The Danish Government and KommuneKredit have agreed that Danmarks Nationalbank, on behalf of the central government, will finance KommuneKredit at the central government’s financing costs, as soon as possible (link). Hereby, the public sector can reduce its total interest costs, since the central government finances its activities at a lower interest rate than KommuneKredit. The initiative is not considered to contribute to increased credit risk for the central government.
The specific terms of financing will be negotiated between the Ministry of Finance, the Ministry of Industry, Business and Financial Affairs, KommuneKredit, and Danmarks Nationalbank, which is responsible for government debt management on behalf of the Ministry of Finance.
Danmarks Nationalbank looks forward to the future collaboration with KommuneKredit.
Issuance strategy for 2025 is unchanged
In 2025, the central government will finance KommuneKredit by drawing on the central-government account at Danmarks Nationalbank. Over time, financing will be covered by issuances of government securities, which in turn contributes to maintaining a well-functioning and liquid government debt market. Both EMU and central-government debt are unaffected by the initiative as the resulting rise in central-government liabilities will be offset by the corresponding increase in assets.
Contact
For further information please contact Henrik Nørby.