UPDATE 1-Serbian PM keeps Vujovic as finmin, faces tough reform targets

(Adds Vucic quotes, analyst, rights group)

BELGRADE, Aug 8 (Reuters) - Dusan Vujovic, a former World Bank economist, will stay on as Serbia’s finance minister in a new cabinet unveiled on Monday and faces a tough task of making unpopular spending cuts, including public sector lay-offs, under an IMF loan deal.

Vujovic, who has been finance minister since 2014, spearheaded the talks on the 1.2 billion euro ($1.33 billion) deal with the International Monetary Fund and his confirmation in the job signals a continuity in economic policy.

Prime Minister Aleksandar Vucic, who aims to conclude European Union accession talks in 2020, won a comfortable majority in an April election, but delayed forming a new cabinet while seeking a coalition to share responsibility for reforms.

“The new government will be the government of progress and prosperity,” Vucic said as he presented his 19-member cabinet, which continues the four-year-old alliance between his centre-right Serbian Progressive Party and the Socialist Party.

Vucic, who has headed the government since 2014, predicted a new “golden era” for Serbia, but did not mention the downsizing of the bloated public sector required by the IMF. He is due to present the government’s programme in parliament on Tuesday.

The IMF commended Serbia in June for its strong economic performance, forecasting economic growth of 2.5 percent this year, but urged it to do more to curb high levels of debt.

Otilia Dhand, an analyst at Teneo Intelligence political risk consultancy, said she expected policy continuity, especially on fiscal issues, with the prolongation of the coalition and the re-appointment of Vujovic as finance minister.

“But whether we are going to see any significant progress on structural reforms, and especially on reduction of the public sector work force, I don’t see any particular change that would convince me that there will be any significant improvement.”

An ultra-nationalist during Yugoslavia’s wars of the 1990s, Vucic performed a political U-turn in 2008 and embraced Serbia’s drive to join the EU. He has rebranded himself as a conservative reformer committed to cutting the budget deficit and debt and to shrinking the public sector.

Vucic called the early election to tighten his grip on power and secure a new four-year mandate to lead Serbia into the EU.

In the largely unchanged government, Ana Brnabic, ex-manager of Serbia’s subsidiary of an international wind park developer, was a new appointment, named minister for state administration.

Brnabic is openly gay, which is very rare in conservative Balkan society, and her appointment was hailed by Serbia’s Gay Straight Alliance as a “historic decision”. ($1 = 0.9021 euros) (Reporting by Ivana Sekularac and Ingrid Melander; Editing by Gareth Jones)