Recovery mitigates pandemic’s impact on central government finances


Recovery mitigates pandemic’s impact on central government finances

The Swedish economy is recovering after the historically large fall in GDP in the second quarter of 2020. This helps to support central government finances, reduce the borrowing requirement compared with the previous forecast and dampen the debt increase resulting from the pandemic.

The Swedish National Debt Office’s new forecast shows a central government budget deficit of SEK 256 billion this year, an improvement in the budget balance by SEK 146 billion over the previous forecast from May. The reduced deficit means the Debt Office is lowering borrowing and that central government debt is not expected to increase as much as previously forecast.

“The virus outbreak has had a major impact on the Swedish economy and state finances, but the development in recent months indicates it is less than we forecast in May. Not least the trend in tax income points to the start of an increasingly more apparent economic recovery, although great uncertainty remains,” says Hans Lindblad, Director General of the Debt Office.

The major fiscal policy stimulus measures in the Budget Bill for 2021 are expected to aid the recovery but at the same time contribute to a budget deficit of SEK 80 billion. The forecast for 2022 shows a smaller deficit. Central government net lending is also negative but gradually recovers as the economy grows.

Faster recovery than expected but still uncertain

The Debt Office expects GDP to fall 3.5 per cent this year to then grow by 3.8 per cent in 2021 and 3.4 percent in 2022. Although the recovery occurs faster than was expected in the previous forecast, GDP does not return to pre-crisis levels until the middle of 2021. The pandemic entails that the uncertainty in the forecasts remains greater than normal.

The labour market also appears to be developing more positively than before. However, unemployment at the end of the forecast period is still expected to be higher than it was prior to the pandemic, thereby weakening recovery and weighing on the budget balance. 

Forecast for Swedish economy and central government finances
Previous forecast in parentheses 2019 (outcome) 2020 2021 2022
GDP growth (%) 1.2 -3.5 (-6.5) 3.8 (4.5) 3.4
Unemployment (% of labour force) 6.8 8.7 (10.0) 9.2 (10.7) 8.2
Budget balance (SEK billion) 112 -256 (-402) -80 (-76) -25
Central government net lending (SEK billion) 60 -118 (-276) -114 (-167) -13
Central government net lending (% of GDP) 1.2 -3.8 (-5.8) -2.2 (-3.3) -0.2
Central government debt (SEK billion) 1,113 1,331 (1,488) 1,408 (1,556) 1,436
Central government debt (% of GDP) 22 27 (31) 27 (31) 26
Maastricht debt (% of GDP) 35 40 (46) 41 (45) 41

Reduced borrowing mainly in treasury bills

The Debt Office is adapting its issuance to the reduced borrowing requirement primarily by lowering the volume of T-bills and refraining from issuing foreign currency bonds except on behalf of the Riksbank. In addition, the announced increase of nominal government bonds next year will be reduced. The auction volume will be raised from SEK 5 billion to SEK 5.5 billion in August 2021, where it will then stay for the remainder of the forecast period.

The Debt Office will, as previously announced, issue a new 25-year bond in November.

Central government borrowing, SEK billion

Previous forecast in parentheses 2019 (outcome) 2020 2021 2022
Nominal government bonds 30 97 (97) 105 (115) 110
Inflation-linked bonds 8 13 (13) 21 (17) 21
Green bonds - 20 (10) 0 (0) 0
Treasury bills (stock at year-end) 20 170 (220) 188 (250) 175
Foreign currency bonds 19 43 (105) 61 (78) 58
–      of which on-lending to the Riksbank 19 43 (61) 61 (49) 58
–      in addition to on-lending 0 0 (44) 0 (29) 0

Central government debt as percentage of GDP evens out after rapid increase

The central government debt was SEK 1,113 billion at the end of 2019, corresponding to 22 per cent as a share of GDP – the lowest level since the middle of the 1970s. This year, the debt is expected to increase to SEK 1,331 billion, or 27 per cent of GDP. At the end of 2022, it amounts to SEK 1,436 billion, corresponding to 26 per cent of GDP.

The Maastricht debt is expected to increase to 40 per cent of GDP in 2020 and then be at 41 per cent at the end of 2021 and 2022. At the end of 2019, it was 35 per cent. This measure is of the general government consolidated debt and is usually used in international comparisons. It is also the measure that forms the basis of the fiscal policy framework’s debt anchor of 35 percent of GDP.

The report Central Government Borrowing – Forecast and Analysis 2020:3 is attached below.

The report will be presented at a digital press conference today, 21 October, at 10:00 a.m. CET. Link to live stream of the press conference

Journalists will be able to send in questions to be answered during the press conference. For further information or interview inquiries, contact our press function.


Debt Office press telephone: +46 (0) 8 613 47 01, e-mail:

The Debt Office is the Swedish government’s financial manager. Our mandate includes central government borrowing and debt management. The aim is to do this at the lowest possible cost while avoiding excessive risk. In the report Central Government Borrowing – Forecast and Analysis, published three times a year, forecasts are presented for the macroeconomic development and budget balance for the next two years. On the basis of these forecasts, the Debt Office calculates the borrowing need and sets up an issuance plan that is also included in the report.


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