ZMOS: Municipalities cannot do without loans

In July 2026, VÚB Banka and the Association of Towns and Communities of Slovakia (ZMOS) signed a cooperation agreement for another year, confirming the continuation of a partnership that has lasted for eleven years.

VÚB Banka's clientele already includes more than 2,100 Slovak towns and villages, representing nearly three-quarters of all municipalities in the country. In addition to the municipalities themselves, the bank provides comprehensive financial services to almost 1,400 of their organizations—ranging from schools, social care facilities, and cultural institutions to technical service companies, transport enterprises, and sports infrastructure managers.

In this interview, ZMOS Chairman Jozef Božik discusses why towns and villages often cannot implement even EU-funded projects without bank financing, where they feel the investment and modernization gap the most, and what a stable financial partner means for local governments.

As the largest municipal organization in Slovakia, ZMOS brings together 2,791 towns, villages, and urban districts of Bratislava and Košice, representing approximately 95% of all Slovak municipalities. What are the biggest problems currently troubling Slovak towns and villages? What does ZMOS miss the most to effectively develop the regions?

One of the biggest problems is the long-term systemic underfunding of municipalities. Currently, this is compounded by the consequences of the debt brake and the Fiscal Responsibility Act. Yet, towns and villages are already subject to legal rules that prevent them from becoming disproportionately indebted.

According to our data, the municipalities' share of the total public debt is below 1.5 percent. Therefore, we do not consider it appropriate to apply sanction mechanisms to towns and villages that significantly limit their ability to use loans or budget surpluses from previous years for necessary investments.

We need a stable and predictable funding system that allows municipalities to plan development several years ahead, rather than forcing them to merely address the most acute problems on an ongoing basis.

In which specific areas are towns and villages lagging behind the most due to the lack of investment? Is it infrastructure, transport, school modernization, or public services?

Money is lacking in practically all areas—from routine operations and public services to major investments. Municipalities need to reconstruct roads, sidewalks, schools, kindergartens, cultural facilities, sports venues, and public spaces.

In Slovakia, we have a massive modernization debt that did not develop over the last five or ten years; it has been accumulating for decades. When comparing the funding of towns and villages with the Czech Republic or Poland, we see that Slovak municipalities are lagging significantly behind. Without a fundamental change in their financing, this gap will close very slowly.

How can commercial banks help you in a difficult economic situation? What is the advantage of their support compared to other funding sources?

Towns and villages are largely dependent on credit resources from commercial banks. Without bank loans, most municipalities would not be able to implement even projects supported by European funds, because they need to secure co-financing or bridge the period between project execution and the reimbursement of eligible expenses.

Apart from banks and European sources, municipalities can use, for example, the Environmental Fund, the Fund for the Support of Sports, the Fund for the Support of Art, or the Fund for the Support of Tourism. However, these options are limited and often strictly earmarked. Bank financing therefore remains one of the key prerequisites for the development of towns and villages.

In 2025, VÚB Banka provided municipalities with more than 200 new loans worth over €250 million. Which strategic projects in the regions would you highlight the most?

Loans are primarily used for major infrastructure and modernization projects. These include reconstructions of primary schools and kindergartens, cultural houses, houses of mourning, sports halls, ice rinks, or swimming pools.

Co-financing projects supported by European funds or state funds is also highly crucial. In such cases, bank loans allow municipalities not only to prepare projects but to actually complete them. The funds are directed into the asset base of the town or village and into projects that serve the residents.

You are signing the cooperation and partnership agreement with VÚB Banka for the eleventh time. How do you evaluate this partnership?

The very fact that we are renewing this cooperation for the eleventh time proves that the partnership has long-term significance. It is built on good experiences, mutual trust, and an understanding of municipal needs.

When a bank can offer suitable loan terms to towns and villages and be a reliable partner in executing investments, it becomes a part of regional development. For ZMOS, it is important that the partnership creates space not only for financing projects but also for a dialogue about the problems and needs of towns and cities.

Up to 73 percent of Slovak municipalities trust VÚB Banka, and the bank manages approximately every third euro belonging to local governments. In your opinion, what stands behind this long-term trust from the leadership of towns and villages?

Trust is built gradually based on concrete experiences. When preparing an investment, municipalities need to know that they will find a stable partner in the bank and can agree on terms that correspond to their financial capabilities.

Currently, very few towns can function and invest in the long term entirely without loan resources. The exceptions might be municipalities with exceptionally strong own revenues, for instance, due to large industrial parks or significant business operations in their territory. For the majority of towns and villages, cooperation with banks is an essential part of development.

Therefore, in my view, the trust in VÚB is driven mainly by long-term experience, the stability of the bank, and its ability to understand the specifics of municipal financing.

Together with VÚB, you are partners in the Community Leader (Komunitný líder) competition. How is the quality of the submitted projects changing, and how important is it to highlight the achievements of towns and villages?

Every mayor tries to implement projects that improve the daily lives of residents. It could be a new park, a sports venue, a children's playground, a renovated cultural house, a public space, a fountain, or a project based on the active participation of citizens.

The Community Leader competition motivates municipalities to thoroughly prepare and present their successful projects and share experiences with others. This is particularly important for smaller villages, where even two or three larger projects can fundamentally transform the quality of life and the atmosphere in the entire community.

The award also shows that the work of mayors and their teams makes sense. It motivates them to move forward and brings positive interaction between municipalities, residents, and the competition partner.

People's satisfaction with public policies begins in their place of residence. That is why we need Slovak towns and villages to have sufficient resources to gradually eliminate the modernization debt and implement projects that residents will truly feel.