National Debt
- Articles
- National Debt
The national debt is growing but becoming cheaper – what does this mean for Sweden's economy?
Sweden's national debt increased by 93 billion kronor in 2025, reaching 1,244 billion kronor at the end of the year, equivalent to 19 percent of GDP. Despite this increase, the state's interest costs decreased to 13 billion kronor, or 0.2 percent of GDP. The main reason is that the Swedish krona strengthened, which lowered the cost of the portion of the debt tied to foreign currencies.
What has happened?
- The national debt has increased for the second consecutive year due to a continued budget deficit.
- The Swedish National Debt Office increased the supply of government bonds to finance the growing borrowing needs.
- The cost of the national debt fell thanks to currency gains as the krona strengthened.
- Tax revenues were 16 billion kronor lower than estimated in June 2025, contributing to the deficit.
Why does it matter?
It is an unusual situation for the national debt to grow while interest costs decline. The lower cost gives the state some breathing room, but this is largely dependent on the strong krona. If the currency situation changes or if interest rates rise, costs could increase rapidly. Since the deficit is due to both higher expenditures and lower-than-expected tax revenues, it may indicate more long-term challenges in public finances rather than temporary fluctuations.
How can the development be interpreted and what does it mean for the future?
- A strong Swedish krona has temporarily dampened the interest cost on the national debt, but there is no guarantee that this will hold. If the krona weakens, costs will increase rapidly, especially for the portion of the debt in foreign currencies.
- The growth in national debt means the state needs to borrow more, increasing its dependence on investors and making public finances more sensitive to changes in global interest rates.
- The current cost reduction primarily affects the state's budget, but if costs were to rise due to a weaker krona or higher interest rates, it could eventually reduce the state's economic room for maneuver.
- Since the deficit is partly due to lower-than-expected tax revenues, there may be structural challenges in the economy that need to be addressed over time.
What should one keep an eye on?
- The cost reduction for the national debt is largely dependent on the exchange rate and could quickly reverse if the krona loses value.
- The debt-to-GDP ratio is still low from a historical perspective, but the upward trend is important to monitor.
- Continued deficits and lower tax revenues may mean that the state needs to continue borrowing more in the future, which will affect the state's long-term economic room for maneuver.
Sweden's national debt
-
Demoskop May 28, 2026: Social Democrats Lose, MP and KD Increase
Thu, 28 May 2026 - 19:35 -
Up to 25% off experiences for mom – Celebrate Mother’s Day with Live it
Tue, 26 May 2026 - 12:00
