Fiscal wobble hits Sweden, borrowing increases

The Swedish National Debt Office (Riksgälden) has confirmed that lower tax receipts will roughly triple the central government deficit compared to earlier forecasts, to SEK32bn (€3.6bn) or slightly less then 1% of GDP.

The change necessitates a SEK9bn(€1bn) increase in overall borrowing via the Debt Offices over the year, to SEK59bn (€6.7bn).

The Debt Office said that the widening deficit was caused by slower economic growth, in particular hitting revenues from corporate taxes. It is forecasting economic growth of just 1% this year, before it recovers to a rate of 2.3% in 2013.

Since March, the Debt Office has revised its tax income forecast down by SEK17bn (€ 1.9bn) for this year, and down by SEK21bn (€2.3bn) for 2013.

Higher interest payments are also affecting the government’s balance sheet.

The Debt Office intends to issue a new 10-year government bond in October, maturing in November 2023.

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