(adds details of the vote and budget, workers protests)
BELGRADE, April 29 (Reuters) - Serbia's parliament approved a tighter budget needed to win a three billion euro loan from the International Monetary Fund on Wednesday, as thousands of workers protested in its capital against prospective austerity.
The country's 250-seat parliament approved a cut in the budget deficit to 2.3 percent of gross domestic product by a vote of 127 to 16, Tanjug news agency reported. The bill set 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.
The government forecasts the economy to shrink 2 percent this year but analysts say it could contract by as much as 10 percent and the country needs the IMF loan to prop up its currency and stabilise the economy in the global downturn.
The IMF is expected to approve the loan on May 11 but the cash 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.
To save 100 billion dinars or 1.1 billion euros, Belgrade 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.
On Wednesday thousands of workers protested in Belgrade against government's plan to increase taxes and excise duties.
Union leader Ljubisav Orbovic said middle-class and blue collar workers would bear the brunt of the government's anti-crisis plan.
"The government will create a small number of profiteers and huge number of losers," he told the crowd.
(Reporting by Ivana Sekularac; Additional reporting by Aleksandar Vasovic; Editing by Patrick Graham)