The Swedish economy is in a robust phase of growth and central government finances are continuing to strengthen compared with our previous forecast. We estimate a budget surplus of SEK 112 billion for 2007, i.e. a negative borrowing requirement. This reinforcement compared with the November forecast is largely due to increased tax income. Next year, the level of economic activity is expected to remain strong even though some slackening off leads to a reduction in the surplus to SEK 82 billion. These forecasts include sales income of SEK 50 billion per year. The expected sales income means that forecast uncertainty is particularly great.
Central government debt decreases to SEK 1,146 billion at the end of 2007 and to SEK 1,065 billion at the end of 2008. This corresponds to approximately 38 and 34 per cent respectively of GDP. Net central government lending, which is not affected by sales income, is estimated to amount to around SEK 50 billion in both years.
Borrowing in most instruments will decrease. The issue volume in nominal government bonds is being decreased to SEK 2 billion per auction from 7 March. As far as we can now assess, this issue volume will also be retained in 2008.
Around half of our bond borrowing will be made in the ten-year maturity. In addition, we expect to make issues in the two- and fourteen-year segment, and the remaining issues in the five-year maturity. A new ten-year bond maturing on 12 March 2019 will be introduced on 21 November 2007.
T-bill borrowing is expected to decrease by SEK 17 billion in 2007 compared with 2006 due to the decreased borrowing requirement. We expect to make swaps corresponding to SEK 30 and 40 billion in 2007 and 2008.
Inflation-linked borrowing is also expected to correspond to an annual pace of SEK 5-10 billion in the future. During 2007, investors will be offered further exchanges of inflation-linked bonds 3101 and 3001.
Since the turn of the year, the Debt Office has amortised the foreign currency debt at an annual pace of SEK 40 billion. The foreign currency debt is expected to amount to the equivalent of SEK 10 billion in 2007 and 2008.
Questions about the borrowing requirement are answered by:
Tord Arvidsson, Analyst, tel: 08 613 47 53
Håkan Carlsson, Analyst, tel: 08 613 47 33
Tord Arvidsson, Analyst, tel: 08 613 47 53
Håkan Carlsson, Analyst, tel: 08 613 47 33
Questions about funding are answered by:
Thomas Olofsson, Head of Funding, tel: 08 613 47 82
The report Central Government Borrowing - Forecast and Analysis 2007:1, can be downloaded from the attached link.
