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Local government sector debt set to continue rising

Increasing numbers of elderly people, a strong urbanisation trend and substantial refurbishment needs drive investments in Swedish municipalities – resulting in increased borrowing. In 2013, total local government borrowing increased by 6.3 percent to SEK 468.5bn, according to Kommuninvest’s most recent report.

In relation to GDP, local government debt remained at relatively low levels, with an increase to 12.9 percent of GDP, compared with 12.5 percent in 2012. Borrowing tends to be higher in municipalities and counties with high population growth, sizeable corporate spheres and high equity/assets ratios.

Kommuninvest projects that the local government sector’s need for external financing will continue to be considerable. The forecast from last year’s report of a nominal growth rate in borrowing of 6 percent per year is revised up to an annual growth rate of 7 percent. An annual growth rate of 7 percent entails borrowing increasing by SEK 150 billion between 2013 and 2017.

For further information: Björn Bergstrand, Head of Media Relations, mobile: +46 708 86 94 76