Proposed debt management guidelines: Debt Office proposes unchanged steering of government debt for 2024

Press release 22 September 2023

The Swedish National Debt Office proposes that the Government keep the current target values for the composition and maturity of the central government debt in place during 2024. However, with a continued low debt, the guidelines for debt management may thereafter need to be adjusted.

The Debt Office submits proposed guidelines for central government debt management to the Government each year by 1 October. In accordance with the Budget Act, the Government is to decide on the guidelines by 15 November. Before this decision is made, the Riksbank is also given the opportunity to provide an opinion on the proposal.

“We see no reason for altering the guidelines at present, but we are continuing to analyse how the debt should be composed looking ahead, considering the long-term conditions such as the shrinking debt. Even when the debt is small, we must always be prepared to borrow as necessary and do so at a low cost,” says Klas Granlund, head of debt management at the Debt Office.

Target values stay same for inflation-linked share and debt’s maturity

The proposal to keep the guidelines unchanged means that the inflation-linked debt share shall continue to be steered towards 20 per cent and the term to maturity for the entire central government debt shall between 3.5 and 6 years (measured as duration). The target value for the inflation-linked debt entails that the Debt Office’s borrowing shall consist of a certain share of inflation-linked bonds, for which the central government pays a fixed real interest rate and compensation for inflation. The range for the debt’s duration determines the Debt Office’s parameters for planning the issuance of debt instruments with various maturities. 

Foreign currency exposure being phased out under current guidelines

The Debt Office also proposes no changes to the guidelines for the foreign currency exposure of the debt. This means that the phase-out of the currency exposure will continue over the next three years. The reason for phasing out the currency exposure is that it involves higher risks without offering any expected cost advantages over time. The phase-out does not affect the Debt Office’s possibilities of issuing foreign currency bonds, because those loans are hedged and thereby do not increase the currency exposure.

Decreasing debt entails new conditions for its management

Sweden’s central government debt as a share of GDP at the end of 2022 was at its lowest level since 1971, and the debt of the public sector as a whole is at the lower end of the range for the fiscal policy framework’s debt anchor. How the size of the debt develops is one of the conditions affecting the design of the guidelines and the Debt Office’s borrowing strategy. This is discussed in the last chapter of this year’s proposed guidelines and in a separate Debt Office Commentary.

The proposed guidelines in their entirety

Debt Office Commentary on the conditions for central government debt management