Serbia's ruling coalition overcame internal strife over where to cut spending and has agreed on a 15-month, 520- million dollar standby credit with the International Monetary Fund (IMF), Finance Minister Diana Dragutinovic said Friday, according to dpa. Within the deal, Serbia must cut spending to keep the 2009 budget deficit under 1.5 per cent of the gross domestic product and the annual inflation rate at 8 per cent. A standby credit means that through March 2010 Serbia may draw the funds if its macroeconomic stability becomes jeopardized. Belgrade and IMF reached the deal after three weeks of hard bargaining, most of it within Prime Minister Mirko Cvetkovic's ruling coalition. Last-minute haggling between the partners even forced Cvetkovic, who has a razor-thin, volatile majority in parliament, to delay the regular meeting of his cabinet from Thursday to Friday. In the end, the smallest partner in the ruling alliance, the pensioners party PUPS, wrangled a concession to keep a 10-per cent increase of pensions that it promised its voters ahead of May polls. To compensate, Cvetkovic was forced to agree to a freeze in public sector salaries starting immediately and lasting until at least October 2009 - which may lead to protests and strikes.
