While much of Europe is struggling with mountainous debts and faces years of austerity in order to bring public finances back into balance, the market turmoil and worries about slower future growth are unlikely to spoil Sweden's model performance of recurrent surpluses and falling debt levels.
"What's happening now should probably take the surplus down a bit," Director General Bo Lundgren told Reuters.
"It is hard to see that we shouldn't get surpluses even if they are perhaps smaller due to the developments in the world economy."
Lundgren added that the government's decision on Tuesday to abandon plans for a new round of income tax cuts would offset the macroeconomic drag on revenues, but it was difficult to say to what extent.
In its previous forecasts issued in May, the Debt Office estimated the government would run a budget surplus of 99 billion Swedish crowns ($16 billion) this year followed by 68 billion crowns in 2012.
The Debt Office publishes fresh forecasts in October after proposals for how the government should manage its debt are presented in September.
Lundgren said he did not expect the Debt Office to recommend any dramatic changes to debt management policy.
SAFE HAVEN
Strong public finances have helped Swedish debt outperform during the crisis.
Yields on 10-year debt hit their lowest levels since at least the 1930s earlier this month and yields are currently around 14 basis points below equivalent German debt from about 30 bp above at the start of the year.
"We know that there is great demand for both our bonds and other Swedish securities," Lundgren said.
"Since we have strong public finances ... we are beginning to be something that you might call in the future a safe haven."
The Swedish crown has also been more resilient than in the past to risk aversion during the latest bout of market turbulence.
It was trading at around 9.17 to the euro at 1205 GMT, off 10-year highs hit against the single currency in February at around 8.7 to the euro, but nowhere near the 11.8 to the euro it hit at the height of the financial crisis in early 2009.
"We haven't seen the currency as much affected as in previous times, so I think we are on the verge of being this safe haven," Lundgren said.
Fundamental economic strength should continue to benefit the crown.
"I think that in the long run, the Swedish currency will strengthen. To what level is difficult to say," Lundgren said.
Lundgren was critical of euro zone leaders' handling of the bloc's debt crisis, adding that Greek debt, at least, should be more extensively restructured.
"I can't see any scenario where Greece, even if they get a primary balance that is positive, can finance a debt of 150-160 percent of GDP," Lundgren said.
Restructuring Greek debt would lead to balance sheet problems for some European banks.
"Then you have to fix that. You might even have to nationalise some banks. But if you do that, then you have fixed it (the problem)," he said.
"The really big problem in the world economy today is the lack of leadership in Europe and the United States.
Copyright Reuters, 2011