The costs will be shared between the federal government and the 16 states, Merkel said, calling it a “sign of national solidarity”.
At least 190 people lost their lives in severe floods that pummelled western Germany in mid-July, with the states of Rhineland-Palatinate and North Rhine-Westphalia worst hit.
Underlining the scale of the destruction, NRW state premier Armin Laschet, the conservative frontrunner to succeed Merkel, said Monday his region has not
had to rebuild thousands of destroyed homes at once since World War II.
The catastrophe has also raised questions over whether enough was done to forewarn residents of the impeding disaster.
On Tuesday, Merkel and regional leaders agreed to improve the country’s warning system, including by providing states with up to 88 million euros to upgrade and install sirens by 2023.
German prosecutors said last week they have launched an investigation against the district chief of the flood-hit region of Ahrweiler for negligence as warnings were made belatedly, resulting in the deaths of dozens of residents.