A central government surplus this year turns into deficit next year

Press release 26 October 2016

A central government budget surplus of SEK 80 billion 2016 turns into a deficit of SEK 33 billion 2017, according to the latest forecast from the Swedish National Debt Office.

The main driver behind the surplus is excess deposits in tax accounts. As the budget balance for 2016 and 2017 is now revised by SEK 48 billion, the total borrowing requirement is lower than in the previous forecast.  Therefore the Debt Office is reducing the issue volumes of all types of government securities. This means that borrowing in government bonds will be SEK 81 billion this year and SEK 66 billion next year.

- The deposits in the tax account will complicate the interpretation of the central government finances. The reported central government debt will be lower than it actually is, as the balance of the tax account in practice constitutes a debt of the state, says Director General Hans Lindblad.

Excess deposits in the tax accounts are an expensive way of borrowing for the state. The additional cost is estimated at approximately SEK 500 million for 2016, compared with the Debt Office's regular borrowing.

The Debt Office's forecast points to a GDP growth of 3.3 percent this year, 1.9 percent next year and 1.8 percent 2018. The global recovery is continuing slowly and Swedish growth is driven by domestic demand.

Changes compared to previous forecast
The budget surplus for 2016 is just under SEK 40 billion larger than the Debt Office's previous forecast in June. This is mainly due to an increase in payments to the tax account, but also to lower costs.
The budget deficit for 2017 is SEK10 billion lower than in the previous forecast. This is mainly due to tax revenues increasing by SEK 5 billion, mainly explained by higher revenue from consumption-based taxes and slightly higher provisional tax payments from companies.

Net borrowing requirement and central government debt (SEK billion)
Previous forecast in parentheses 2016 2017 2018
Net borrowing requirement (budget balance with opposite sign) –80 (–41) 33 (42)  –20
Central government debt 1 350 1 372 1 342
Central government debt as % of GDP 31 30 28

Government debt is estimated at SEK 1350 billion at the end of 2016, SEK 1 372 billion in 2017 and SEK 1 342 billion in 2018. This corresponds to 28 percent of GDP at the end of 2018.

Lower issue volume in government bonds
Due to lower net borrowing requirement and lower refinancing requirement the Debt Office reduces the auction volumes in government bonds from SEK 3.5 billion to SEK 3.0 billion during the forecast period. This means that borrowing in government bonds will be SEK 81 billion this year and SEK 66 billion in 2017. Borrowing in T-bills is reduced to SEK 10 billion per auction. Also borrowing in inflation-linked bonds will be decreased.

Borrowing (SEK billion)
Previous forecast in parentheses 2016 2017 2018
Government bonds 81 (83) 66 (77) 66
Inflation-linked bonds 16 (18) 14 (18) 14
T-bills 90 (120) 110 (130) 80
Foreign-currency bonds 60 (59) 67 (66) 105
– of which on-lending to the Riksbank 60 (59) 67 (66) 105

Central Government Borrowing 2016:3


Robert Sennerdal, press officer, +46 8 613 46 94