The Munich-based Ifo Institute has publicly criticized certain accounting practices employed in the federal budget. The institute reported on Wednesday that the Federal Government is shifting planned investments from the Special Fund for Infrastructure and Climate Neutrality (SVIK) into the debt-financed allocation designated for defense.
Ifo President Clemens Fuest stated that without these transfers, the required 10% investment quota would not be met. Calling the necessary maneuvers “accounting tricks,” he argued that “the state, overall, is doing too little to reduce non-priority spending and increase investments.”
Ifo experts specifically noted a transfer of €4.2 billion, which was originally earmarked for building roads and railways under the SVIK. These funds are now being booked into the Ministry of Defense’s operating budget. According to the budget draft, this places the money under the “defense scope exception,” allowing it to be financed via debt. The justification provided is that these are “defense-relevant transport investments.” If this reallocation were not made, the federal budget’s investment ratio would be 9.9 percent, rather than the 10.8 percent listed in the budget draft.
“Only thanks to these measures is the prescribed investment ratio of 10 percent being achieved within the core budget,” explained Ifo researcher Emilie Höslinger. She added that they observed further shifts intended to mask the overall insufficient infrastructure investment. Meeting the 10 percent core budget investment quota is considered necessary for the SVIK’s new borrowing to be legally sound.
Ifo specialist Max Lay pointed out that such transfers are possible due to how the Federal Government structures the calculation of the investment ratio. While all genuine investments count toward the numerator, all core budget expenditures form the denominator. Although investments made under a scope exception increase the investment total in the numerator, they are not included in the sum of all expenses in the denominator. This mathematical mechanism artificially inflates the ratio, making the target of 10 percent easier to reach.
