Questions and answers regarding debt

Although borrowing can be considered neither right nor wrong, it is good to have the opportunity to do so when necessary. Generally speaking, long-term borrowing for consumption is not advised, but in the short term borrowing can be beneficial in order to stimulate the economy. Loans for investment can be useful since they lead to increased income in the future.

The central government debt varies over time. In the last ten years, it has been between SEK 1,000 billion and SEK 1,400 billion. Measured as a proportion of gross domestic product (GDP), the central government debt has decreased from over 70 per cent in the mid-1990s to 16 per cent at the end of 2023. The Debt Office reports the outcome of the central government debt once a month, which can be monitored here.

What is known as the Maastricht debt, which comprises the whole general government sector, was just over 30 per cent of GDP at the end of 2023. This is a low level from both a historical and international perspective. Statistics Sweden reports the Maastricht debt statistics.

There are no political ambitions to pay off the entire central government debt in Sweden. Nor is there any future time when the debts must be paid. An important difference between an individual who borrows and a government that does so is that a government is expected to continue to exist and receive tax revenue, whereas a person's income can cease. 

For the central government, there is no saving objective as there is for the entire general government sector – the central government, local governments, and the pension system – for which the current saving (net lending) objective is 0.33  per cent of GDP on average per business cycle.

Interest payments on central government debt are financed through the central government budget, and loans that mature are paid for by raising new loans. The central government’s biggest asset is future tax revenue. The most important factor for payment capacity is for tax revenue to be sufficient for covering all the government’s obligations, in terms of both expenditure and the repayment of debts.

Sweden currently has stable government finances, but during the early the 1990s they were weak and the central government debt rose sharply. A rapid rise in the central government debt can create a fear that the government will not be able to cover its obligations, which can in turn have a significantly adverse impact on the country’s entire economy. Interest rates go up as the risk for lenders increases.

Historically, insurance companies, pension institutions, and foreign investors have owned the majority of the securities issued by the Swedish state. In 2020, however, the Riksbank surpassed foreign investors as the largest holder, after having purchased government bonds for several years. The Riksbank began selling off its government-bond holdings in 2023 but remains the largest owner. The statistics on the securities holdings are compiled in Statistics Sweden’s Financial Accounts.