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IMF opens talks on new loan deal with Serbia

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November 13, 2012 07:17 AM EST | AP


BELGRADE, Serbia — The International Monetary Fund has opened talks with Serbia that could potentially lead to a new loan deal for the Balkan country.

The talks which started Tuesday will focus on pledges by Serbia's new government to slash public spending in a 2013 draft budget.

Serbia's deficit in 2012 has soared to around 7 percent of gross domestic product. The draft budget projects the deficit falling to 3.6 percent.

The IMF froze a (EURO)1 billion ($1.27 billion) standby loan with Serbia in January over the country's rising public spending.

The government says it needs a new deal with the IMF as a guarantee to foreign investors that Serbia's economy is on the right track.