Sweden’s borrowing requirement decreases in 2018 as the Riksbank’s foreign currency reserve is reduced

Press release 20 June 2017

Sweden’s central government budget will turn from a deficit – a net borrowing requirement – of SEK 17 billion this year into a surplus of SEK 124 billion for 2018, according to the Debt Office’s new forecast. The large surplus next year is because the Debt Office assumes that the loans raised for the Riksbank (the Swedish central bank) in order to strengthen the foreign currency reserve will begin to be repaid. This will greatly reduce central government borrowing in foreign currencies.

Apart from the effect of the reduced lending to the Riksbank, the changes in the forecast of the budget balance and central government borrowing are small. Central government net lending, which is a better indicator of the underlying central government finances than the budget balance, shows a surplus of 0.3 per cent of GDP this year and 0.2 per cent in 2018.

– We assume that the Government’s proposal to reduce the foreign currency reserve will be realised, leading to a large budget surplus and a decrease in central government debt next year, says Hans Lindblad, Director General of the Swedish National Debt Office. The underlying central government finances show a more even development and the economy is continuing to grow at a stable rate.

The Debt Office expects GDP growth of 2.3 per cent in 2017 and 2.1 per cent in 2018. A clearer international recovery will contribute to good export growth in the near term, at the same time as domestic demand will remain strong. Unemployment is expected to level out at 6.5 per cent.

Net   borrowing requirement and central government debt (SEK billion)

Previous forecast in brackets




Net   borrowing requirement (budget balance with opposite sign)


17 (20)

–124 (–17)

Central   government debt

1 347

1 354 (1 352)

1 217 (1 324)

Central   government debt as a share of GDP




Small forecast changes apart from the loans to the Riksbank

The budget deficit for 2017 is SEK 3 billion lower in the new forecast than in the forecast from February. This is due to lower expenditure for the labour market, social insurance and some other areas. The lower expenditure is partly countered by tax income also being revised downwards.

In principle the forecast for 2018 is unchanged apart from the reduction in lending to the Riksbank. The Debt Office has raised loans in foreign currencies corresponding to a total of SEK 249 billion on behalf of the Riksbank. In March the Government proposed phasing out this on-lending. In its forecast the Debt Office assumes that lending to the Riksbank will end as the loans mature. In 2018 this involves maturing loans of SEK 106 billion.

When the loans to the Riksbank mature, the central government debt decreases. At the end of 2018, the debt is expected to be SEK 1 217 billion, compared with SEK 1 354 billion a year earlier. This means that, as a proportion of GDP, the central government debt decreases from 30 per cent to 26 per cent.

Reduced borrowing in foreign currencies and in T-bills

In 2017 the Debt Office will continue, as in the past, to refinance the loans to the Riksbank that mature. When this borrowing ends in 2018, the Debt Office instead plans to issue foreign currency bonds corresponding to SEK 17 billion on its own behalf. This is being done in order to retain a presence in the international capital market.

To create scope to resume foreign currency borrowing on its own behalf the Debt Office is reducing borrowing in T-bills. The supply per auction will decrease from an average of SEK 10 billion to 7.5 billion from the end of February 2018.

Borrowing in government bonds and inflation-linked bonds is unchanged compared with the previous forecast.

Borrowing   (SEK billion)

Previous forecast in   brackets




Government   bonds


52 (52)

50 (50)

Inflation-linked   bonds


13 (13)

13 (13)



110 (110)

60 (80)

Foreign   currency bonds


68 (68)

17 (105)

–        Of which on-lending to the   Riksbank


68 (68)

0 (105)

In a box in the report Central government borrowing – forecast and analysis 2017:2 the Debt Office describes how new arrivals are handled in the Labour Force Survey (LFS). The conclusion is that the increase in recent years in the number of asylum seekers leads to the LFS overestimating employment.

Central government borrowing – forecast and analysis 2017:2, pdf


Robert Sennerdal, press secretary, +46 (0)8 613 46 94