Sweden to issue more government bonds

Projections of economic weakness in Sweden this year have caused the Swedish National Debt Office to announce government borrowing will increase in 2012 and 2013, as will the number of auctions it holds.

The Detbt Office (Riksgälden) said weaker economic growth in Sweden in 2012 will lead to rising unemployment and falling tax revenues, creating a “moderate” SEK11bn (€1.23bn) deficit in the central government budget, bofore returning a small surplus of SEK3bn in 2013, as consumption and investment picks up.

The country’s economic growth is being affected by domestic demand issues as well as weaker demand in key export markets. The Debt Office projects the central government budget will remain broadly in balance in 2012-2013, but only if the eurozone problems are dealt with in an “orderly” process.

“Our forecast assumes that the debt problems in the euro zone will be dealt with in an orderly although protracted process and that confidence in the economy will grow gradually in the course of 2012,” the Debt Office said.

“As confidence returns, consumption and investment will recover and the economy will grow faster. However, there is a risk that continued fiscal austerity in the euro zone will restrict the pace of recovery.”

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