Germany Diverts Over a Third of its Defence-Designated Debt, Ifo Finds
Analysis of Germany's Defence-Related Debt Allocation
By Maria Martinez
Ifo Analysis Reveals Misallocation of Funds
BERLIN, Sept 10 (Reuters) - More than a third of the additional debt taken on by the German government in 2025 under the exemption for defence and security-related spending was used for other purposes, according to an Ifo analysis published on Thursday.
Expert Commentary
"Instead, the spending leeway that became available in the core budget was used for other purposes,” said Ifo researcher Emilie Hoeslinger.
Government Response
The finance ministry did not immediately respond to a request for comment from Reuters.
Breakdown of Spending and Borrowing
Sectoral Exemption Totals
Government spending covered by the sectoral exemption totalled 54.6 billion euros ($63.56 billion) in 2024 and rose to 72.2 billion euros in 2025.
Borrowing vs. Actual Defence Spending
While spending increased by 17.6 billion euros, additional borrowing under the exemption amounted to 28.6 billion euros in 2025. According to Ifo, that left 11 billion euros in extra debt that did not translate into additional defence and security spending, implying a misappropriation rate of 38.5%.
Implications and Additional Coverage
Criticism of Fiscal Reforms
The government has been repeatedly accused of using some of the financial firepower created by its taboo-busting fiscal reforms to prop up day-to-day spending.
Other Areas Covered by the Exemption
Beyond Defence
In addition to defence spending, the sectoral exemption also covers aid to Ukraine, IT security, civil defence and civil protection of the population, and intelligence services.
($1 = 0.8590 euros)
(Reporting by Maria Martinez, Editing by Friederike Heine)
