Money flow for nations' special assets: the destination of 100 billion dollars
In a groundbreaking move, the German government has initiated a special assets fund worth over €500 billion for infrastructure and climate protection. Established in March 2025, this fund is set to revolutionise the country's investment landscape, with a focus on modernising infrastructure and achieving climate neutrality by 2045 [1].
The fund is structured into three main pillars. €100 billion is allocated to the federal states ("Länder") and municipalities, another €100 billion to the Climate and Transformation Fund, and the federal government retains €300 billion for additional investments [1]. These funds are to be used within a 12-year period, with investments eligible only if started after January 1, 2025, and can be utilised in areas such as transport infrastructure, education, civil protection, hospitals, digitalization, and energy infrastructure [1][2].
For 2025 alone, the total investment plans, including this special fund, amount to a record €115 billion, which is 55% higher than in 2024. Around €27.2 billion are expected from the special fund itself during 2025 [3].
However, concerns have been raised about the distribution of funds to municipalities, which are crucial for on-the-ground infrastructure upgrades and climate protection measures. While 100 billion euros are earmarked for states and municipalities, there is a fear that a major portion of these funds might not effectively reach the cities and municipalities where the investment needs are most urgent, especially for local infrastructure [2].
The federal finance ministry emphasises that funds should be made available "quickly, flexibly, and purposefully," and the states are obliged to provide annual reports on fund usage, with provisions to reclaim funds if misused [2]. Despite the substantial allocation, municipalities may receive insufficient direct support, as the distribution and actual disbursement of the 100 billion euros to local governments remain uncertain or subject to state-level decisions [2].
This could risk delaying or limiting investments where local infrastructure is in most dire need, such as roads, bridges, and digital infrastructure in smaller communities [2]. The German Association of Towns and Municipalities has criticised this, stating that it undermines the central signal that the majority of funds should reach where they are most needed.
The reform provides states with greater scope for action, allowing them to have a debt allowance of 0.35 percent of gross domestic product, similar to the federal government [4]. The cabinet has also adopted a bill for the more detailed implementation of the debt brake reform [4].
However, there are ongoing debates about the adequacy and transparency of the allocation to municipalities. The approach of using funds from the special assets fund to fill gaps in regular budgets is not understood to be favourable among some sectors, such as the construction industry [4].
Measures can be approved until the end of 2036, and misuse of funds can result in their recall [1]. The reform is a significant step towards a more sustainable and modernised Germany, but the challenge lies in ensuring that the funds are distributed and utilised effectively and equitably across all levels of government.
The Climate and Transformation Fund, one of the three main pillars of the German government's special assets fund for infrastructure and climate protection, is allocated €100 billion to be invested in various sectors of business, including finance for climate protection measures. However, concerns have been raised about the distribution of funds to municipalities, where local infrastructure needs are most urgent and effective usage of funds is crucial for on-the-ground improvements.
