Central government funding requirement decreases
(Thomson Reuters ONE) - The new forecast from the Swedish National Debt Office shows asmaller budget deficit this year than the June forecast. The mainreason is that Swedish banks will probably not need capitalcontributions from the state. Apart from that, central governmentfinances develop largely as expected in 2009 and 2010. The economicrecovery will start having an impact on tax revenue in 2011. Thestable forecasts mean that the Debt Office can continue to borrow SEK3 billion per auction in nominal government bonds. Central governmentdebt including the Debt Office's financial assets will grow onlymarginally to 36 per cent of GDP at the end of 2011.The budget deficit will be SEK 179 billion this year and SEK 64billion in 2010. This is SEK 19 billion and SEK 8 billion less thanin the June forecast. Of the 2009 deficit, SEK 102 billion ison-lending to the Riksbank and Iceland which is balanced by equallylarge receivables. Our first forecast for 2011 indicates a deficit ofSEK 40 billion.The main reason for the lower deficit in 2009 is that it is no longerprobable that the banks will need the state capital contribution ofSEK 20 billion that we assumed in June.The forecast for 2010 does not include any major changes. Proposedexpenditure increases and tax cuts in the Budget Bill were inaccordance with our assessment of SEK 25 billion. Our macroeconomicoutlook 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 weassume fiscal policy measures in the range of SEK 20 billion.Indications of recoveryAccording to our macroeconomic scenario in June, some recovery in thereal economy would take place during the second half of 2009 afterthe extreme fall during the winter. This assessment is supported by anumber of forward-looking indicators. However, the recovery may comeslightly later than we expected then.The drop in GDP for 2009 will probably be between 4.5 per cent and5.0 per cent. For 2010 and 2011, we expect growth of just over 2 percent for both years. The recovery is relatively slow and it will takeuntil 2011 before GDP is back at the same level as in 2007.Unchanged pace of borrowingCentral government borrowing in 2009 will be slightly lower comparedwith the previous forecast. The funding requirement is nonethelessextensive this year, mainly due to the on-lending and large bondmaturities. The funding requirement will fall sharply in 2010.Funding in nominal government bonds will remain at SEK 3 billion perauction in 2010 and 2011. We reduced the issue volume at thebeginning of the autumn in accordance with the June forecast. Thiswas possible as we had issued a large 30-year bond loan and increasedforeign 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 theon-lending to the Riksbank. Next year, bond funding in foreigncurrency will decrease to SEK 25 billion.Funding in T-bills will decrease slightly compared with our previousforecast for 2009, but instead increase for 2010.The forecast for inflation-linked funding in 2010 is unchanged and wewill accordingly issue inflation-linked bonds for SEK 10 billion nextyear. That volume will be maintained in 2011.Central government debt increases marginally in relation to GDPThe central government debt will be SEK 1,185 billion at the end of2009, increasing to SEK 1,249 billion and SEK 1,289 billionrespectively at the end of 2010 and 2011. This corresponds to 38 percent of GDP this year, 39 per cent in 2010 and 40 per cent in 2011.Central government debt including the Debt Office's financial assetswill be 35 per cent of GDP at the end of 2009 and 36 per cent at theend of 2010 and 2011.For more information, please contact:Sofia Olsson, forecasts, +46 8 613 47 30Thomas Olofsson, funding, +46 8 613 47 82http://hugin.info/133745/R/1349569/325257.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 23.10.2009 - 09:30 Uhr
Sprache: Deutsch
News-ID 7338
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