the Government can commission the Debt Office to issue such guarantees.
- A guarantee fund is a guarantee to inject capital in a company that is in a vulnerable position. This guarantee is valid for a limited time with a limited amount. The Debt Office has issued a guarantee fund for Svenska Skeppshypotek for SEK 350 million, which is valid until 2039.
- A capital adequacy guarantee is similar to a guarantee fund, but has no limitation in terms of time and amount. It is an unlimited undertaking, which makes the risk difficult to assess.
- Callable capital for international financial institutions – Sweden is a member of several multilateral financial institutions, such as the Nordic Investment Bank. The membership is based on authorised capital, provided in the form of callable capital, which means that the central government via the Debt Office is obligated to inject the capital requested by the institution. This is an unlimited credit, for which we keep a special reserve. Payments from this reserve are then subsequently deducted from the appropriations for the ministry concerned.
- Guarantee programmes are a more standardised initiative to support a certain industry or field. These may for example relate to the shipbuilding industry or to national emergency preparedness.