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National Debt Reaches New Record High – But Interest Costs Fall
At the end of February 2026, Sweden's national debt amounted to 1,201 billion SEK. This represents a continued increase compared to the previous year, when the debt rose by 93 billion SEK during 2025. At the same time, the state's cost of managing the debt has decreased, amounting to 13 billion SEK in 2025, equivalent to 0.2 percent of GDP. This is a historically low level relative to the size of the debt.
What lies behind the development?
- The state has run deficits in its payments over the last two years, which has increased the need for borrowing.
- However, in February 2026, an unexpectedly large surplus of 83.4 billion SEK was reported. Tax revenues were approximately 10 billion SEK higher than expected, primarily due to supplementary payments.
- Expenditures for certain agencies, particularly the defense sector, were lower than calculated.
- The cost of the national debt has been kept down, partly thanks to a stronger Swedish krona, which has made it cheaper to pay interest on loans in foreign currencies.
- The National Debt Office has continued to reduce the state's exposure to foreign currencies, which reduces sensitivity to currency fluctuations.
What does this mean for public finances and taxpayers?
Despite the growing debt, the state's interest costs are being kept at a historically low level. This means that a smaller share of the state budget needs to go towards interest payments, providing more room for other expenditures. A stronger krona acts as a buffer against rising interest costs on foreign loans and can help dampen the need for rapid measures to strengthen public finances.
The fact that the February outcome was significantly better than expected may indicate that the state's economy is more resilient than previous forecasts suggested. At the same time, it is important to note that the improvement is largely due to one-off items, such as supplementary payments, and that this is not necessarily a lasting trend.
How can the future development be interpreted?
- The deficit for the last twelve months is still 101.5 billion SEK, meaning the state continues to borrow more than it receives.
- If the current trend continues, the debt could exceed 1,250 billion SEK within a few years, meaning the development needs to be monitored closely.
- Interest costs are low now, but if the krona weakens again, the state's costs could increase, especially for loans in foreign currencies.
- A portion of tax revenue goes towards interest, but this share is currently unusually low. This provides some room for other investments within the state budget.
- Tax revenues better than expected could indicate that the economic cycle is stronger than feared, which could affect future budget decisions.
For those following public finances, it is important to pay attention to both the development of the debt and the cost of managing it. A growing debt does not necessarily imply acute problems as long as the state budget is under control and costs are kept down, but the development requires continued vigilance and careful management in the future.
Sweden's national debt
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