Guidelines for central governtment debt management 2009

This year's decision on the guidelines has been made at a time of great unrest in the financial markets. The international financial crisis has affected the real economy and central government finances in Sweden and other countries. There is considerable uncertainty about how large these effects will be. Central government debt management is long term in nature. Central government finances are strong and the long-term direction will be maintained. The Government exercises control over the expected costs and risks in debt management primarily by its decisions on the composition and maturity of the central government debt. This year's decision on the guidelines covers 2009-2011, but the guidelines for 2010 and 2011 should be considered preliminary. The target values for the composition of the central government debt and the target for the debt's maturity will remain unchanged from the current year. The targets for the different types of debt are: - Foreign currency debt: 15 per cent (±2 percentage points) - Inflation-linked debt: 25 per cent (long-term) - Nominal krona debt: 60 per cent (residual) The maturity for the three types of debt is to be: - Foreign currency debt: 0.125 years - Inflation-linked debt: 10.1 years - Nominal krona debt: 3.5 years The Government's decision on the target values agrees with the Debt Office's proposal, except for the maturity for the nominal krona debt. The Debt Office proposed shortening the maturity for the nominal krona debt to 3.2 years until the end of 2010. In view of the increase in uncertainty during autumn 2008 regarding the development of the real economy and central government finances, the Government has chosen to defer taking a position on the long-term direction of the maturity for the nominal krona debt. Thus the current maturity of 3.5 years has been retained. The benchmark for the amortisation of the foreign currency debt was abolished in the Government's decision of 28 August 2008 since the percentage of foreign currency debt during the summer neared the long-term percentage of 15 per cent. The Government has decided that the deviation interval around the foreign currency target share is to be 2 percentage points. The control system for central government debt management has evolved since 1999 when the then Government decided guidelines for central government debt management. In this year's guidelines decision, two adjustments have been made to the control system: the time horizon for achieving the target share for the inflation-linked debt has been viewed from a long-term perspective and the Government has decided a maturity for each type of debt (instead of a maturity benchmark for the whole debt). In the guidelines decision, rules have been established concerning extra issues of T-bills decided by the Debt Office on 18 September with the aim of alleviating an acute shortage of government securities and at the same time facilitating the financing of banks and mortgage institutions. The Debt Office has been given the right to have outstanding loans with a maximum nominal value of SEK 200 billion for this purpose in 2009. The Debt Office has also been requested to present a progress report on the extra issues no later than 30 April 2009. The issues referred to do not affect the CCF measure and thus do not affect the control of the debt percentages or the maturity.