The City of Belgrade has been compelled to take on debt to pay its employees, according to the Center for Local Self-Government. Poštanska Štedionica, a state-owned bank, has become the primary source of loans for both the city and the state. Since last summer, the bank has lent over 800 million euros to the state and its companies, raising questions about whether this borrowing is justifiable or politically motivated.
Nikola Jovanović from the Center for Local Self-Government explained that the city is facing significant financial difficulties, resulting in a large budget deficit of over 20 billion dinars by the end of the year. This financial strain has led to delayed payments for some city employees’ salaries. As a result, the city has been forced to reduce capital investments while also resorting to borrowing to cover these expenses.
In the first half of this year alone, the City of Belgrade borrowed 3 billion dinars from Poštanska Štedionica to maintain liquidity. According to Jovanović, this trend is likely to continue in the coming months due to the ongoing financial challenges.
The state has increasingly relied on Poštanska Štedionica to finance capital projects, a shift away from funding these projects through city revenue. The bank has become a key lender for the government, with more than 800 million euros in loans granted since the summer. These loans have been directed toward infrastructure projects, including three loans for Srbijagas, with the state acting as the guarantor.
Poštanska Štedionica, which has traditionally been a service provider for pension payments and public sector transactions, has rapidly expanded its role as a government lender. According to Forbes, it is unusual for this bank, typically a smaller player, to be involved in such significant lending activities. One notable loan, granted in late July, amounted to nearly 360 million euros and was used to finance the construction of urban infrastructure and the National Stadium. Two additional loans were provided for the Karađorđeva street and Dunavska padina tunnel connection project, totaling around 212 million euros.
The scale and speed of these loans have raised concerns about their long-term profitability and whether such decisions would be made by a bank with professional, market-driven management. Since Poštanska Štedionica is fully owned by the state, there is growing speculation that political considerations are influencing these lending practices. As a result, some experts worry that the loans may carry risks if the borrowers are unable to repay them, ultimately placing the financial burden on taxpayers.
While the loans may help fund important infrastructure projects, the potential for future financial strain remains, and it is unclear whether the city and state can effectively manage the growing debt. As Poštanska Štedionica continues to lend significant amounts, questions about the motivations behind these decisions persist.
