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National debt increased but interest costs fell, partly due to a stronger krona
During 2025, Sweden's national debt increased by 93 billion SEK, reaching 1,244 billion SEK by the end of the year, equivalent to 19 percent of GDP. The debt rose due to government budget deficits for the second year in a row. At the same time, the actual interest cost for the state decreased to 13 billion SEK, or 0.2 percent of GDP – one of the lowest levels in recent years.
Why did the state's interest cost decrease?
The main reason for the lower interest cost was the strengthening of the Swedish krona during the year. Since part of the national debt is borrowed in foreign currencies, a stronger krona means these loans become cheaper to repay in Swedish kronor. This has led to a reduction in the state's ongoing debt costs, despite continued borrowing to cover deficits.
What does this mean for public finances and taxpayers?
- The state can manage its deficits at a lower cost than before, reducing the need to reallocate resources from other expenditures solely to pay interest.
- The low interest cost means there is more room in the state budget, which can give the government greater flexibility if the trend continues.
- A debt-to-GDP ratio of 19 percent is low in both a historical and international perspective, giving Sweden margins to handle future crises or unexpected expenditure needs.
- Strong demand for Swedish government bonds, even among foreign investors, indicates continued confidence in Sweden's economy and the state's ability to manage its borrowing.
What should be kept in mind going forward?
- Deficits have continued for two years in a row, meaning the national debt is increasing in absolute terms even though costs have been low so far.
- If the krona were to weaken in the future, the interest cost for the currency-exposed portion of the debt could rise again. There is thus no guarantee that the low costs will persist.
- A larger share of Sweden's national debt matures in the short term compared to many eurozone countries, meaning the National Debt Office (Riksgälden) needs to remain active and cautious in its borrowing strategy.
How can the development be interpreted?
The development during the year shows that the state has been able to finance its deficits at a lower cost than before, despite the increase in debt. The reduced interest expenses mean that more of the state's resources can be used for purposes other than paying interest, as long as the krona remains strong. At the same time, it is important to note that the low costs are largely due to exchange rate developments, which can change rapidly. Therefore, it is reasonable to view the current situation as favorable but not without risk, and to monitor how the state manages both borrowing and currency risk in the future.
Sweden's national debt
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