The budget deficit will be SEK 179 billion this year and SEK 64 billion in 2010. This is SEK 19 billion and SEK 8 billion less than in the June forecast. Of the 2009 deficit, SEK 102 billion is on-lending to the Riksbank and Iceland which is balanced by equally large receivables. Our first forecast for 2011 indicates a deficit of SEK 40 billion.
The main reason for the lower deficit in 2009 is that it is no longer probable that the banks will need the state capital contribution of SEK 20 billion that we assumed in June.
The forecast for 2010 does not include any major changes. Proposed expenditure increases and tax cuts in the Budget Bill were in accordance with our assessment of SEK 25 billion. Our macroeconomic outlook from June is largely unchanged.
In 2011, tax revenue will return to a more normal rate of increase, which improves the budget balance. An offsetting factor is that we assume fiscal policy measures in the range of SEK 20 billion.
Indications of recovery
According to our macroeconomic scenario in June, some recovery in the real economy would take place during the second half of 2009 after the extreme fall during the winter. This assessment is supported by a number of forward-looking indicators. However, the recovery may come slightly later than we expected then.
According to our macroeconomic scenario in June, some recovery in the real economy would take place during the second half of 2009 after the extreme fall during the winter. This assessment is supported by a number of forward-looking indicators. However, the recovery may come slightly later than we expected then.
The drop in GDP for 2009 will probably be between 4.5 per cent and 5.0 per cent. For 2010 and 2011, we expect growth of just over 2 per cent for both years. The recovery is relatively slow and it will take until 2011 before GDP is back at the same level as in 2007.
Unchanged pace of borrowing
Central government borrowing in 2009 will be slightly lower compared with the previous forecast. The funding requirement is nonetheless extensive this year, mainly due to the on-lending and large bond maturities. The funding requirement will fall sharply in 2010.
Central government borrowing in 2009 will be slightly lower compared with the previous forecast. The funding requirement is nonetheless extensive this year, mainly due to the on-lending and large bond maturities. The funding requirement will fall sharply in 2010.
Funding in nominal government bonds will remain at SEK 3 billion per auction in 2010 and 2011. We reduced the issue volume at the beginning of the autumn in accordance with the June forecast. This was possible as we had issued a large 30-year bond loan and increased foreign currency funding in the spring.
Bond funding in foreign currency will total SEK 123 billion in 2009. The sharp increase in relation to previous years is mainly due to the on-lending to the Riksbank. Next year, bond funding in foreign currency will decrease to SEK 25 billion.
Funding in T-bills will decrease slightly compared with our previous forecast for 2009, but instead increase for 2010.
The forecast for inflation-linked funding in 2010 is unchanged and we will accordingly issue inflation-linked bonds for SEK 10 billion next year. That volume will be maintained in 2011.
Central government debt increases marginally in relation to GDP
The central government debt will be SEK 1,185 billion at the end of 2009, increasing to SEK 1,249 billion and SEK 1,289 billion respectively at the end of 2010 and 2011. This corresponds to 38 per cent of GDP this year, 39 per cent in 2010 and 40 per cent in 2011.
The central government debt will be SEK 1,185 billion at the end of 2009, increasing to SEK 1,249 billion and SEK 1,289 billion respectively at the end of 2010 and 2011. This corresponds to 38 per cent of GDP this year, 39 per cent in 2010 and 40 per cent in 2011.
Central government debt including the Debt Office's financial assets will be 35 per cent of GDP at the end of 2009 and 36 per cent at the end of 2010 and 2011.
For more information, please contact:
Sofia Olsson, forecasts, +46 8 613 47 30
Thomas Olofsson, funding, +46 8 613 47 82
Sofia Olsson, forecasts, +46 8 613 47 30
Thomas Olofsson, funding, +46 8 613 47 82
