Deficit in central government budget as economy slows

Press release 18 helmikuuta 2020

The slowdown in the economy is becoming increasingly evident, and withdrawals of capital investments from tax accounts weigh on the budget balance. Altogether, the central government budget shifts to a deficit this year. The Debt Office’s plan to increase bond borrowing remains unchanged.

Today, the Swedish National Debt Office is publishing its new forecast for economic development, the budget balance, and central government borrowing up to and including 2021.

The overall picture consists of low growth both globally and in Sweden, which we have taken into account in our borrowing plan. Towards the end of next year, the situation appears somewhat brighter and the Swedish economy grows somewhat more rapidly again, says Debt Office Director General Hans Lindblad.

Withdrawals from tax accounts expected to weigh on budget balance in 2020 and 2021

This year, the slowdown in the Swedish economy entails somewhat slower growth in tax income for the central government than in the previous year. At the same time, the interest rate situation is expected to contribute to a net outflow of capital investments from tax accounts during the forecast period.

Investments in tax accounts are an expensive form of borrowing for the central government and have contributed to a decrease in the supply of government bonds. After the Riksbank raised its policy rate in December, there have been fewer incentives to use deposits in tax accounts as a form of investment and we are now seeing withdrawals being made instead, says Director General Hans Lindblad.

The Debt Office’s overall assessment is that the central government budget balance will, after four years of a surplus, show a deficit of SEK 14 billion both this year and the next. This is a slightly smaller deficit for both years compared with the previous forecast.

Swedens's economy and central government finances
Previous forecast in parentheses201920202021

GDP (%)

1.2  (1.3)

1.0  (1.1)

1.8  (1.6)

Unemployment (% of labour force)

6.8  (6.7)

7.2   (7.1)

7.4  (7.2)

Budget balance (SEK billion)

112  (113)

-14  (-17)

-14  (-27) 

Central government net lending (% of   GDP)

1.0  (0.8)

0.7  (0.5)

0.3  (0.2)

Central government debt (% of GDP)

22  (22)

21  (21)

21   (21)

Plan for increased bond borrowing remains

The new budget balance forecast does not prompt any change in the central government borrowing plan, and the Debt Office is continuing to gradually increase the issuance volume of nominal government bonds. At the end of 2020, there will be a redistribution within short-term borrowing as the auction volume of treasury bills is temporarily increased in connection with bonds maturing.

Green bond complements continual borrowing

During the year, the Debt Office will issue a green bond that will complement the traditional government bond borrowing. The proceeds will be connected to central government budget expenditure allocated for achieving Sweden’s environmental and climate goals. The issuance volume for the green bond has not yet been determined, but it will not affect the borrowing plan for traditional government securities. 

Central government borrowing, SEK billion
Previous forecast in parentheses           201920202021

Nominal government bonds


51 (51)

60 (60)

Inflation-linked bonds


9 (9)

9 (9)

Treasury bills (outstanding at year-end)


55 (40)

68 (68)

Foreign currency bonds


59 (60)

48 (49)

– of which on-lending to the Riksbank


59 (60)

48 (49)

Central government debt remains at historically low levels

The central government debt is expected to amount to SEK 1,100 billion at the end of 2021, which corresponds to 21 per cent of GDP. The level is somewhat lower than in the Debt Office’s October forecast. The Maastricht debt is expected to stay at the current level until the end of the forecast period. This corresponds to 35 per cent of GDP, which is in line with the debt anchor in the fiscal policy framework. The Maastricht debt measure comprises the entire public sector debt.

Central Government Borrowing – Forecast and Analysis 2020:1, PDF


Debt Office press telephone: +46 8 613 47 01

The Debt Office is the central government’s financial manager. Our mandate includes central government borrowing and debt management. The objective is to do so at as low a cost as possible while keeping risk to a minimum. In the report Central Government Borrowing – Forecast and Analysis, published three times a year, forecasts are presented for the macroeconomic development and central government budget balance for the next two years. On the basis of these forecasts, the Debt Office calculates the borrowing requirement and establishes an issuance plan that is also presented in the report.