Larger budget surplus this year turns into deficit in 2017

Press release 15 June 2016

A strong Swedish economy coupled with some temporary effects lead to a central government surplus of SEK 41 billion this year, according to a new forecast from the Debt Office. The surplus turns into a deficit of SEK 42 billion next year as some of the temporary effects wane. The total borrowing requirement for the two years is lower than in the previous forecast, leading to a reduced issue volume of government bonds.

– Continued high consumption, a strong labour market and higher capital gains help strengthen the budget balance this year, although the surplus is also explained by temporary factors such as deposits of savings in tax accounts, a discount on the EU contribution and historically low interest rate payments, says Director General Hans Lindblad. The Swedish economy will grow at a strong pace this year and slow down gradually as resource utilisation in the economy rises.

The Debt Office expects Swedish GDP growth of 3.2 per cent in 2016 and 2.2 per cent in 2017. The slowdown in economic growth will start affecting central government finances towards the end of the forecast period.

The turnaround in the budget balance between 2016 and 2017 comes partly because deposits of savings in tax accounts are expected to decrease as the tax account interest rate is cut to zero. The lowered interest rate should also result in taxpayers requesting repayments of parts of their deposits. Central government tax income is also reduced by lower capital gains and larger outgoing payments of local government tax. On the expenditure side, government grants to local authorities and the EU contribution will increase next year.

Changes compared with the previous forecast

The budget surplus for 2016 is SEK 39 billion larger than in the previous forecast from February. The increase is partly due to higher capital gains for households and higher consumption-based tax income, but it is also an effect of tax accounts being used for savings.

The budget deficit for 2017 is SEK 11 billion larger than in the previous forecast. This is mainly due to lower tax income because of larger outgoing payments of local government tax and an expected outflow of savings from tax accounts. Also, government grants to local authorities are higher, while migration expenditure is somewhat lower than previously estimated.

In total for both years, the forecast for the net borrowing requirement is reduced by SEK 27 billion.

Net borrowing requirement and central government debt (SEK billion)

Previous forecast in parentheses                 




Net borrowing requirement (budget balance with opposite sign)


–41 (–3)

42 (31)

Central government debt

1 403

1 376

1 411

Central government debt as % of GDP




Central government debt is estimated at SEK 1,376 billion at the end of 2016 and SEK 1,411 billion at the end of 2017, which corresponds to 32 per cent of GDP for both years.

Lower issue volume of government bonds

To meet the reduced net borrowing requirement and a lower refinancing requirement, the Debt Office cuts borrowing in government bonds by SEK 5.5 billion this year and SEK 11 billion next year. The auction volume decreases from SEK 4 billion to SEK 3.5 billion.

The issue volume in inflation-linked bonds remains at SEK 18 billion a year. Borrowing in T-bills is also unchanged.

Borrowing (SEK billion)

Previous forecast in parentheses




Government bonds


83 (88)

77 (88)

Inflation-linked bonds


18 (18)

18 (18)



120 (120)

130 (130)

Foreign-currency bonds


59 (60)

66 (67)

–      of which on-lending to the Riksbank


59 (60)

66 (67)

In the report Central Government Borrowing – Forecast and Analysis 2016:2 there is also a box titled ”What is a reasonable size of the central government debt?”. The box is based on the Debt Office’s new Focus Report which discusses the role of the government debt in the economy from both a theoretical and an empirical perspective (currently available only in Swedish).

Central Government Borrowing – Forecast and Analysis 2016:2, pdf


Linda Rudberg, press officer, +46 (0)8 613 45 38