Serbian President’s Party Invites Socialists to Form Cabinet

Serbian President Tomislav Nikolic’s Progressive Party has asked the Socialist Party to join them in talks on forming a government, more than a month after inconclusive elections.

“We believe that Serbia has no time to waste, that Serbia has no time to wait, we are convinced that the citizens voted for a change, that people want a different government,” Aleksandar Vucic, the acting leader of the Progressives, told reporters today in Belgrade.

Serbia needs to form a government quickly to ease concern over its fiscal outlook as the economy teeters on the brink of recession, according to Fitch Ratings. The country’s three- member Fiscal Council, which monitors budget performance, warned of a looming debt crisis on May 30 after the budget gap rose to 7 percent to 8 percent of gross domestic product and public debt approached 50 percent of GDP.

The five-month budget deficit widened 80 percent to 89.3 billion dinars ($971 million), while the economy contracted 1.3 percent in the first quarter after a harsh winter paralyzed many industries and the euro-area debt crisis damped exports.

The Progressives, who have 73 of parliament’s 250 seats, would control 117 seats if the Socialists join them. Both parties used nationalist rhetoric in their campaigns ahead of the May 6 elections, and said they favor closer ties with Russia. If no government is formed by the end of August, Serbia will have to call fresh elections.

IMF Talks

A new government will need to resume IMF talks over a suspended $1.3 billion precautionary loan arrangement earlier this year when it became clear the country would miss agreed fiscal targets that include keeping a full-year budget gap under 4.25 percent of GDP.

Talks between former President Boris Tadic’s Democrats and the Socialists, led by Ivica Dacic, stumbled on the number of parties in a new coalition.

The top leadership of Tadic’s Democrats decided to step up efforts to form as broad a coalition as possible at a meeting today. They want to “intensify negotiations on the formation of a program government” to pursue a ’’responsible economic policy, fight against poverty and against corruption’’ and be stable and ’’supported by a wide majority in Serbia’s parliament,’’ according to a statement after the meeting.

‘Consultations’

The Socialists, previously led by deceased former strongman Slobodan Milosevic, want a broad coalition to include the Liberal Democratic Party, which calls on Serbia to recognize Kosovo’s independence, and the United Regions of Serbia, a group led by Mladjan Dinkic, who has held the posts of the economy minister, finance minister and central bank governor since Milosevic’s fall in 2000.

Tadic’s Democrats, which dominated the previous government, removed Dinkic in February 2011 following his criticism that Prime Minister Mirko Cvetkovic’s Cabinet wasn’t following his authority.

The Democrats will meet all three groups for “consultations” including Dinkic’s United Regions, according to the statement.

To contact the reporters on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net