The infrastructure special fund, established by the governing coalition of the Christian Democratic Union (CDU) and the Social Democratic Party (SPD) with a value of 500 billion euros, is projected to significantly constrain the budgetary flexibility of future governments.
According to reports citing calculations from the Federal Ministry of Finance (BMF), annual repayment obligations of 16 billion euros are slated to begin no earlier than 2037 and potentially as early as 2044. This is due to provisions within the draft law establishing the supplementary budget, which mandates repayment of the borrowed funds, a structure similar to that of special funds for the Bundeswehr (German Armed Forces) and emergency loans issued during the COVID-19 pandemic.
The BMF’s projections indicate that repayment for these existing funds will commence in 2028, spanning a period of 31 years, with an annual repayment rate of 14 billion euros. With the addition of debt repayments from the infrastructure special fund, the German federal government is forecast to face an annual debt servicing burden of 30 billion euros.