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Proposed changes in investment rules for government agencies
Press release 14 May 2001
The Swedish National Debt Office proposes in a report to the government that central government agencies engaged in active or long-term asset management be allowed to invest directly in ordinary treasury bonds and no longer be required to invest in accounts at the Debt Office.
Three agencies currently have extensive long-term investments at the Debt Office: the Deposit Guarantee Board, the Swedish Nuclear Waste Fund and the Premium Pension Authority. They manage assets totalling about SEK 60 billion.
The proposal also implies that the inflation-linked bond market would gain a number of new investors, leading to increased trading volume and liquidity. In the long term, a smoothly functioning inflation-linked bond market means lower borrowing costs for the Swedish central government. The consolidated government debt is not effected since it is an internal government transaction.
However, the Debt Office recommends rejection of the proposal from the Nuclear Waste Fund that the fund should be allowed to operate under the same investment rules as the Swedish National Pension Funds, which are allowed to invest in equities. The money in the Nuclear Waste Fund should be invested in assets with the greatest possible safety. The Nuclear Waste Fund's proposal means that the risk that the Fund may be insufficient to cover future costs will be shifted to future generations. The advantages of higher risk-taking would benefit today's electricity consumers and producers. This violates the principle that the generations that benefit from nuclear power production should also bear its full costs.
The documents referred to here are available in their entirety on the Debt Office's web site, www.rgk.se (in Swedish only).
For further information:
Lars Hörngren, tel +46 8-613 47 36 (The Nuclear Waste Fund's proposal) Pär Nygren, tel +46 8-613 47 44 or Mikael Bergman tel +46 8-613 46 23 (Rules on agencies' investments at the Swedish National Debt Office)