Sweden lowers budget surplus forecast

The National Debt Office (Riksgälden) lowered its estimate of Sweden’s 2008 budget surplus by 12.9 percent to 101 billion kronor ($16.2 billion).

“The Swedish economy continues to be strong although it has weakened since our forecast in October,” said the agency in a statement.

The agency sees the surplus shrinking further to 60 billion kronor in 2009, due mainly to falling corporate profits and lower capital gains resulting from the weakening global economy.

The projected surpluses include an estimated 50 billion kronor per year in income from the privatization of state assets.

Sweden recorded a surplus of 103 billion kronor for 2007, including 18 billion kronor in privatization income.

The Debt Office also projects government debt will drop to 1.07 billion kronor in 2008, and to 1.01 billion by the end of 2009.

If the forecasts hold, the additional reduction in Sweden’s public debt represent a 26 percent drop in the last decade.

Combined with Sweden’s expanding GDP, the figures correspond to public debt ratios of 33 percent and 30 percent of GDP, levels not seen in Sweden since the 1970s.

The debt to GDP ratio for 2007 was 38 percent.

The agency also said it plans to raise more debt by increasing the volume of government bonds from 1.5 billion kronor to 2.5 billion kronor starting in March of this year.