Swedish National Debt Office proposes review of foreign currency exposure of central government debt

Press release 16 September 2019

Conditions for managing the central government debt have in recent years been characterised by a continued low level of debt, strained liquidity in the government securities market and an increased focus on sustainability. This is evident in the Debt Office’s proposed guidelines for central government debt management.

The Swedish National Debt Office has deemed it necessary to publish its proposed guidelines for central government debt management earlier than anticipated in order to reduce the risk of improper market influence.

At the most recent meeting of the Debt Office's Board of Directors on 11 September, the Board resolved to propose a new review of the foreign currency exposure of the central government debt. Due to unexpected movements in interest rates and currency rates, there are grounds for re-evaluating the analysis of the currency exposure of the debt that was conducted just prior to 2015. Therefore, the Debt Office proposes that the currency exposure be left unaltered for prudential reasons until a review is completed. This would entail, until further notice, that the Debt Office would refrain from buying in foreign currency for the purposes of reducing the foreign currency debt.

Share of inflation-linked debt should remain the same despite reduced central government debt

The Debt Office has analysed whether the proportion of inflation-linked bonds should be reduced to create additional room for nominal bonds. The results of the analysis show that there are currently no grounds for reducing the share of inflation-linked debt for such reasons, as the stock of inflation-linked bonds is expected to decline drastically even under the current guidelines. There are also no distinct systematic differences in cost between inflation-linked and nominal borrowing.

Proposal for common maturity target for central government debt

The Debt Office proposes a common maturity target for the central government debt because it provides a better overview of the overall level of risk. Merging the maturity steering would result in a maturity interval of 3.5–6 years for the central government debt. This would also include the maturity of the foreign currency debt, which currently has a separate target value.

Central Government Debt Management – Proposed Guidelines 2020–2023, PDF


Press telephone: + 46 8 613 47 01

At a general level, central government debt management is governed by the Swedish Budget Act and the Ordinance containing Instructions for the Swedish National Debt Office. These statutes set out, for example, the permitted purposes of central government borrowing and the objective of the debt management. In addition, the Swedish Government adopts guidelines for this management that govern matters including the composition and maturity of the debt.

The Government adopts new guidelines each year no later than 15 November. This decision is taken after the Debt Office has submitted proposed guidelines on which the Riksbank has been given the opportunity to deliver an opinion.