Serbia's government has signed a $1 billion joint venture with the Italian auto maker Fiat to revive the country's only car plant Zastava.

Serbian Economy Minister Mladjan Dinkic and Fiat's chief executive Sergio Marchionne signed the agreement on Monday in Belgrade.

The joint statement says Fiat will have a 67 percent stake in the joint venture.  It says an initial investment of $1 billion includes the support of close to $300 million by the Serbian government.  Dinkic called the venture Serbia's biggest investment so far.

Marchionne said the deal demonstrates the company's confidence in Serbia.

Under the deal, Zastava is expected to produce 200,000 cars a year initially and expand the production later.  Serbian President Boris Tadic, Prime Minister Mirko Cvetkovic and Italian Foreign Minister Franco Frattini attended the signing ceremony.

Some information for this report provided by AP and AFP.