Swedish central government debt at lowest level in 40 years

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News 21 February 2019

Today, the Swedish National Debt Office is submitting its basis for evaluation of central government debt management in 2018 to the Government. The year was characterised by a declining debt, continued low interest rates and a limited supply of government bonds. The Debt Office also took a position for a stronger krona against the euro in order to reduce the cost of the debt.

The basis for evaluation, submitted each year in February, includes a description of the operational decisions made by the Debt Office in 2018 to minimise the cost of the central government debt while limiting the risk. The Debt Office’s strategies and actions are then evaluated. Finally, the report presents the cost of the debt and covers the monitoring of the risks in its management.

The year in brief

  • The central government budget showed a surplus for the third year in a row, and the central government debt decreased to 26 per cent of GDP – the lowest level in forty years.
  • The overall central government borrowing requirement decreased due to the budget surplus along with a low volume of maturing loans. This resulted in a historically low supply of government securities.
  • The low supply from the Debt Office in combination with the Riksbank’s purchase of government securities for monetary policy purposes contributed to the deterioration of liquidity in the Swedish government securities market.
  • The Debt Office decided to take a position for a stronger krona of at most SEK 7 billion. The position, which is gradually being built up against the euro, was SEK 3.9 billion at year-end and showed an unrealised gain of SEK 73 million.
  • Confidence in the Debt Office’s strategies and actions was at a record high in an annual survey of primary dealers and investors in Swedish government securities.
  • The cost of the central government debt was SEK 20 billion, corresponding to 0.4 per cent of GDP. This is an increase from 2017 but in line with the average over the last five years.

See the full report here