Sweden sees deficit and growing debt ahead

Press release 22 February 2024

After three consecutive years of a budget surplus for the central government, the Swedish National Debt Office expects a deficit for both this year and the next. That entails an increase in the central government debt, from a low level. Given the larger borrowing requirement, the Debt Office is increasing its bond issuance.

Today, the Debt Office is presenting its first Central Government Borrowing Report for this year.

“Central government finances have been strong after the pandemic, but we now foresee some weakening, with dampened tax income and increased government spending. A contributing factor to the greater borrowing need than in our previous forecast is that we now expect a capital contribution to the Riksbank,” says Debt Office Director General Karolina Ekholm. 

Larger deficit this year than in 2025

The new forecast for the budget balance shows a deficit of SEK 84 billion in 2024 and SEK 50 billion in 2025. This year’s deficit is among other things due to an assumption of a capital contribution of SEK 40 billion to the Riksbank, as well as to higher expenditure in other areas and slow economic growth.

The Debt Office expects the Swedish economy to grow by 0.5 per cent this year and unemployment to rise. Next year looks brighter with a stronger labour market and GDP growth of over 2 per cent contributing positively to the budget balance.

More government bonds and higher debt

As the borrowing requirement grows, the Debt Office is raising the issuance volume of nominal government bonds from SEK 3 billion to SEK 3.5 billion per auction starting in March this year, then further to SEK 4 billion as of August. This means that the annual issuance volume for 2025 will be SEK 80 billion.

The Debt Office expects the central government debt to increase to 18 per cent of GDP by the end of 2025, from 16 per cent at year-end 2023. This is still a low level both historically and internationally. The general government debt is expected to be 33 per cent of GDP at the end of next year. 

Debt Office’s forecast – key figures

Central Government Borrowing – Forecast and Analysis 2024:1

The report will be presented at a virtual press conference today, 22 February, at 10:00 a.m. Follow the live stream.

Journalists can e-mail questions to press@riksgalden.se. Questions asked directly before and during the press conference will be answered during the live stream.