IMF says Serbia's budget is in line with one billion-euro loan deal

BELGRADE (Reuters) - Serbia's 2015 budget is in line with the terms of a one billion-euro ($1.22 billion) loan agreement with the International Monetary Fund that is due to be approved by the Fund's executive board in the second half of February, the IMF said on Monday.

In November, Serbia agreed a three-year precautionary loan with the IMF to reassure markets concerned over the Balkan country's budget deficit and public debt.

In a statement issued on Monday afternoon, Daehaeng Kim, the Fund's representative to Serbia, said the budget passed by the Balkan country last week was "line with agreements that the Serbian authorities and the staff reached in November."

The 2015 budget included cuts in subsidies to loss-making state-owned companies as well as downsizing of the bloated public sector.

"The Stand-By Arrangement is subject to the approval by IMF Management and the Executive Board. The Board discussion is tentatively scheduled for the second half February, 2015," Kim said in the statement.

The government of Prime Minister Aleksandar Vucic is targeting savings of around 1.3 billion euros by 2017 to cap public debt, which now stands at 70 percent of gross domestic product, and curb a deficit that is forecast to exceed 7 percent of GDP this year.

A delay in loan talks with the IMF, which had been scheduled for May, unnerved markets and put pressure on the dinar. The currency has lost five percent of its value this year.

(Reporting by Ivana Sekularac; Editing by Larry King)