A week into the region's worst flooding disaster in living memory, which has killed at least 170 in Germany, and 201 in total in Europe, the right-left "grand coalition" government will unblock aid for demolished homes, businesses and vital infrastructure.
Merkel vowed on a visit to the badly hit medieval town of Bad Muenstereifel on Tuesday that Berlin would come through to help in the short and long term.
"This was flooding that surpassed our imagination when you see the destruction it wrought," Merkel told reporters after touring what the Bild daily called the "apocalyptic" wreckage of the 17,000-strong community in North Rhine-Westphalia (NRW) state.
She said ministers would clear the way for emergency assistance for citizens who had suffered losses and do everything in their power "so that the money is with people fast".
"I hope it will be a matter of days," she said, noting that she had met local victims "left with nothing but the clothes on their backs".
The initial amount is reportedly expected to be around 400 million euros ($470 million).
The stopgap aid will be supplemented by a longer-term reconstruction fund financed by the federal government and "solidarity contributions" from all 16 of Germany's regional states, she said.
Merkel was joined on the visit by NRW premier Armin Laschet, head of her Christian Democratic Union and the frontrunner in the race to succeed her as chancellor after a general election on September 26.
Laschet called for the rescue funds to reach victims "unbureaucratically and as fast as possible", pledging to double Berlin's assistance with a cash injection from his own state budget.
He warned it could take "months if not years to rebuild".
A total of 121 people are now confirmed to have died in the flooding in Rhineland-Palatinate state, with at least 48 victims in NRW and one in Bavaria.
At least 31 people also died in Belgium, and later torrential rain caused havoc in southern Germany and several other neighbouring countries.
"We are still looking for missing people as we clear roads and pump out cellars," the vice president of Germany's THW civil protection agency, Sabine Lackner, told media group Redaktionsnetzwerk Deutschland.
"However by now it is unfortunately very likely that we will only be able to recover victims, not rescue them."
German Finance Minister Olaf Scholz, the chancellor candidate for the Social Democrats, said that Europe's top economy would pass a "billions-strong rebuilding programme" in addition to the direct aid to victims "so that things will quickly start looking up".
"We'll manage it together," he told the daily Rheinische Post.
"What's crucial for me is that there are consequences from what's happened," he said, including plans to improve to Germany's disaster prevention systems as well as climate protection measures.
Annalena Baerbock, the Greens' flag bearer for the election, called for a more coordinated approach to warning citizens while stressing the country must prepare better for extreme weather events due to global warming.
"Germany has been fortunate for decades in suffering relatively few natural catastrophes," she told Der Spiegel magazine.
"But that's meant that the disaster protection measures haven't been sufficiently developed, although experts have been warning for years about climate-driven extreme weather events."
Merkel, who is retiring this year after 16 years in power, on Tuesday defended Germany's preparations for deadly disasters, saying even experts had been taken by surprise by the sheer brutal force and speed of last week's rains, which left many stricken towns looking like war zones.
"Now we've got to look at what worked and what didn't work, without forgetting that this was flooding as we haven't seen in a long, long time," she said.