"The fact is that the Russians see some signals as to the fate of this arrangement as our desire to opt out of it, and I have therefore talked to them, to convince them that we are standing by everything that was signed and that President Tadić agreed on," Cvetković said in an interview for Belgrade daily Politika.

He said that the government he heads finds the construction of a stretch of South Stream natural gas pipeline through Serbia to be important, and added that it will fight to achieve it.

Cvetković said that appraisal of the value of oil monopoly NIS, the sale of which is a part of the Russian deal, is necessary because of the free distribution of shares to citizens.

"It is important for the state to conduct an additional appraisal of the value and sustainability of the inter-state arrangement as a whole," the prime minister was quoted as saying.

As for the economy, Cvetković said he expectes the inflation to be the same as last year, between ten and 12 percent, "closer to ten".

He addressed the issue of pension hikes approved by the government earlier this week by saying that the regular October raise had already been calculated with the budget, while the additional ten percent will add in between RSD 5.5 and 6bn to the expenditure.

A rebalancing of the state budget will likely see it increase by RSD 15-18bn, the prime minister told the daily. Beside the pensions, other new spending will include funds set aside for the construction of the Belgrade bypass.

He added that the 2009 budget will also have a deficit, expected to be smaller that this year's, "while a transfer to a surplus is only possible gradually".

Cvetković also revealed that the Horgoš-Požega concessionaires Alpine Porr are asking not to be charged EUR 10mn from the guarantee they submitted, now that the contract has been scrapped, and are also seeking to undertake the construction of the northern part of the highway.

Negotiations on this, he explained, are in progress. Asked how Alpine could hope to clinch that deal without a tender, Cvetković said that he would "not allow for any decision to be made that is in violation of the Public Procurement Law, that is, contrary to the interpretation of the Public Procurement Directorate".

The prime minister also announced that the Fiat-Zastava "arrangement is taking its course", and said he expects the agreement to be signed in mid-September.