National Debt

Public debt grew but interest costs fell – what lies behind this development?

Sweden's public debt increased by 93 billion SEK in 2025, reaching a total of 1,244 billion SEK by the end of the year, equivalent to 19 percent of GDP. This marks the second consecutive year that the state has run a deficit and needed to borrow more to cover the gap between expenditures and revenues. At the same time, the cost of paying interest on the debt fell to 13 billion SEK, or 0.2 percent of GDP. The primary reason for this decrease is that the Swedish krona has strengthened against other currencies, making it cheaper to repay loans denominated in foreign currencies.

What does this mean for public finances and taxpayers?

The growth in public debt means the state is borrowing more to finance its expenditures. In the short term, interest costs have decreased, primarily due to currency fluctuations, which provides some room in the state budget. However, it is important to remember that a stronger krona may offer only temporary relief – if the currency weakens, interest costs could rise again.

The rising debt-to-GDP ratio – that is, the share of GDP represented by public debt – indicates that the state's expenditures exceed its revenues. If this continues over a longer period, it could affect the state's ability to finance operations and investments in the future.

The state borrows more – but at continued low interest rates

To finance the deficit, the National Debt Office (Riksgälden) has increased the supply of government bonds and issued new loans, including a currency loan of 2 billion euros at an interest rate of 2.097 percent. Despite the increased borrowing, demand for Swedish government securities has remained strong among both Swedish and foreign investors. This suggests that the market continues to have confidence in Sweden's economy and the state's ability to repay its loans.

How can households and savers interpret this development?

• The state is borrowing more, but for now, it is unusually cheap thanks to the currency situation. This reduces pressure on the state budget in the short term.
• A growing public debt could mean in the long term that the state needs to review its revenues and expenditures, which could affect taxes or public services in the future.
• The strong market confidence in Sweden allows the state to borrow at relatively low interest rates, which is positive for public finances.
• Swedish government bonds continue to be attractive even on the international market, which may be interesting for savers seeking low risk.

Key points to keep in mind going forward

• Public debt (1,244 billion SEK) is significantly larger than the annual interest cost (13 billion SEK) – these are two different metrics.
• The low interest cost is largely due to a stronger krona, which could change if currency conditions fluctuate.
• As long as the state's expenditures exceed its revenues, the debt will continue to grow, which could impact future economic decisions.