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Ranka Gašić, PhD
Institute for Contemporary History, Belgrade, Republic of Serbia

 

FUNDING OF THE URBAN DEVELOPMENT OF BELGRADE BY MUNICIPAL LOANS (1919–1929)

Vol. XLIII, 1/2025, pp. 1-18
https://doi.org/10.29362/ist20veka.2025.1.gas.1-18

 

ABSTRACT/RESUME:

In the aftermath of the WWI the Belgrade Municipality faced serious social and economic problems of increasing population, relief and reconstruction. Such capital expenditures had to be financed by borrowing. These included roads and streets, public transit, solid waste facilities, and water and sewer systems, fire and police infrastructure, and housing. The foreign capital was very much in demand, but the access to the international capital market was difficult in the early 1920s. From 1924 to 1928. there followed a phase of increasing capital flow, which was stopped by the Great Depression in 1929. Private capital was not interested in investing in municipal infrastructure, so the State Mortgage Bank and various state institutions were the main source of capital for the Belgrade Municipality. The Belgrade Municipality took out five loans from the Ministry of Finance in 1919. and 1920, with the minimum interest rate of 5%, in order to cover the costs of provisions and heating. To this end, one loan was actually taken from the foreign bank(s) – The Prague Bank in Belgrade and Živnostenská banka from Prague. From 1921. the State Mortgage Bank was able to finance the development of Belgrade. Until 1929 Belgrade Municipality took out ten loans. Six of them were taken from the state institutions, mostly from the State Mortgage Bank. The remaining four loans were taken from the private banks on both the international and domestic capital market. The state was, however, instrumental in bringing these loans about and in dealing with their repayment. All these loans had very low interest rates (7%–8%), in comparison with the average interest rates on the international capital market. All loans taken from the state institutions were long-term, whereas those taken from the foreign bank groups and private banks were short-term. Them money was used exclusively for relief, reconstruction, development of infrastructure and housing.

 

KEYWORDS: Belgrade Municipality, State Mortgage Bank, capital market, loans, infrastructure, housing

 

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