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DEBT

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.

IMF

Sweden pledges $10bn to IMF bailout fund

Sweden, Norway and Denmark pledged $26 billion to the new IMF crisis funding Tuesday, taking the total raised so far to $286 billion, Fund managing director Christine Lagarde announced.

Sweden pledges $10bn to IMF bailout fund

Their support to the planned $400 billion fund-raising exercise “clearly demonstrates these countries’ enduring commitment to multilateralism,” Lagarde said in a statement.

“Ensuring that the Fund has sufficient resources to tackle crises and to promote global economic stability is in the interests of all our members,” she said.

In a Frankfurt Allgemeine Zeitung interview published earlier Tuesday, Lagarde revealed that the International Monetary Fund is seeking some $400 billion for expanding its crisis intervention “firepower”.

That was sharply lower than the original target of $500 billion. Last week Lagarde said the Fund was lowering its target, citing a slight easing of tensions in the global and eurozone financial system.

In the newest pledges, Denmark was promising about $7 billion, Norway $9.3 billion, and Sweden $10 billion.

Their contributions follow a $60 billion commitment from Japan and $200 billion from the euro area.

The IMF is hoping to firm up commitments, especially from the big emerging economies like China, Russia, Brazil and India, at the Fund’s Spring meetings held at the end of this week in Washington.

But the Fund’s largest shareholder, the United States, is not expected to contribute.

AFP/The Local

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