Press release
12 November 2009
Ministry of Finance
Guidelines for central government debt management in 2010
The Government today decided the guidelines for central government debt management for 2010 to 2012. Under the decision, the Government's stance on the composition and maturity of the central government debt is unchanged. The control system will, however, be adjusted in line with the amended decisions taken earlier in 2009.
"Despite the economic slowdown, Sweden's central government finances continue to be strong and thus the current stance will remain unchanged. The overall goal guiding central government debt management is to minimise the cost of that debt in the long run without the risk involved in such management being too high," says Mats Odell, Minister for Local Government and Financial Markets.
During the most intensive phase of the financial crisis in spring 2009, long rates fell to historically low levels and at the same time, the krona weakened. In March 2009, the Government therefore gave the Swedish National Debt Office permission to deviate temporarily from the maturity target for the nominal krona debt to enable it to borrow with longer maturities. In May, the Debt Office was also given an expanded mandate to take strategic positions in other currencies.
New system for steering the maturity
The Government is now establishing a new system for controlling the maturity the nominal debt is to have. The benchmark for short debt with a maturity of up to twelve years is 3.2 years. For longer maturities, the Government has instead decided on a ceiling for the debt of SEK 60 billion. This is being done in order for control of debt management to be more appropriate and transparent in a situation where the Debt Office has introduced a 30-year bond.
The Government has also decided that the Debt Office's mandate to take strategic positions in other currencies up to SEK 50 billion in 2010 is to remain unchanged.
"During the financial crisis, the Government and the Debt Office, by taking well-balanced decisions, have benefited from both the historically low long rates and a weak krona. This reduces the long-term costs to taxpayers while taking the risks in central government debt management into account," says Mats Odell.
Guidelines for the distribution of the debt
Foreign currency debt: 15 per cent (±2 percentage points)
Inflation-linked debt: 25 per cent (long term)
Nominal krona debt: 60 per cent (residual)
Guidelines on maturities for the debt
Foreign currency debt: 0.125 years
Inflation-linked debt: 9.4 years
Nominal krona debt:
-instruments with a maturity of up to twelve years: 3.2 years
-instruments with a maturity exceeding twelve years: maximum volume of SEK 60 billion
The overall goal of central government debt policy is to minimise the cost of the central government debt in the long run while taking the risk involved in its management into account. The Government controls the expected cost and risk primarily by deciding guidelines for composition and maturity. The Government decides on the guidelines after receiving proposals from the Debt Office. The Debt Office is responsible for the operational management of the central government debt within the framework of these guidelines.
On 31 October 2009, the unconsolidated central government debt amounted to SEK 1 110 billion. Included in this amount is on-lending to the Riksbank of SEK 97 billion.
Contact
Mia WidellPress Secretary to Mats Odell
Per Franzén
Desk Officer
08-405 54 68
070-260 92 41
