The wartime spokesperson of late strongman Slobodan Milosevic is set to become Serbia's new prime minister, triggering unease at home and abroad despite his proclaimed pro-EU policies.

Ivica Dacic of the Serbian Socialist Party is expected to be sworn in at a parliament session later on Thursday, along with his government, which also includes the nationalist party of President Tomislav Nikolic and several smaller groups.

If elected, the new cabinet will mark the first time that Milosevic's allies have fully returned to power in Serbia since the former autocrat was ousted in a popular revolt in 2000.

Dacic took over the Socialists after Milosevic died in 2006 and has worked to transform the party.

He has pledged he would not revive Milosevic's nationalist policies and would press on with Serbia's integration into the European Union, but there are fears his election could undermine postwar reconciliation in the Balkans.

His rise comes in the context of deep economic uncertainty in the Balkans state. The Serbian dinar hit a new low versus the euro at 119.05 on Wednesday, reflecting deep uncertainty over the future economic policy of a government about to take power and the fate of the central bank governor.

The dinar has lost some 9.5 per cent in value against the euro this year, battered by concern over Serbia's rising debt of some 55 per cent and a frozen loan deal with the IMF.

The incoming government has said it will rack up more debt and spend to revive the stagnant economy, putting it at odds with Central Bank Governor Dejan Soskic, who has steered a restrictive policy and called for a reduction in debt.

The return of Milosevic's Socialist Party comes on the heels of the election of another former ultra-nationalist, Tomislav Nikolic, who won the presidential vote in May.

Source: Al Jazeera And Agencies