Asked in a television interview by ARD public broadcaster about her investment plans and Schulz's criticism, Merkel said: "We now can not spend the money that we have". Dr Merkel said her government has already increased spending "massively" on broadband expansion, roads and pre-schools. She says the greatest challenge to allocating more funds to new projects lies in removing bureaucratic barriers, specifically in the planning process.
"No one can say what life will bring, but I certainly intend to continue for four years", Merkel said in response to a question concerning voters' expectations of her being able to fulfill her vision for Germany.
Merkel insisted Sunday she won't accept it.
"It's also a question of justice among generations not to leave behind a dilapidated country, but rather to invest so that they have the same conditions as we do", Schulz told a crowd hours earlier at SPD headquarters in Berlin. He had signaled in an interview that Germany must help resolve the imbalance by promoting domestic demand through increased spending.
"We now can not spend the money that we have", Merkel argued, pointing to planning and capacity bottlenecks in the construction industry as well as at the level of regional authorities.
Merkel also defended her decision to hold this month's Group of 20 summit in Hamburg, Germany's second-largest city, where some demonstrations against the meeting devolved into violent street battles between police and protesters.
Distancing herself from the position of her conservative Bavarian sister party, the Christian Social Union (CSU), Merkel, who leads the Christian Democratic Union (CDU), said placing a limit on refugees was not the way forward.
"It's important to me that the citizens have a true choice", Merkel said.
Germany's current-account surplus has been on the receiving end of persistent criticism, including most recently from the International Monetary Fund and the administration of U.S. President Donald Trump.
Schulz, the former European Parliament president, is hoping to beat Merkel in the 24 September parliamentary election but his centre-left Social Democrats (SPD) have lost momentum in the polls after initial gains following his nomination in January.