Germany’s Federal Government has announced its draft 2027 budget, which sees increased funding for defense and reduced climate-related Official Development Assistance (ODA) and humanitarian aid, according to RTE, Ireland’s National Public broadcaster. Germany’s development aid will be cut by 6% and international climate finance reduced to €5.3 billion, which is below the more than €6 billion pledge made at the 2021 G7 Summit.
If the Bundestag, the German parliament, approves this draft and the budget cuts involved, this will have a serious impact on low- and middle-income countries (LMICs), including many nations in Africa that are bearing the greatest brunt of climate change. Most African LMICs emitted just 2-3% of greenhouse gas emissions but are among the most climate-vulnerable nations, as previously reported by DevelopmentAid.
The German government argues that the reallocation of ODA and humanitarian aid funding to defense and infrastructure aims to stimulate investment and reduce war-related energy issues. However, climate experts argue that the aid cuts will mainly adversely affect climate change initiatives in the developing world because the reduction to climate-related ODA will limit the resources available to support climate finance programs.
Recent trends in Germany’s ODA commitments
In 2025, when the largest donor of development aid in the world, the United States, announced major cuts under Donald Trump’s administration, Germany became the largest bilateral donor despite also instigating a significant reduction in its own aid budget.
Germany’s development assistance started to significantly decline in 2024 after years of sustained increases. In 2020, the country’s ODA amounted to approximately US$28.4 billion with climate finance accounting for over €5.3 billion of this. In 2022, the German cabinet approved climate funds of around €6.3 billion, exceeding the pledged target of €6 billion (Figure 1). In 2024, climate financing amounted to €6.1 billion.
Climate finance trends
Source: Federal Ministry for Economic Cooperation and Development(BMZ)
However, in 2025, climate funding fell to below €5.3 billion, while in 2026, this will amount to less than €5.2 billion with these funds being reallocated to other sectors.
An overview of Germany’s draft 2027 budget
The draft budget for 2027 totals approximately €555 billion, an increase from €524 billion in 2026. The budget includes increased spending of €109 billion for defense.
Germany’s draft 2027 budget
Source: Prajna verse 2026 budget summary
Sector-based budgetary allocations
🔹 Defense spending
Core defense spending will increase to over €109 billion in 2027 from €82.7 billion in 2026 if the draft budget is approved with the aim of strengthening military capacity in Europe and honoring NATO spending commitments as the U.S. plans to limit its military presence in the region. In the proposed budget, Germany has also allocated roughly €11.6 billion to support the war in Ukraine.
🔹 Borrowing and investment summary
The draft budget indicates that total borrowing will be over €203.6 billion, an increase from roughly €196.6 billion in 2026. This will be met by €119 billion from the core budget, approximately €55 billion from the infrastructure fund, and €30 billion from the defense fund.
🔹 Debt and interest payments
The high costs of borrowing will increase debt interest payments by €11.6 billion to approximately €42 billion in 2027, and this is expected to rise to almost €80.7 billion by 2030.
Sectors facing budget cuts
🔹 Federal Ministry of Economic Cooperation and Development (BMZ)
In the draft budget, BMZ’s total funding is expected to reduce to €9.5 billion, representing a €600 million decrease compared to 2026. Long-term forecasts indicate that the BMZ budget is likely to fall to almost €9.3 billion by 2028. Since the budget allocations for climate finance come from multilateral development cooperation, which falls under the remit of BMZ, the €600 million reduction will adversely affect climate actions.
🔹 Climate finance
The German government plans to reduce the impacts of climate change through energy-efficient buildings, climate-smart agriculture, and environmentally friendly heating systems. However, despite the expectations that the government will honor its pledge of €6 billion in climate finance, it has only earmarked €5.3 billion for this in the draft budget, which is €700 million less than the promised commitment and will significantly disrupt climate adaptation strategies.
🔹 Humanitarian Aid
The draft budget allocates €1.05 billion in humanitarian aid which is the same amount as in 2026 but significantly less than the €2.24 billion allocated in 2024.
Human impact and global ramifications
More than 20 civil and humanitarian organizations have opposed the budget cuts and have expressed their concerns in a joint statement. During a press briefing, Andreas Frick, the Chief Executive of Misereor, one of the signatory organizations, stated that the decision could exacerbate global humanitarian crises.
“Reducing aid to poverty reduction programs is severely hitting the most vulnerable during times of mounting crises. Anyone undermining humanitarian work is destroying prospects of a sustainable future,” Andreas Frick, Chief Executive of Misereor
According to the joint statement, the cuts could cause approximately 9.4 to 22.6 million preventable deaths to become unavoidable by 2030, including 5 million children below five years of age.
The domino effect of the cuts in Germany’s climate-ODA
The cuts to climate funding may result in short-term impacts to the federal budget, but will have long-term effects on climate action.
Climate funds support developing nations to combat the effects of climate change which is one of the goals established by the Paris Agreement. As previously reported by DevelopmentAid, reducing climate financing leads to the total disruption to climate adaptation initiatives, digital education and health programs, mainly in the Global South.
The climate change crisis also creates division between rich industrialized nations and LMICs. By reducing the budget allocation for global climate finance, Germany will erode trust and cooperation between the Global North and South. This mistrust is likely to put pressure on international partnerships in an already geopolitically tense world.
According to the 2026 forecasts by the Organization for Economic Cooperation and Development, bilateral ODA to sub-Saharan Africa and the least developed nations will again fall in 2026, by 11.6% and 10.9% respectively. In this context, development experts warn that failure to honor the €6 billion climate finance Germany has pledged could lead other donors to also reduce their aid budgets, resulting in a domino effect.