SARAJEVO, Feb 24 (AFP) - Bosnia's new reform-oriented government has boosted hopes of tackling the country's burning economic and political problems and the chance of an international donors conference, Western diplomats here say.

"The first step in meeting preconditions for such a conference was the election of non-nationalist government," a Western diplomat who requested anonymity told AFP Friday.

But the international community expects the new government, which does not include nationalists for the first time since the end of Bosnia's 1992-95 war, to start tackling the problems "immediately", he stressed.

If the new government makes substantial progress in economic reform, the return of refugees, property repossession, and strengthening of the state institutions, the conference could take place as soon as May of this year, the diplomat said.

So far the central institutions, controlled by the three main nationalists parties of Bosnia's Muslims, Croats and Serbs, have been unable to work efficiently to revive the country's collapsing economy.

The office of the top international mediator in Bosnia, Wolfgang Petritsch, confirmed Friday that the international community was considering further financial assistance to Bosnia.

"There was a plan to hold such a conference even earlier, although the conference members may well choose to take into account the changes that have occurred within governmental institutions in Bosnia-Hercegovina", Oleg Milisic, the spokesman for the Petritsch's office told AFP.

The six-member Council of Ministers was approved by the central parliament on Thursday, three month after the elections.

Most of the ministers are from a moderate grouping, dubbed the Alliance for Change set up in mid January in a bid to end the supremacy of nationalists in the country's joint institutions.

The government is headed by Bozidar Matic, a member of the moderate Social Democratic Party (SDP), the Alliance's leading force.

Welcoming the new government, Petritsch voiced hope that it will "move swiftly to tackle all problems that Bosnia-Hercegovina faces, guiding it through the difficult transition and reform process."

He also voiced hope that the government would "break with the policies of the past and lead Bosnia actively and decisively into a better future."

Robert Barry, the head of the Organisation for Security and Cooperation in Europe (OSCE) mission to Bosnia, also welcomed the new government saying he was encouraged by the program set out by Matic which focused on economic issues.

The Alliance pledged urgent action in improving economic and social situation.

Its priorities include economic reform, building a functioning state, the return of refugees and tackling corruption. These goals represent the requirements set by the international community for bringing the country closer to European integration.

The previous five Bosnia donors' conferences brought 5.1 billion dollars of reconstruction aid to the war-torn country.

Failing to achieve a self-sustaining economy, Bosnia, besides Albania the poorest European country, has remained dependent on foreign aid.

Around 60 pecent of Bosnia's population live in poverty, while the unemployent rate is running at over 40 percent.

Total foreign debt in 2000 was over 3 billion dollars.