By Adam Tanner and Aleksandar Vasovic
BELGRADE, March 7 (Reuters) - Serbia's fiscal policies as agreed with the IMF are not likely to change after Prime Minister Mirko Cvetkovic also took on the finance portfolio in a government reshuffle, officials and analysts said on Monday.
On Sunday night, Cvetkovic said a wider government reshuffle would remove Finance Minister Diana Dragutinovic, a fiscal conservative, and see him the finance ministry portfolio in addition to his responsibilities as prime minister.
"I don't see Cvetkovic as someone who will be less hawkish when fiscal and spending policies are concerned," said Danica Popovic, a lecturer with the faculty of economy at Belgrade University. "He demonstrated it when he adamantly refused to increase wages of school teachers during their recent strike. So no changes in financial policy." Under a three billion euro stand-by agreement with the International Monetary Fund that expires next month, Serbia has pledged to maintain its budget deficit at 4.1 percent of gross domestic product this year and grow at three percent of GDP.
Belgrade is also expected to seek a new IMF deal that will continue to contain government spending ahead of elections scheduled in 2012.
Cvetkovic previously served as finance minister and has a doctorate in economics.
"I don't think that we're going to see a big difference," said one diplomat in Belgrade. "Cvetkovic was a former finance minister himself and economist, so I think actually it probably puts the finance ministry in maybe a stronger hand."
"Frankly, (the ex-finance minister) was not really known as a strong player in the cabinet."
Dragutinovic won praise for her economic expertise, but was seen as less effective in winning support for her positions in Serbia's pro-Western coalition government.
A finance ministry official said Serbian law should prevent a significant expansion of spending.
"We have this fiscal responsibility law; we have this clear limitation," the official said. "I suppose that there will be no major changes in government policy as the government has accepted the fiscal rules."
Although Serbia's economy is growing and its dinar has stabilised in recent months, many Serbs are unhappy with the slow pace of integration into the European Union and their relatively modest standard of living, creating additional pressures on the government.
Sasa Djogovic, an analyst with the Belgrade-based Institute for Market Research, called the dismissal, along with the elimination of several Serbian cabinet positions and some personnel changes, "a facelift before elections."
"The government will stay almost as it was, only slightly streamlined," he said. "But as with every facelift, this one cannot conceal all the wrinkles and that's why they will need the IMF and a precautionary deal with IMF."
(Editing by Toby Chopra)