Nearly half of Germany’s infrastructure and climate fund at risk of being misused – report

About half of the money from Germany’s special fund for infrastructure and climate neutrality might not be used for additional investments, but instead to avoid budget cuts elsewhere, found a report by the German Economic Institute (IW). Although the federal government complies with the legally required additionality for a 60 percent share of the money it receives from the fund, there are no criteria to be met for the remaining 40 percent. Moreover, a total of 42 billion euros out of the total 500 billion euros will be given to the country's states, and it is unclear whether that money will be used for additional investments. The IW report found that without political will, misuse to offset budget deficits or finance other expenditures is virtually unavoidable.

Investments in transport infrastructure and broadband expansion have been moved from the core budget to the special fund. According to IW, the special fund “does not lead to higher investments in infrastructure and climate neutrality in these cases as politically promised, but rather saves the federal government from having to take consolidation measures to finance such expenditures. Even if these expenditures are labelled as ‘additional’ in the federal budget, “they are a case of false labelling,” said Tobias Hentze, author of the report.

Germany’s national Court of Auditors has called for clear targets to be implemented in the special infrastructure and climate fund, stressing that the funds should be limited to real investments and should not cover running costs like wages. Industry experts echoed those concerns and said the fund could help boost economic growth, but only if the money flows into new projects.