The central government borrowing requirement
Compared with the Debt Office's borrowing requirement forecast in June, the forecast for 2004 has been reduced by SEK 7 billion. This is primarily due to central government disbursements between June and September being lower than expected.
Next year, the borrowing requirement is estimated at SEK 46 billion. This is SEK 11 billion lower than this year. The fact that the difference between the years will not be larger despite an expected reduction in interest payments of SEK 15 billion and a cyclical upswing giving rise to increased tax revenue, is mainly due to the tax cuts proposed in the Government Budget Bill. The reduced interest payments are a temporary effect due to the state realising large foreign currency gains on maturing foreign currency loans.
At the end of 2004, the central government debt is estimated at SEK 1,276 billion and at SEK 1,322 billion at the end of 2005. This is equivalent in both cases to approximately 50 per cent of the gross domestic product.
Funding
Issue volumes of nominal government bonds will be reduced from SEK 4 to 3.5 billion per auction from 24 November 2004. At the same time, central government borrowing in T-bills will increase.
The funding forecast assumes that the Government decides to shorten the duration from 2.7 to 2.5 years and that this reduction takes place gradually during 2005, and that SEK 25 billion of the foreign currency debt is also amortised in 2005.
During 2005, the issues will be allocated between the two-, five- and ten-year loans - with the emphasis on the longer maturities. The sixteen-year loan will be issued on a few occasions.
The Debt Office will increase the volume of interest-rate swaps at an annual pace from SEK 30 to SEK 35 billion in 2005.
The Debt Office makes the assessment that there are prerequisites to continue to issue inflation-linked bonds corresponding to an annual pace of SEK 20 billion.
Foreign currency borrowing is expected to total SEK 11 billion this year. In 2005, borrowing is expected to increase to SEK 28 billion, due to a high level of maturities of foreign currency loans.
The report also contains a summary of the Debt Office's recommended guidelines that were submitted to the Government in September, and a description of how retail market borrowing operates in Sweden and abroad.
The Debt Office will present its new report Central Government Borrowing - Forecast and Analysis at a press conference today, October 27, 2004, 10.30 am at Norrlandsgatan 15, 8tr.
For more information, please contact:
Bo Lundgren, Director General, tel: +46 (0)8-613 46 51
Borrowing requirement and central government debt:
Sofia Olsson, Analyst, tel: +46 (0)8-613 47 47
Funding:
Charlotte Lundberg, Head of Debt Management,
tel: +46 (0)8-613 46 47
Thomas Olofsson, Head of Borrowing,
tel: +46 (0)8-613 47 82
A printed version of the report Central Government Borrowing - Forecast and Analysis 2004:3 can also be ordered on tel: +46 (0)8-613 46 55
