For some time, Serbia's main negatives in the eyes of the Western world have been political - fugitive war criminals, the imbroglio over Kosovo - but now it has joined the swelling ranks of economies that face potentially serious trouble.

The global financial crisis has seen Serbia's currency, the dinar, hit an all-year low against the euro and has given a new impetus to Belgrade's discussions with the International Monetary Fund (IMF).

Serbia parted ways with the IMF in 2006 because domestic political turbulence meant that the country could not achieve the pace of reforms it had promised, but more recently decided to hold talks on resuming relations, believing that a deal with the IMF would be a positive signal to the foreign investors on whom Serbia is deeply dependent.

But as the global financial crisis deepened, it became an open question whether a deal on IMF assistance for Serbia would go further than just acting as a consultant on budget planning.

Not dissimilarly to other countries in South Eastern Europe, Serbia has insisted of late that while it is revising its economic projections because of the financial crisis, it does not expect to go into recession.

On October 27, the eve of a scheduled visit to Belgrade by IMF officials, prime minister Mirko Cvetkovic - who was finance minister before becoming head of government in July 2008 - said that earlier projections of economic growth for 2009 would have to be lowered but the country would not go into recession. The same day, as the dinar touched a new low against the euro and the dollar, he said that the currency's fluctuation was in normal parameters and said that the economic state of today's Serbia was not equivalent to the economic woes of the 1990s that saw recession and hyper-inflation.

Cvetkovic said that over the next few years a restrictive fiscal policy would have to be introduced, which meant that attention would have to be paid to reducing public spending.

Serbia's GDP growth rate for 2008 would be between seven and 7.5 per cent, possibly dropping next year to four per cent. Inflation would be single-digit next year, Cvetkovic said.

The 2009 budget would include provision for emergency intervention in the banking system, although he hoped that this would not prove necessary.

A slightly different view on the question of public spending came from Janko Guzijan, state secretary at the Finance Ministry, who according to a report in the Guardian, said that severe cuts in the 2009 fiscal deficit and public spending would be inappropriate. Some fiscal stimulus was needed to allow the economy to survive the crisis, he said.

Speaking at a government-business round table on October 27, Radovan Jelasic, governor of the central National Bank of Serbia, said that the global financial crisis would make it more difficult for Serbia to deal with two existing challenges, inflation and its current account deficit. The bank would maintain a strict monetary policy.

Serbian news agency Tanjug reported Serbian finance minister Diana Dragutinovic as saying that a budget revision for 2009 would be a reasonable solution in the current political circumstances, with revenue and spending synchronised with the government's developmental and social priorities.

Dragutinovic said that the finance ministry would issue treasury bonds to encourage the domestic financial market, to reduce debt to the international market and increase the effectiveness of monetary policy.

She said that the bill on amendments to the law on deposit insurance, according to which the deposit insurance limit for private persons, entrepreneurs and small and medium-sized enterprises will be raised from 3000 euro to 50 000 euro, had been sent to parliament for urgent approval. Deposits in dinar and foreign currencies will be covered.