The mission of the International Monetary Fund (IMF) has offered to Serbia's negotiating team to extend the existing credit arrangement for another nine months or to set up a new one for a much longer period, the negotiating team told Tanjug on Friday.

The arrangement would contain new elements of public sector reforms and would constitute an obligation for the next Serbian government as well.

In the talks on the seventh revision of the stand-by credit arrangement with Serbia, the IMF still insists that the country should continue implementing pension law reforms and structural reforms in public enterprises.

The IMF delegation also reiterated that public spending must not be allowed to increase, as this would result in overstepping the limits set for 2011, and warned that the country needs to take greater care and prevent employees with lowest salaries from turning into regular victims of reforms as they have been brought to the lowest endurance limit.

After several meetings with the IMF mission over the course of the week, representatives of the Serbian government backed the continuation of cooperation with the IMF. Governor of the National Bank of Serbia (NBS) Dejan Soskic believes that Serbia should close the arrangement with the IMF as a precautionary measure, without burdening the country by further debts.

This implies that the IMF would be providing advisory assistance to Serbia, but the IMF mission would be constantly monitoring macroeconomic developments in the country.

Of the arrangement worth EUR 2.87 billion, Serbia has withdrawn EUR 1.51 billion since May 2009 but has not used them sum up yet. The country's arrangement with the IMF is due to expire in April 2011.

During the talks with Serbian officials, trade unions of teachers, judiciary and public administration, representatives of the IMF mission pointed out that the country has not carried out reforms in the public sector, that Serbia has a surplus of employees, that budget funds are being spent irrationally and that Serbia needs to set up more strict control.

At the start of the two-week talks on Monday, the Serbian government and the IMF mission agreed that all revisions carried out so far have been successful and that the country needs to establish a firm fiscal discipline.

The officials also assessed that salary raise for employees in Serbia needs to be in keeping with the country's established budget and economic policy.

During the talks between IMF representatives and Prime Minister Mirko Cvetkovic, Deputy Prime Minister Jovan Krkobabic, Finance Minister Diana Dragutinovic and Minister of Labour and Social Policy Rasim Ljajic, it was mentioned that the officials might discuss the possibilities for the country's future cooperation with the IMF.