UPDATE 1-Serbia's president calls parliamentary election for March 16
* SNS well ahead in opinion polls
* Outgoing government will pursue talks with IMF
BELGRADE, Jan 29 (Reuters) - Serbia's President Tomislav Nikolic on Wednesday called an early parliamentary election for March 16 after the dominant centre-right SNS party said it needed a stronger mandate to accelerate reforms.
The coalition government asked Nikolic on Tuesday to dissolve parliament and call the election, less than two years after the western Balkan country's last vote.
Nikolic announced the election date in a statement broadcast live on state-run RTS TV.
"I think there are conditions for fair elections after which we will get a more energetic and enthusiastic government," Nikolic said after signing a decree to dissolve the parliament.
"A lot of work is ahead of us - painful and difficult reforms which will improve lives of our citizens, meeting conditions set by the European Union for the member candidates," he said.
Serbia started EU membership talks on Jan. 21, but it is unlikely to join the bloc before 2020.
The SNS (Serbian Progressive Party), the strongest party in the ruling alliance, is well ahead in opinion polls, putting party leader Aleksandar Vucic in pole position to take over from Socialist Prime Minister Ivica Dacic.
Once an ultranationalist disciple of the "Greater Serbia" ideology that fuelled the wars of federal Yugoslavia's bloody disintegration in the 1990s, Vucic has since rebranded himself as a pro-European moderniser.
Measures to rein in the deficit and cap the public debt will be crucial to negotiations with the International Monetary Fund on a new precautionary loan deal, which will begin on Feb. 26 with the election campaign in full swing.
Finance Minister Lazar Krstic said the government will negotiate a precautionary deal with the Fund, but does not have the mandate to sign the deal.
Investors appear to believe a strong SNS-led government would be better placed to forge ahead with the requisite measures, although doubts remain about the party's abilities and commitment.
"SNS will most likely be the pivotal party in the future coalition," said Djordje Vukovic, programme director of the Centre for Free Elections and Democracy thinktank.
Fearing popular discontent, consecutive Serbian governments since the fall of strongman Slobodan Milosevic in 2000 have shied away from the kind of radical structural overhaul that economists say is needed to put the economy on a sound footing.