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The national debt is growing but becoming cheaper – how the public finances are affected
Sweden's national debt increased by 93 billion kronor during 2025 and amounted to 1,244 billion kronor at the end of the year. This corresponds to a debt ratio of 19 percent of GDP, compared to 18 percent the previous year. Despite the growing debt, the government's interest costs decreased to 13 billion kronor, which is approximately 0.2 percent of GDP. This development is mainly explained by the Swedish krona strengthening during the year, which lowered the cost of the currency-exposed part of the debt.
The increase in the national debt is due to the government running a deficit for the second consecutive year. To finance the deficit, the Swedish National Debt Office increased the supply of government bonds and short-term loans. At the same time, interest in Swedish government securities remained strong among both Swedish and international investors. This has helped keep government interest costs low despite a higher borrowing need than previous years.
The cost reduction is not solely a result of low interest rates or efficient borrowing. A significant part is explained by exchange rate changes. When the krona strengthens, it becomes cheaper for the government to pay interest and repay loans in foreign currency. Conversely, if the krona weakens in the future, costs could rise again.
The low interest costs mean that the government's expenses for servicing the debt are small relative to the size of the economy. In the short term, this can provide some budget space, but since deficits are financed through new borrowing, the total debt increases, along with the long-term cost risk. The debt ratio, i.e., the share of government debt relative to GDP, continues to rise, and the development needs to be monitored closely.
The Swedish National Debt Office has continued to keep the maturity of the government debt within the target range of 3.5–6 years. This means that the debt does not need to be refinanced too quickly, providing some stability in cost development. The Debt Office also reports that liquidity and market confidence in Swedish government securities remain high, which is important for borrowing on favorable terms in the future.
What does this development mean for public finances and taxpayers?
For public finances, the situation presents both opportunities and risks. Low interest costs provide budget room and reduce pressure to quickly restore balance in government finances. At the same time, the growing debt means the government is building up a larger future obligation. If interest rates or exchange rates change, costs could increase relatively quickly.
For taxpayers and households, the current situation has no immediate direct effect on taxes or public services. How the development influences the national budget in the longer term depends on how debt, interest rates, and exchange rates evolve moving forward.
Continued monitoring is essential
- The krona's development – a weakening could quickly increase government interest costs.
- The budget balance – if deficits continue, pressure on future public finances will increase.
- Demand for government securities – sustained strong demand is important for low borrowing costs.
Since the report concerns 2025 and was published in February 2026, official statistics for the entire 2026 are not yet available. Therefore, it is important to follow upcoming monthly reports and forecasts to see if the trend of low costs despite increasing debt continues.
Sweden's national debt
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