IMF urges Germany to boost its infrastructure investments tenfold

Chancellor Angela Merkel’s government should raise infrastructure investments tenfold compared with a blueprint laid out in the 2014-17 budget plan to help euro-region members such as Italy, the International Monetary Fund said. 

Germany has leeway to raise spending on items such as road and bridge maintenance by half a percentage point of gross domestic product per year over four years, equating to more than €50bn, without violating its debt reduction commitments, the IMF said in a regular report on the German economy. Merkel’s government plans to spend €5bn through 2017 to fix decaying infrastructure.

“Germany has the fiscal space to finance an increase in needed public investment, particularly in the transport infrastructure,” the Washington-based institution said in its so-called Article IV consultation report. “Unlike public consumption, this would durably raise German output and have measurable growth spillovers on the rest of the euro area.”