We have opened talks with the IMF in order to work together with the Fund's Fiscal Affairs Department on elaborating a model of the fiscal rule in Croatia, taking into account our five-year-long recession and quite severe cuts in the expenditure last year, Linic told the press today.

Croatia is aware that the rules must be obeyed, all we are talking about is that our fiscal rule is not adjusted to recession conditions. We want this institution with the know-how about fiscal rules worldwide, to help us find a better model, the minister said.

The fiscal rule provides reducing general government budget expenditure by at least one percentage point of GDP each year.

When a positive economic growth is not achieved for some time, spending cuts of one percent can cause more damage than benefits. Europe obviously handles this in a different and better way, and problems cropping up with restructuring certain companies and economic branches must be taken into consideration, the Croatian minister said.

Today's meeting did not revolve around the possibility of coming to an arrangement with the IMF, as this is currently not needed in Croatia, Linic said.

The government may ask for arrangements if it were faced with problems in managing the public debt, however, we have no particular problems in servicing our debts and we are still not thinking about an agreement with the IMF, he explained.

Nemat Shafik stopped in Croatia within her tour of countries which are within her remit. During her stay in Croatia she is due to meet government officials, the National Bank (HNB) representatives, bankers, trade unionists and employers for talks on models for Croatia's consolidation.

At the news conference Linic boasted of the reduction of the budgetary deficit from five to three percent of GDP in 2012 and how public finances have managed to remain under control.