The 10 main goals the Serbian government wants to achieve by the start of next year "face a challenge" in the form of a social conflict, said the European Commission in its latest economic analysis.

In Serbia, last year's GDP rose 1.8 percent above expectations and economic recovery was based on exports, reads a European Commission document to which BETA had access.

Inflation this past February reached a rate of 12.6 percent, the unemployment rate remained at around 20 percent and the budget deficit stayed the same - 4.5 percent of GDP. The deficit in the payment system saw a very small decrease last year and amounted to 7.5 percent of GDP.

The successful stand-by arrangement with the International Monetary Fund expires mid-April and the government in Belgrade has only drawn half of the EUR3 billion available, "bearing in mind the large foreign currency reserves" of around EUR10 billion, reads the analysis.

The flow of foreign capital decreased by 11 percent, mainly because of less foreign investment, and Serbia's foreign debt last year grew by EUR1.3 billion. The debt was reduced slightly in the first quarter of this year and amounted to EUR23 billion, close to 80 percent of GDP.