* Serbia's revised budget cuts spending by 1.1 billion euros
* Serbia's '09 growth officially revised down to minus 2 pct
* Borrowing abroad for '09 budget gap capped at 550 mln EUR (Updates with more detail, background)
By Aleksandar Vasovic
BELGRADE, April 16 (Reuters) - Serbia unveiled a revised 2009 budget on Thursday that cuts the budget deficit to 2.3 percent of GDP, a move key to winning a three billion euro loan from the International Monetary Fund.
The bill, adopted unanimously by the cabinet of pro-Western parties and the Socialists of late autocrat Slobodan Milosevic, sets new revenues at 649 billion dinars and spending at 719.8 billion, leaving a 70-billion dinar gap to be financed through debt issues and borrowing abroad.
Serbia needs the IMF loan to prop up its currency and stabilise the economy during the global economic downturn. Its economy is expected to contract by 2 percent.
"The government has unanimously adopted the draft revised 2009 budget," Finance Minister Diana Dragutinovic told a news conference. "This was the most difficult budget to draft because of massive fiscal adjustment."
Savings total 100 billion dinars or 1.1 billion euros, the heaviest spending cut experienced in more than eight years of economic transition.
A three-billion euro IMF loan is contingent on Serbia containing its consolidated fiscal gap -- which also includes deficits produced by local governments and the pension fund -- to 3 percent of GDP.
The IMF is expected to approve the loan on May 11.
MEETING IMF TARGETS
Dragutinovic said the wider deficit measure would be in line with the IMF target.
"Taking into consideration a new macroeconomic framework, unchanged policies would have produced a deficit equivalent to 6 or 7 percent of GDP," Dragutinovic said.
The government slashed its official 2009 GDP growth forecast to minus two percent from plus 3.5 percent and committed to a 10 percent inflation target. The government also hopes Serbian exports will be 14.8 billion euros, imports 21.8 billion and the current account gap 4.0 billion euros.
Many countries in the Balkans have been hit as hard by the global economic woes and the central bank of Albania, one of the region's poorest, urged the government on Thursday to turn to the IMF to help solve liquidity problems.
To save 100 billion dinars, Serbia plans to cut spending by 65.4 billion dinars through a public sector wage freeze, a new hire ban, a cut in discretionary spending, and lower transfers to local governments and to the state-run health fund.
The remaining third of planned savings will come from higher revenues -- income taxes, excise duties on petrol, diesel and natural gas, as well as on mobile phone bills. Public companies will have to transfer their entire profits to the budget. Higher taxes will also be slapped on car registration and real estate.
"These measures are supporting stability and will cause no economic shocks," Dragutinovic said.
To finance the deficit, Serbia plans to issue new debt but also borrow abroad.
"We have some hard currency reserves (in the budget)," Dragutinovic said. "Part of the budget deficit will be financed through our debt issue but the maximum borrowing to finance the deficit will be 550 million euros." (Writing by Gordana Filipovic; editing by Stephen Nisbet)