Belgrade - Serbia's economy would decline by 2 per cent in 2009, instead of growing by 3.5 as was originally projected, the International Monetary Fund (IMF) said Thursday, unveiling details of a new standby loan for Belgrade.

The Serbian economy would stagnate in 2010, IMF said, in contrast to recent optimistic statements by Belgrade officials, who until recently insisted that the global financial crisis would largely bypass Serbia.

Serbia and IMF struck the three-year, 3-billion euros (4-billion dollars) deal Wednesday. However, for definite IMF approval, Belgrade must rebalance the budget and cut spending, adjust fiscal policy and secure the present level of foreign crediting for the private sector.

Serbian central bank chief Radovan Jelasic said 2.2 billion dollars could be drawn on this year, and the rest in 2010. (dpa)