Serbia's new nationalist-led government was sworn in Friday with the new prime minister vowing to focus on EU integration, continuing talks with breakaway Kosovo and boosting the floundering economy.
"One of the main tasks of the government will be to continue (along) the European path... but without an economic recovery in our country none of the goals will be easily achievable," Prime Minister Ivica Dacic said.
His comments came as Economy Minister Mladjan Dinkic warned that Serbia's public finances were "catastrophic" and announced plans to cut spending.
Belgrade is also eager to restart talks with the IMF which in February froze a one billion-euro ($1.2 billion) stand-by loan because Serbia did not keep to figures agreed for the 2012 budget.
Dacic and his 19-member cabinet were sworn in after lawmakers voted in the coalition made up of the nationalist Serbian Progressive Party (SNS) -- founded by President Tomislav Nikolic -- and the prime minister's Socialists.
Some critics have warned that the coalition is a throwback to the late 1990s when the Socialist SPS -- then led by late strongman Slobodan Milosevic -- governed with Nikolic during its crackdown against ethnic Albanians in Kosovo.
Dacic, who transformed the party after Milosevic's death in 2006, has always vigorously denied there would be "a return to the 1990s" marked by the bloody wars that tore apart the former Yugoslavia and led to international isolation for Belgrade.
"Serbia wants to be a factor of peace and stability in the region... all outstanding issues should be resolved peacefully," Dacic, who also holds the post of interior minister, said when he unveiled his government on Thursday.
"Serbia is extending its hands in reconciliation with everyone. We will not concern ourselves with the past, let's concern ourselves with the future."
Belgrade was given EU candidacy status in March, and improving relations with Kosovo -- which unilaterally proclaimed independence from Serbia in 2008 -- is a key condition for it to secure a start date for accession talks.
Both Dacic and Nikolic, a former ultra-nationalist who once said he would rather see Serbia as a province of its traditional ally Russia than an EU member, are now firmly pro-European Union.
Dacic said he spoke on Friday with EU foreign policy chief Catherine Ashton who welcomed the new government and expressed "a political will for opening Serbia's European perspectives".
While insisting "Serbia will not recognise the independence of Kosovo", Dacic promised Thursday that Belgrade would respect agreements reached in EU-brokered talks with Pristina that began in March last year.
He said Belgrade was ready to continue the talks "immediately, without conditions".
On the economy, Dinkic said the government would start working on a "fiscal consolidation programme" to be presented in September and announced a "radical decrease of all unnecessary expenses".
Economists estimated that the budget deficit has hit a record 7.3 percent of gross domestic product (GDP).
The 2012 budget forecasts 1.5 percent economic growth but the International Monetary Fund has a much lower estimate of only 0.5 percent and the country has one of the highest unemployment rates in Europe at nearly 25 percent.
Among the top cabinet posts, Ivan Mrkic, a former ambassador to Japan and Cyprus who is not affiliated with any party, was sworn in as foreign minister.
SNS leader Aleksandar Vucic was named deputy prime minister -- one of four -- and defence minister.