Debt Office Commentaries

An important matter for the Swedish National Debt Office and other government debt management offices is the choice of auction format for issuing government securities. The two predominant procedures from which to choose are the multiple-price auction and the single-price auction. This Debt Office Commentary describes how both theory and empirical studies indicate that the auction format should be chosen on the basis of how well the pricing works.

For a market exhibiting low liquidity and significant pricing uncertainty, single-price auctions are preferable. This is because they reduce uncertainty for the bidder and can thereby increase the incentive to participate. An example of such a market is the Swedish market for inflation-linked bonds, which suggests that it would be more cost-effective to issue inflation-linked bonds through single-price auctions instead of multiple-price auctions.

The authors of “The choice of auction format is influenced by market dynamics” are Daniel Wayland and Erik von Schedvin.

Read Debt Office Commentary No 4 2024

In a PPP contracting arrangement, a private enterprise is appointed – to carry out a state infrastructure project, for instance – which is then repaid by the central government. In Sweden, it has not been particularly common. One of few examples is the New Karolinska Hospital. Abroad, PPP has been more commonplace, for instance in the UK, the Netherlands and France.

 PPP advocators argue that the incentive structure in a PPP generates socioeconomic efficiencies. In a PPP, project payment is also deferred, and there is thus no near-term burden on the central government budget, which might appeal to decision-makers.  

However, potential benefits are unsure and are outweighed by the drawbacks, according to the Debt Office economists in their commentary. Transparency surrounding decisions will be impaired, and financing will be more expensive because private-sector entities have a lower credit rating than the central government. A number of conducted empirical studies also appear to support this conclusion. In the UK for example, PPP is no longer used.

The authors round off their commentary by advising the central government against using PPP. 

Read the commentary in full here

In recent years, the Debt Office has been able to reduce Swedish government agencies’ overall costs for currency conversions through better prices in the central government framework agreements for cross-border payments and the introduction of a multi-currency cash pool model for improved coordination of the agencies’ payments in foreign currencies.

A liquidity management structure as equally well-functioning and efficient as that used for Swedish kronor is now in place for agencies’ payments in other currencies using a multi-currency cash pool solution (MCCP).

Debt Office Commentary 1-2021: More efficient management of Swedish government agencies’ international payments

The central government net borrowing requirement shows how much money the central government needs to borrow to cover its ongoing operations. The Debt Office makes independent forecasts of the net borrowing requirement, which have an important role in the development of borrowing plans. Accurate forecasts enable the Debt Office to plan and manage borrowing in a way that helps minimise the long-term cost of central government debt.

Sofia Nilsson and Elin Stenbacka are economists at the Swedish National Debt Office’s Economic Analysis Department.

Debt Office Commentary: The central government’s net borrowing requirement is a measure of its cash flow

Mattias Bruér is a senior economist at the Swedish National Debt Office´s Economic Analysis Department.

Debt Office Commentary: Forecast evaluation 2013–2018