Swedish government debt grows as virus effects hit budget

Press release 19 toukokuuta 2020

There has been a rapid and sharp slowdown in the Swedish economy due to the coronavirus, and the recovery will take time. The downturn in the economy and the support measures taken lead to a large deficit in the central government budget and to increased government debt.

The Swedish National Debt Office forecasts a deficit in the central government budget of SEK 402 billion this year and SEK 76 billion in 2021. This is a sharp weakening of the budget balance compared with the previous forecast. The Debt Office is meeting the deficit by increasing borrowing in all debt instruments.

This is an exceptional situation we are in, with great uncertainty, but the Debt Office has good preparedness to increase borrowing. Central government debt will grow rapidly, but the increase will be from a low level following the surplus in recent years, says Director General Hans Lindblad.

The shrinking economy and support measures put a strain on the budget

The Debt Office expects GDP to fall by 6.5 per cent this year. Although there is a recovery next year, it is not sufficient for GDP to return to pre-crisis levels during the forecast period. The large deficits in the central government budget are due to both the economic downturn and the measures taken by the Government to mitigate the socio-economic consequences of the virus outbreak.

The uncertainty in the forecasts is greater than normal and depends on the course of the pandemic as well as the measures to prevent infection and economic policy measures that are taken.

Swedish economy and central government finances
Previous forecast in parentheses201920202021

GDP (%)


-6.5   (1.0)

4.5   (1.8)

Unemployment (% of labour force)


10   (7.2)

10.7   (7.4)

Budget balance (SEK billion)


-402   (-14)

-76   (-14)

Central government net lending (% of GDP)


-5.8   (0.7)

-3.3   (0.3)

Central government net lending (SEK   billion)


-276   (37)

-167   (14)

Central government debt (% of GDP)


31   (21)

31   (21)

Increased borrowing in all debt types

The increased borrowing requirement as a result of the virus outbreak has so far been accommodated by the use of treasury bills and other short-term borrowing. The stock of treasury bills will continue to grow and starting in June bond borrowing will also increase. The volume of nominal government bonds is first being raised to SEK 5 billion per auction in June and then progressively to SEK 6 billion.

The borrowing plan for 2020 also includes issuing around SEK 10 billion in a new 25-year government bond and at least the same amount in the green bond that the Debt Office is going to issue. The assumption for the green bond is conservative, and the volume could be up to twice as large. Borrowing in inflation-linked bonds and in foreign currency also increases.

Central government borrowing, SEK billion
Previous forecast in parentheses   201920202021

Nominal government bonds


97 (51)

115 (60)

Inflation-linked bonds


13 (9)

17 (9)

Treasury bills (outstanding stock, year-end)


220 (55)

250 (68)

Foreign currency bonds


105 (59)

78 (48)

–  of which on-lending to the Riksbank


61 (59)

49 (48)

–  in addition to on-lending


44 (0)

29 (0)

Central government debt grows from a historically low level

The central government debt is estimated to increase from SEK 1,113 billion at the end of 2019 to SEK 1,556 billion at the end of 2021. As a share of GDP, central government debt increases from 22 percent to 31 percent.

The Maastricht debt is expected to increase from around 35 per cent of GDP in 2019 to 45 per cent at the end of next year. That measure includes the general government consolidated debt and is usually used in international comparisons. It is also the measure that forms the basis of the fiscal policy framework’s debt anchor of 35 percent of GDP.

Report: Government Borrowing – Forecast and Analysis 2020:2, pdf

PowerPoint presentation


The report will be presented at a digital press conference today, 19 May, at 10:00 a.m.

Watch the recorded press conference (in Swedish)

Debt Office press telephone: +46 (0) 8 613 47 01

The Debt Office is the Swedish government’s financial manager. Our mandate includes central government borrowing and debt management. The aim is to do this at the lowest possible cost while avoiding excessive risk. In the report Central Government Borrowing – Forecast and Analysis, published three times a year, forecasts are presented for the macroeconomic development and budget balance for the next two years. On the basis of these forecasts, the Debt Office calculates how much the government needs to borrow and sets up a plan for borrowing that is also included in the report.