RTTNews - Friday, the Swedish National Debt Office revised its budget deficit forecast for 2009 to SEK 198 billion. This was SEK 63 billion larger than its earlier forecast. The Debt Office also raised the deficit estimate for 2010 by SEK 7 billion to SEK 72 billion.

According to Debt Office, the deterioration this year is mainly due to increased on-lending in the wake of the financial crisis. The office will lend equivalent of SEK 100 billion in foreign currency to the Riksbank and SEK 7 billion to Iceland. The forecast for 2010 includes a loan of SEK 8 billion to Latvia.

The economy is expected to contract 4% this year and then to grow 2% in 2010. The growth number should be considered as a recovery from an extremely low level rather than a forecast of swift recovery, the official data said.

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