In-depth analysis of the outcome in January – larger disbursements from government agencies

News 21 February 2012

The net borrowing requirement was SEK 12.2 billion higher than expected in January. The large difference is mainly explained by larger disbursements from government agencies and larger interest payments on central government debt. In addition, tax revenues were lower than forecast. Overall, the net borrowing requirement has been SEK 13.0 billion larger than forecast in the last four months.

Tax income was SEK 2.5 billion lower than forecast in January. This is mainly due to lower corporate taxes.

The accumulated difference in tax revenue for the period October-January is a modest SEK 2 billion. However, taxes on consumption stand out as they have been a total of SEK 6 billion lower than forecast in the last four months. It is a sign that household consumption developed weakly in the fourth quarter of 2011. The lower income from consumption based taxes was offset by other taxes being SEK 4 billion higher than forecast. This can mainly be explained by lower tax refund payments in December than expected. Wage based taxes have developed in line with our calculations.

Disbursements from government agencies were significantly higher than forecast in January. These are minor differences on a number of authorities which together have a large effect on the borrowing requirement. This cannot be interpreted as any persistent increase in expenditure related to a weaker economy. Probably it is largely due to shifts in payments between months. Transfers to households, which are the expenditures with the closest connection to the business cycle, have consistently been close to forecast in the past four months. We therefore assume that this will not have any major impact on future expenditure

The Debt Office net lending to authorities was in line with the forecast in January. The cumulative difference since October is also small, although there were large differences for individual months. The Debt Office net lending is affected by deposits and withdrawals made in connection with repo transactions by government agencies. These kinds of transactions can have large effects on the outcome specific months but they do not affect the underlying government finances.

Interest rate payments on the government debt have been higher than calculated, which is mainly explained by larger exchange rate losses arising due to rollovers with derivatives in our benchmark portfolio.

Differences outcome net borrowing requirement Oct 2011- Jan 2012

All values in SEK billion and in net borrowing requirement terms. A positive value means that the government has to borrow more than expected.

Further information can be obtained from:
Håkan Carlsson, +46 8 613 47 33