The precautionary arrangement with the International Monetary Fund (IMF) has not been terminated nor has it collapsed -it is still in effect, but its review has been postponed until the middle of the year, economic advisor to the Serbian prime minister Jurij Bajec told Tanjug on Thursday.

He said the review has been delayed until a budget balancing establishes that what was agreed as far as the government's economic policy will be implemented in practice.

Bajec said the IMF has given a positive assessment of the work of Mirko Cvetkovic's government in 2011.

The IMF is convinced the Serbian prime minister will meet the undertaken obligations by the end of the term, Bajec said.

"Government representatives have given assurances to the IMF mission, which they accepted, that until the end of the term, the government will adhere strictly to the agreed policy, including the agreed upon budget bounds, in regards to both public debt and fiscal deficit," Bajec pointed out.

IMF representatives insisted primarily on the size of guarantees for loans to public companies and stressed the danger of jeopardizing the legal limit of public debt by additional borrowing, and this cannot be implemented in practice by the end of the current government's term, Bajec said.

He expects the budget balancing will be on the agenda only after a new government is formed.

Bajec said that in Thursday's closing talks with the IMF technical mission a final assessment was given of the implementation of agreed economic policy, above all budget policy.

The mission also reviewed some open issues relating to the 2012 budget, and discussed economic growth projections in the eurozone, Europe and Serbia and effects of a possible economic decline.

We discussed how this would reflect on the projected GDP growth rate, which the precautionary arrangement started from, and how realistic the rate is, Bajec said.

In this context, we reviewed the risks related to the size of Serbia's public debt and the agreed fiscal deficit, he said.

Bajec underlined that once again "there was no talk of freezing payment of salaries and pensions."