Sweden faces rising budget deficit

Swedish government borrowing is expected to increase over the next two years as the National Debt Office (Riksgälden) raises its budget deficit forecast for 2009 and 2010.

In a statement on Thursday, the debt office said it saw a 90 billion kronor ($10.6 billion) deficit this year, compared with its previous forecast, published in November, for a 23 billion kronor deficit.

The office also said it expected a deficit of 65 billion crowns in 2010, versus a previous forecast for a 35 billion deficit.

“Before we know how great the interest for a new bond will be, we cannot say how much borrowing in the outstanding nominal bonds and in T-bills will increase,” the debt office said.

“There is a lot to indicate that the amounts involved will be limited.”

The surplus or deficit determines the government’s net borrowing requirement, most of which the debt office covers by issuing government bonds.