“We have some very tentative figure that could be about 200 percent of the Serbian quota or about 1 billion euros,” Albert Jaeger, the head of the IMF mission to Serbia, said.

Jaeger said the future deal would not anticipate any requirement to draw on a standby loan. Belgrade’s previous IMF deal, worth 3 billion euros, expired last month.

Thursday’s arrest of Bosnian Serb wartime general Ratko Mladic, the last of the three men accused of instigating ethnic cleansing during the 1992-95 Bosnian war, is expected to clear the way for the Serbia to join the European Union.  

The initial round of talks over the new IMF deal started earlier this week, with Serbian officials saying they are turning to the IMF mostly for help to forge a sound fiscal and reform program.

“Those ... (standby loan) figures depend on how you assess the external risks, what are the needs that the country has in terms of its balance of payments,” Jaeger said.

“There is an agreement it (the deal) will be a precautionary one.”

Jaeger said future borrowing figures will be reassessed in August during the new round of talks.

Under the terms of its previous deal with the lender, Serbia pledged it would keep its budget deficit this year at about 4.1 percent of gross domestic product.

To join the European Union, Serbia must also reform its tax administration and collection of fiscal revenues, and improve its pension system, labor market, business climate and budget management.

“There has to be an agreement on 2011 and 2012 budgets in rather specific terms,” Jaeger said.

“When we come back in August we will know more on how things are going in 2011,” he said.

Serbia’s economy contracted 3.1 percent in 2009 and grew 1.8 percent the following year, mainly on an increase of exports. Both the IMF and Belgrade set the 2011 gross domestic product growth target at three percent of GDP.

“There’s this new growth model under which you’ll switch the economy from a relatively closed one with a low export/GDP ratio to a more export-oriented economy,” Jaeger said.

“You have to create an investment climate that is more favorable to the tradable sector.”

Many fear that ahead of a general election in the first quarter of 2012, Serbia’s ruling coalition led by the pro-European Democratic Party of President Boris Tadic will turn to populist policies that could bloat the budget deficit and boost inflation.

Jaeger said the IMF believes Serbian authorities will refrain from excessive spending.