M. Continuo

Serbia's next PM sets reform target, backs finance minister to stay

By Ivana Sekularac

BELGRADE (Reuters) - Serbia's probable NEXT (NXT.LO)prime minister set a mid-July TARGET (TGT.NY)on Monday to overhaul laws on labour, bankruptcy and privatisation, underlining his reformist agenda after a resounding election win.

Aleksandar Vucic, leader of the centre-right Progressive Party, also said that "as far as I am concerned" 29-year-old Lazar Krstic would remain as finance minister.

The Progressives won a clear parliamentary majority in a snap poll on Sunday, promising the kind of root-and-branch economic overhaul that successive governments have ducked since Serbia came in from the cold with the ouster of strongman Slobodan Milosevic in 2000.

The party's margin of victory rivals those of Milosevic in the war years of the 1990s, handing Vucic a firm mandate to reform the biggest country to emerge from the ashes of federal Yugoslavia as it embarks on talks to join the European Union.

Vucic is expected to bring at least one other party into government, and then move quickly to secure a new precautionary loan deal with the International Monetary Fund. He gave no timeframe for a deal.

"I expect we will pass key laws, including the labour law, bankruptcy law, privatisation law and the law on building permits by the end of June or mid-July," Vucic told a briefing for journalists.

Passage of those laws stalled under the previous government, a coalition of the Progressives and the Socialist Party, which came in a distant second on Sunday.

The IMF says an overhaul of the bloated public sector and pension system and the sale or closure of loss-making state firms is essential if Serbia is to bring down its budget deficit and cap the public debt.

"We will have to reform some public companies, and that is going to be our biggest problem," said Vucic. "We will privatise some because they cannot catch up with the competition," he said.

"We have to do it very quickly but I am sure we will manage to do something."

The Progressives, a party of former ultra-nationalists who converted to the cause of EU membership in 2008, won just over 48 percent of votes in Sunday's election, according to preliminary unofficial results, which translates into around 156 seats in the 250-seat parliament.

Vucic has said he wants a government formed by May 1, and analysts said he may turn to the New Democratic Party of former Serbian president Boris Tadic to broaden support and seek expertise for what promises to a period of tough reform.

"It is much easier to implement reforms when there is an absolute parliament majority," Hrvoje Stojic, an analyst with Hypo Alpe Adria, told Reuters.

"However, whether they (SNS) will be successful will depend on their human capacity. A lot will depend on the future arrangement with the IMF."

(Writing by Matt Robinson; Editing by Ruth Pitchford)

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