Central government financing requirement for 2020 and 2021
The Economic Survey, August 2020, will be published August 31st.
The estimates of the central government net financing and financing requirement for 2020 and 2021 can be found in table 1 below. The net financing requirement is estimated in The Economic Survey, August 2020, to be DKK 248 bn. in 2020 and DKK -65 bn. in 2021. The estimate of the net financing requirement for 2020 has been increased by approximatively DKK 70 bn. compared to the estimate in The Economic Survey, May 2020. The increase is primarily due to the payment of holiday allowances (Feriepenge), as well as additional postponement of taxes agreed since The Economic Survey, May 2020. The postponement of tax revenue reduces the net financing need for 2021.
The financing requirement (gross) is estimated in The Economic Survey, August 2020, to be DKK 374 bn. in 2020 and DKK 209 bn. in 2021. For 2020, this is an increase of approximatively DKK 80 bn. compared to The Economic Survey, May 2020. This is primarily due to the increased estimate of the net financing requirement.
The financing requirement is met by debt issuance or by drawing on the central governments account at Danmarks Nationalbank. The financing strategy is published on the website of the government debt management office.
The estimates in table 1 reflect the proposal for a budget for 2021 and the Economic Survey, August 2020. The budgeted expenditures are however too high by approximatively DKK 7 bn. in 2021. The financing requirements in table 1 (net and gross) for 2021 are therefore too high by approximatively DKK 7 bn. This is a liquidity effect between the central government and the municipalities, and will be corrected by technical amendment to the budget proposal for 2021.