Lars Klingbeil, the Social Democratic finance minister who styles himself the ‘Minister of Investment,’ faces criticism over how a large new borrowing facility is being used. In 2025 the Bundestag approved a special fund aimed at infrastructure and climate neutrality that permits up to €500 billion in additional debt over its lifetime. A year later two economic research institutes say much of that money has not gone to new projects.
The Ifo Institute in Munich and the German Economic Institute in Cologne published progress reports arguing that funds from the special debt vehicle were largely used to plug gaps in the federal budget instead of financing fresh investments. Their findings prompted questions from opposition parties and commentators about whether the fund is meeting its intended purpose.
Klingbeil rejects the accusations. He says loans from the special fund were spent exclusively on infrastructure, as the law requires, and that the priority has been to ensure released resources reach municipalities. He told reporters in Berlin that ‘what matters is that swimming pools are being renovated, that bridges are being repaired, that high-speed internet is being installed,’ and that the Finance Ministry will continue to focus on those outcomes.
Clemens Fuest, president of the Ifo Institute, warned before the credit package passed that it risked creating fiscal problems. In the institute’s latest study he renewed that critique, arguing that about 95% of the funds in 2025 were used to balance the budget rather than to finance new investments. ‘In light of the current situation, indirect financing of such expenditures or tax cuts through debt is clearly not appropriate,’ Fuest told public broadcaster ARD, adding that the government should prioritize cuts to non-priority spending rather than distributing new handouts.
The Finance Ministry pushed back, saying the institutes compared the old 2024 budget plan with the 2025 plan in ways the ministry considers misleading. Officials point to aggregate figures showing federal budget investments plus additional investment funded by the special vehicle totaled €87 billion in 2025, a 17% increase compared with 2024, and say that meets the legally mandated 10% investment share in the core budget.
Researchers and opposition politicians interpret the numbers differently. They contend that roughly €23 billion from the special fund effectively financed items that had already been earmarked in the core budget, calling it an accounting reclassification that masks the true use of the extra borrowing. The Greens and the far-right Alternative for Germany have threatened legal action at the Federal Constitutional Court.
The special fund was designed to operate for 12 years. Projections show federal investments of about €128 billion in 2026, with €58 billion of that drawn from the special fund, and similar levels expected through 2029. From 2030 to 2036 the allowable annual draw from the fund drops to roughly €20 billion, and from 2037 onward investments must return to the regular budget.
Economic researchers, budget policymakers in the Bundestag and legal observers say they will continue to monitor how the fund is used and accounted for. Some commentators conclude that Klingbeil’s ‘investment minister’ narrative has not fully carried through in practice, and that his role so far looks more like one of reallocating existing commitments than launching a wave of new projects.
This article was originally written in German.