SERBIAN PM THREATENS TO OUST ILLINOIS TREASURER AS FORMER ILLINOIS SERB GOVERNOR ROD BLAGOJEVICH ATTEMPTS TO APPEAL U.S.A. FEDERAL CONVICTION

SERBIAN PM THREATENS TO OUST ILLINOIS TREASURER AS FORMER ILLINOIS SERB GOVERNOR ROD BLAGOJEVICH ATTEMPTS TO APPEAL U.S.A. FEDERAL CONVICTION

Maja Zuvela, Reuters12:27 pm, July 27, 2013

BELGRADE (Reuters) - Serbia's prime minister piled pressure on Finance and Economy Minister Mladjan Dinkic on Saturday to cede one of his portfolios or face being ousted from the Balkan country's coalition government.

"It's crucial to have a division of responsibilities by splitting the ministry of finance and economy if we are serious about pursuing our goal of economic and fiscal consolidation," Prime Minister Ivica Dacic told a news conference.

The ultimatum comes as the coalition tries to agree a cabinet reshuffle and avert a snap election that would likely delay the start of European Union membership talks from January next year.

The two biggest parties, Dacic's Socialists and the national Progressive Party, signaled on Friday that they had agreed how to reshuffle their own ministers, but there was no word from the junior partner, Dinkic's United Regions of Serbia (URS).

Without URS's 16 seats, the remaining coalition parties would still hold a slim majority in parliament.

"If our political views match, we will continue to work within the same configuration, and in case they don't, we will work with or without URS, since we have a majority in the parliament," Dacic told reporters.

He said he planned to present a new line-up for parliamentary approval on August 20.

Dinkic's ouster would likely unnerve investors worried about Serbia's rising budget deficit and public debt, which have all but scuppered hopes of a new precautionary loan deal with the International Monetary Fund.

On Friday, Fitch ratings kept Serbia's BB- rating with a negative outlook, citing uncertainty over public finances and public debt, which is projected to reach 65 percent of output by 2014.

"The country is running out of time," said Miladin Kovacevic, deputy head of the Serbian statistics agency. "It needs thorough reforms but they will require a fully functional government as soon as possible," he told Reuters.

URS is due to hold a leadership meeting on Sunday. Dinkic has indicated he wants the government downsized to 15 ministries from the current 19 rather than expanding it as his coalition partners insist. He has resisted ceding either of his portfolios.

(Additional reporting by Valerie Hopkins; Editing by Matt Robinson and David Evans)