Swedish sovereign fund is political not practical

Author: Amélie Labbé | Published: 2 May 2017

The launch of a sovereign wealth fund (SWF) in Sweden could solve some liquidity issues in the country’s bond market. But it may be a case of too much, too soon for the Nordic nation which has so far met its funding needs in other ways.

Finance minister Magdalena Andersson told Reuters in April that Sweden could look to set up such a fund to channel the government’s excess cash in conjunction with an increase in the supply of sovereign bonds. Such a possibility had never been mentioned before.

"If state debt is so low that we get a problem with liquidity in government bonds, then the Norwegian solution is a possibility," Andersson said. "Combining a fund with debt, so there is liquidity in government bonds, that is absolutely a possibility."

The country’s public debt is expected to drop to around 31% of GDP by 2020 as its...