BELGRADE Serbian Finance Minister Mladjan Dinkic agreed on Sunday to cede his economy portfolio, averting possible snap elections that could have dented the country's ambitions to join the European Union.
Dinkic said he would remain as finance minister, while the economy portfolio would go to the SNS, Serbia's biggest party, paving the way for a fuller cabinet reshuffle.
Dinkic had previously resisted splitting up his ministry, but Prime Minister Ivica Dacic warned on Saturday that the coalition would go on without him if he did not.
Financial markets seem likely to welcome Dinkic's continued presence in government. He has slowed the rate of increase of Serbia's budget deficit and public debt, which had ballooned to all but scuppered hopes of a new precautionary loan from the International Monetary Fund.
Dacic's Socialists and the nationalist Progressive Party (SNS), the two biggest parties in the alliance, had already agreed to reshuffle their ministers.
Dinkic's United Regions of Serbia party (URS) is polling just 5 percent among voters.
Weeks of fraught negotiations over the reshuffle had raised the risk of a snap election that would almost certainly have delayed the start of EU membership talks scheduled for January.
"We accept the proposal of our coalition partners to separate the finance and economy portfolios," Dinkic said after a closed meeting of the URS party.
The SNS, which is riding high in opinion polls, had made clear it was prepared to bring down the government if the reshuffle fell short of its ambitions.
Dacic says he planned to present his new cabinet for parliamentary approval on August 20.
(Reporting by Maja Zuvela and Valerie Hopkins; Editing by John Stonestreet)