Swedish collection agency mired in debt

Sweden’s official debt collection agency is suffering from severe economic problems after having over-spent and over-borrowed and may soon be forced to cut staff to stop the bleeding.

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“[Layoffs] may happen, yes. But that’s not something we’re doing right away,” said Eva Liedström Adler, head of the Swedish Enforcement Authority (Kronofogden) to the TT news agency.

Current forecasts project that Kronofogden is going to overspend its 1.6 billion kronor ($236 million) budget by 60 million kronor this year.

As many as 150 employees from the agency’s total staff of 2,500 may be let go from various offices around the country.

“We’re looking into the possibility. That’s the most concrete thing I can say today,” said Kronofogden spokesperson Åke Lundholm to TT on Monday.

The agency’s offices held meetings on Monday to discuss the acute financial situation at Kronofogden.

“It’s important that all are aware. We have to look under every stone and tighten the screws,” said Liedström Adler.

The agency, which is charged with collecting unpaid Swedes' debts and assisting with bankruptcies, used to be a part of the Swedish Tax Agency (Skatteverket), but was made independent at the start of the year.

Officials apparently grossly underestimated the costs of running the Kronofogden as an independent agency.

“We didn’t have sufficient capacity to calculate [the costs of the transition] in the right way,” said Liedström Adler.

Adding to the agency’s woes is the fact that the Ministry of Finance only released 12 million kronor of the 18 to 25 million kronor that Kronofogden estimated it would need to manage the increased work load.

As the situation has worsened throughout the year, the agency has in turn borrowed more and more money, having already exceeded the borrowing limit of 3 percent of next year’s budget, or 48.3 million kronor.

“We’ve requested an increase in our credit allotment from the government, but have yet to receive an answer,” said Liedström Adler.

She stressed that the agency expects the need to make several large investments, including a new computer system that will allow Kronofogden to manage the additional work resulting from new laws.

The agency is expected to announce any possible staff cuts in mid-October. In the meantime, a comprehensive review of costs and expenses is underway in a frantic effort to minimize the scope of the agency’s financial hardship.

“We have to live on what we actually have today and take drastic measures at once,” said Lundholm.