In a recent borrowing review, Sweden’s National Debt Office (NDO) stated that the central government budget balance has continued to develop more strongly than previously expected. Although there will be a surplus this year, the NDO predicts two years of deficits to follow.
According to the NDO, central government finances have consistently outperformed expectations, and 2023 is projected to be another year of surplus. However, increased spending in the future is expected to have a negative impact on the budget balance, resulting in deficits in both 2024 and 2025. Despite this, the government debt is still considered low when compared to historical and international standards.
For 2023, the central government budget is expected to show a surplus of 31 billion Swedish kronor ($2.78 billion). This is an improvement from the previous estimate of a SEK15 billion deficit. In 2024, a deficit of SEK49 billion is anticipated, slightly lower than the previous forecast of SEK51 billion. The NDO expects a SEK60 billion deficit in 2025.
The NDO’s plans for bond issuance include SEK60 billion in nominal government bonds and SEK9 billion in inflation-linked bonds for 2024. These figures remain unchanged from the previous forecast. Similar volumes of issuance are planned for both asset classes in 2025.
Foreign-currency bond issuance, originally scheduled for 2023, has been postponed to 2024. The NDO also intends to issue foreign currency bonds in 2025.
Additionally, the NDO announced the introduction of a new May 2035-dated government bond on January 31. To quickly build up its volume, the NDO will offer three switches after the introduction of this new bond.
Overall, Sweden’s central government budget balance is expected to remain strong in the near term, with a surplus this year followed by deficits in the coming years. The NDO’s borrowing review demonstrates its commitment to managing this financial landscape effectively.