The Swedish National Debt Office expects a central government financial surplus of SEK 135 billion this year. This surplus is SEK 3 billion lower than in our June forecast. The difference is due to slightly higher interest on central government debt.
During 2008, we expect that the surplus will decrease to SEK 116 billion since tax income falls and corporate profits slacken.
We have taken into account sales income of SEK 50 billion per year in our forecasts. This makes the forecasts more uncertain than usual.
The central government debt decreases to SEK 1,120 billion at the end of 2007 and SEK 1,005 billion at the end of 2008. This corresponds to around 37 and 31 per cent of GDP, respectively. Central government net lending amounts to over 2 per cent of GDP for each year.
Reduced borrowing
The large budget surplus means that borrowing in all instruments will decrease. However, we are giving priority to borrowing in nominal government bonds, where the issue volume will continue to be SEK 1.5 billion per auction. During 2008, we expect to borrow as much per auction.
Half of the bond issues will be made in the ten-year loan. A few individual bonds will be issued with two- and fourteen-year maturities. The remainder will be five-year bonds.
A new bond is being introduced in November this year. It will mature in March 2019.
From the turn of the year, the Debt Office will have a new policy for T-bills. We are issuing four bills with maturities of up to six months. We expect to make swaps for SEK 30 billion and SEK 39 billion, respectively, during 2007 and 2008.
Borrowing in inflation-linked bonds is decreasing to an annual pace of SEK 3 billion. During 2008, the Debt Office will offer exchanges for the equivalent of SEK 10 billion.
The Debt Office will amortise the foreign currency debt at an annual pace of SEK 40 billion. We expect to borrow the equivalent of SEK 16 billion and SEK 11 billion in foreign currency during 2007 and 2008.
Further information can be obtained from:
Sten Hansen, assistent head of analysis, telephone +46 8 613 47 37
Thomas Olofsson, head of funding, telephone +46 8 613 47 82
