National Debt

National Debt Rose in 2025 – But Interest Costs Fell Thanks to a Stronger Krona

Riksgäldens latest annual report shows that Sweden's national debt increased by 93 billion SEK in 2025, reaching 1,244 billion SEK by the end of the year. The debt-to-GDP ratio, i.e., the national debt relative to GDP, rose from 18 to 19 percent. The increase is primarily due to the state running a deficit for the second year in a row, with a deficit of just over 100 billion SEK.

Interest Costs Declined Despite Higher Debt

Despite the growth in debt, the state's total interest cost decreased to 13 billion SEK, equivalent to 0.2 percent of GDP. The main reason is that the Swedish krona strengthened during the year, which lowered the cost of the portion of the debt exposed to currency risk. Riksgälden has also increased the supply of government bonds and issued euro-denominated bonds to meet the increased borrowing needs. Demand for Swedish government securities remained strong, even among foreign investors.

What Does This Mean for Public Finances and Taxpayers?

• A growing national debt means the state is borrowing more than it saves. If interest costs remain low, the annual cost to taxpayers becomes more manageable, even as the debt increases.
• The fact that interest costs fell thanks to a stronger krona shows that exchange rates can impact the state's economy. If the krona weakens again, costs could rise.
• The strong confidence from investors and high demand for Swedish government securities indicate that the market views Sweden as a stable borrower. This gives the state favorable financing conditions even with increased borrowing needs.

Long-Term Aspects to Monitor

• Two consecutive years of large deficits is a trend that could lead to continued debt growth unless the state budget is balanced in the future.
• Although this year's interest cost was low thanks to the strength of the krona, this depends on factors that can change. A weaker krona or shifts in market interest rates could affect costs going forward.
• The debt-to-GDP ratio remains low in international comparison, but continued increases could eventually heighten the state's vulnerability to economic changes.

How Can This Development Be Interpreted?

For taxpayers and households, this year's development means that the state's increased indebtedness has not led to a sharp rise in interest costs. There are also no signs of an urgent need for tax hikes to cover interest payments at this time. At the same time, it is important to monitor the trend of recurring deficits and long-term debt growth. If conditions in the currency or interest rate markets change, the cost of the national debt could also change. In the long run, a larger debt could mean that future generations will have to take on greater responsibility for repayment.