* Ex-ultranationalist bidding to become PM
* Centre-right promising economic overhaul
* Serbia setting out on talks on joining EU
By Matt Robinson
BELGRADE, March 16 (Reuters) - Serbia's centre-right Progressive Party, led by former ultra-nationalist Aleksandar Vucic, bids in an election on Sunday to cement its grip on power for the next four years as the ex-Yugoslav republic embarks on talks to join the European Union.
The Progressive Party (SNS) forced the snap election after just 18 months in coalition government, saying it needed a stronger mandate to pursue a much-needed overhaul of the Serbian economy.
Opinion polls suggest it may win more than 40 percent of the vote, a haul unprecedented in the almost 14 years since Serbia came in from the cold with the ouster of strongman Slobodan Milosevic. Vucic is likely to become prime minister.
The party's domination owes much to Vucic's personal popularity as the face of a popular crusade against crime and corruption.
Critics, however, are unnerved at the power amassed by a man who up until five years ago was a virulent anti-Western disciple of the Greater Serbia ideology that fuelled the wars of Yugoslavia's bloody demise in the 1990s.
Vucic converted to the cause of EU membership in 2008 and is advocating root-and-branch reform of Serbia's bloated public sector, pension system and labour legislation.
The country of 7.3 million people must commit to rein in its budget deficit and public debt in order to secure a new precautionary loan deal with the International Monetary Fund, which could come soon after a new government is formed.
"Serbia has the potential to be the new Romania of the region - i.e. an IMF poster child," said Timothy Ash, head of emerging markets research at Standard Bank.
"The political establishment and the population appear ready/primed for reform, and a new strong government with a fresh mandate has no excuse now for not reforming."
KOSOVO SETTLED
The opposition, led by the Democrats who held power from Milosevic's ouster in 2000 until 2012, is warning voters against handing too much power to Vucic. He was information minister in the late 1990s when newspapers were fined and shuttered under draconian legislation designed to muzzle dissent as Milosevic led Serbia into war with NATO over Kosovo.
The outgoing government, in which Vucic was deputy prime minister, went a long way to finally putting to rest the issue of Kosovo. It agreed to cede Serbia's last foothold in its former southern province, which declared independence six years ago and has been recognised by more than 100 countries.
In return, the EU granted Serbia membership talks, which formally began in January shortly before the government fell.
The process, likely to run beyond 2020, should help steer reform and lure much-needed foreign investment to the biggest market to emerge from the ashes of Yugoslavia. Serbia is a natural hub for a region with deep linguistic and cultural ties.
Vucic's SNS is expected to bring several other parties into government, possibly to share the blame for what promises to be a painful economic overhaul.
"We can't spend more than we have," Vucic told the Serbian daily Vecernje Novosti last week. "Either we're going to pursue a realistic and rational policy, or we'll simply keep lying to ourselves."
Opinion polls say the Socialists of outgoing Prime Minister Ivica Dacic and the Democrats of former Belgrade mayor Dragan Djilas will fight it out for second place, still a long way behind the SNS. (Writing by Matt Robinson; Editing by Mark Trevelyan)
Our Standards: The Thomson Reuters Trust Principles.
