WASHINGTON (MINA-BUSINESS) - Key Yugoslavia#s goals between 2002 and 2005, following the approval of a new three-year loan agreement by the International Monetary Fund, will be low inflation, constant and sustainable growth and strengthening of the country#s external position with the improvement of the current account and the balance of payment, the IMF said. According to Belgrade daily Glas Javnosti, Yugoslavia#s economy is expected to grow this year 4.0 percent after 5.5 percent in 2001, with its industry growing 3.0 percent after zero growth in 2001. The authorities plan a rapid reduction of consumer price inflation to 20 percent in 2002 from 39 percent in 2001, due to tight credit policy and price liberalisations. Economic environment remains tough, the IMF said, citing low production levels, fragile macroeconomic and external perspectives and insolvency in the state enterprise sector strapped of cash and burdened with excessive labour, as some of the difficulties ahead. Yugoslavia#s headaches also included a dissatisfactory banking sector, massive and inefficient state-sector and outdated infrastructure. Total Yugoslavia#s budget deficit this year is estimated at 5.7 percent of gross domestic product but would start to decline over the coming years and was in line with achieving fiscal sustainability and lower inflation. The gap will be financed from international donations, soft loans and privatisation receipts, while domestic borrowing is capped at 1.0 percent of GDP. Yugoslavia#s foreign debt should fall from 109 percent of GDP in 2001 to 59 percent in 2005. Its current account deficit is projected to reach 12.8 percent of GDP after 10.9 percent in 2001. Despite a growing inflow of foreign direct investment, external financial needs of Yugoslavia from donors and official creditors will remain substantial, the IMF said. In the financial sector, the cleanup of the banking system has created grounds for comprehensive reforms, including new monetary policy instruments, further liberalisation of the foreign exchange market, a development of a market-oriented balance of payments and strengthening of bank supervision.