The German Federal Cabinet approved draft legislation on Wednesday to finance infrastructure investments by states and municipalities. Alongside this, a draft law concerning the allocation of new “structural debt leeway” to the states and the inclusion of the Stability Council in the new EU budgetary surveillance system were also adopted, according to the Ministry of Finance.
The first draft law aims to implement the 100 billion euro portion of the federal special funds earmarked for investments by states and municipalities. The Ministry stated this will enable “massive investments on the ground in modernization and future viability.
The second draft law grants the states the same structural debt leeway as the federal government within the framework of the debt brake, thereby providing states with a significantly greater budgetary scope.
Federal Finance Minister Lars Klingbeil (SPD) stated, “Today, in the Federal Cabinet, we have initiated the regulations with which the federal government makes 100 billion euros available to states and municipalities for on-site investments. This directly strengthens the capacity for action of states and municipalities.
The distribution of the 100 billion euros will follow the agreement reached by the Chancellor and the heads of government of the states, based on the Königstein key. Investment measures can be financed if they have not commenced before January 1, 2025. According to the draft law, measures can be approved until the end of 2036.
