The Swedish National Debt Office lends 100 billion to the Riksbank
The Swedish National Debt Office will lend SEK 100 billion to the Riksbank in
order to strengthen foreign exchange reserves. The Swedish economy is so strong
that this will not conflict with the government's regular borrowing. However,
the Swedish National Debt Office questions the Riksbank's analysis.
- Â The entire amount will be borrowed using bonds and short-term securities in
foreign currencies. The National Debt Office's borrowing in Swedish kronor will
thus not be affected by the Riksbank's lending, says the Debt Office Director
General, Bo Lundgren.
Borrowing will focus on benchmark bonds in the capital market with maturities of
up to five years and initially also commercial paper. The currencies will likely
be Â dollar and Â euro. The pace of bond issuance and choice of maturities and
currencies will be based on market conditions.
The total on-lending to the Riksbank, including this new lending to the
Riksbank, will be SEK 200 billion, which is equivalent to approximately 5 per
cent of the GDP. The budget deficit in 2013 will be adjusted from SEK 56 to 156
billion. The reported central government debt will also increase by the same
amount, while the re-lending entails a strengthening of the foreign exchange
reserve. Hence, the new borrowing does not entail a weakening of government
A new regulatory framework is needed
The National Debt Office's opinion, however, is that it is wrong that a decision
by a public authority can increase the government debt by three digit billion
amounts without a clear framework. This decision-making undermines the
parliament's control over the government finances. Current rules provide that
the National Debt Office shall approve requests by the Riksbank as long as new
lending to the Riksbank does not affect Sweden's ability to finance other
central government expenditures. Strong government finances means that no such
-Â Â Â Â However, strong government finances also entail that the National Debt
Office does not share the Riksbank's concerns that our ability to fund may
deteriorate, says Bo Lundgren. We expect to be able to complete our assignment
to finance government activities also in the future, including if needed to
funding for the foreign exchange reserve.
A regime where the National Debt Office borrows foreign exchange only once the
Riksbank has needed to use the foreign exchange reserve is a more secure and
cheaper solution to the government on the whole, than one where funds are locked
in the foreign exchange reserve in advance. The National Debt Office therefore
looks forward to the review of rules which a government investigation will
submit at the end of January.
For further information, please contact:
Press contact, Linda Rudberg + 46 8 613 45 38
Market issues Thomas Olofsson, Head of Debt Management + 46 8 613 47 82
UpplÃ¥ning valutareserven Riksbanken:
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Source: RiksgÃ¤lden via Thomson Reuters ONE