Merz Vows Municipal Debt Relief Ahead of Upcoming Elections

Chancellor Friedrich Merz announced that Germany’s federal government will begin assisting municipalities with the repayment of long-standing debts starting January 1, 2026. The commitment comes just two weeks before his administration faces its first electoral challenge since taking office.
Merz made the announcement at a Christian Democratic Union (CDU) party conference in North Rhine-Westphalia (NRW), where local elections are scheduled for September 14. His government has been in power for four months.
Local leaders have voiced frustration over the federal government assigning additional welfare responsibilities to municipalities without supplying the necessary funding to cover those costs.
NRW, Germany’s most populous state and often a barometer for national political trends, had approximately €55.4 billion ($64.86 billion) in municipal debt by the end of 2024.

“We will present a draft law on municipal old debts later this year,” Merz said. “We want to bring it into force on January 1, 2026.”

He cautioned that the measure would only offer limited assistance, saying broader cooperation between the federal government, the states, and municipalities is essential to address what he called their “ever-exploding expenditures.”
Merz also called for major changes to Germany’s social welfare system, arguing that the current structure is unsustainable.

“We have been living beyond our means for years,” he said.

While polling suggests the CDU is poised to remain the dominant party in NRW, the far-right Alternative for Germany (AfD) is expected to make notable gains. No longer confined to its eastern stronghold, the AfD has recently overtaken Merz’s CDU/CSU bloc in some nationwide polls.