State finances: Audit office warns of sharply rising debt burden

North Rhine-Westphalia’s state audit office says the government’s debt policy has reached a “crossroads” as planned new borrowing threatens to deepen the burden on the state budget.

The 2026 budget provides for about 1.8 billion euros in cyclical borrowing and, for the first time, roughly 2.5 billion euros in structural borrowing. The state also plans to assume around 8.9 billion euros in municipal legacy debt. Together, those obligations could push the debt total from 160.7 billion euros to about 173.8 billion euros.

The budget sets aside about 4.1 billion euros for interest payments. Audit office President Brigitte Mandt said the new debt would add to an already high debt load and create further interest and repayment costs. “Our appeal to the state government: No more of the same,” she said. “The spiral of rising debt and rising debt-service spending must be broken.”

“

Our appeal to the state government: No more of the same.

The audit office said state spending has grown faster than inflation every year since 2019. It recommended a comprehensive debt plan showing both debt levels and expected future interest costs, along with a broad review of government responsibilities and spending. It also called for a consolidation plan to preserve room for future crises and challenges.

The office cited several examples. Decisions over the site, renovation and possible replacement of the Cologne justice center took from 2010 to 2021, and projected total costs rose from about 280 million euros in 2017 to 1.7 billion euros in 2023. It said cheaper alternatives had not been adequately examined. At the planned North Rhine-Westphalia prison hospital, a demand forecast that was too high led to oversized plans. After the forecast was corrected on the audit office’s recommendation, 113 million euros could have been saved from a project costing about 771 million euros.

The audit office also criticized the public for bearing the full cost of extensive police operations at high-risk football matches. Police deployments in Germany’s top three leagues cost almost 30 million euros in the 2024-25 season, with about half linked to matches classified as higher risk. The office supports requiring organizers to contribute to those additional costs.

“

The spiral of rising debt and rising debt-service spending must be broken.