Fitch's assessment, issued earlier today, shows faith that the government can do something through changes but also huge expectations, meaning there is no continuation of government policy without reform and structural change in which one must not stall but be efficient, Linic told reporters.

At the same time, the Fitch assessment contains very clear messages that the debt is too high, that Croatia must reduce the deficits and be responsible in its fiscal and economic policy, he said.

"We have no time to relax. The affirmation of the rating is an encouragement to the government to pursue even more fiercely the programmes it has set."

Linic said that after Fitch's statement it would be easier for the government to talk with the other ratings agencies.

"With Fitch we talked about assumptions and today, when we talk with the other agencies, we have the state budget, some measures, structural moves that we have undertaken, something that is easier to explain than when we explained it to Fitch."

Linic said that at the same time, given that the government was thinking about financing part of the deficit and rollover for this year by issuing securities on the foreign capital market, Fitch's evaluation meant that interest rates would not change significantly and, most importantly, that the government would have a successful bond issue.

Asked when the bonds would be issued, Linic said the Finance Ministry had invited potential banks to participate in the issue together with the government.

He estimated that a decision to issue the bonds would be made by the end of the week and that the issue could be effected in early April.

Asked what the government's announcements, mentioned in Fitch's statement, actually meant, namely that the budget would be revised in July, new austerity measures and labour reforms by the middle of the year, Linic said the assumption during the talks with Fitch was that Croatia had conservative methods of generating revenues.

That means that if we really increase revenues thanks to possible growth of capital investment, with 2.5 per cent inflation, those funds will be used to reduce the debt and the deficit, he said, adding that there would be no yielding in consumption.

Regarding the Labour Act, Linic said the Labour Ministry was preparing a series of bills on collective bargaining and relations with social partners which would be ready by June to make the labour sector sufficiently flexible to enable changes, but in agreement with social partners.

Fitch Ratings today affirmed Croatia's long-term foreign currency rating at BBB- and local currency rating at BBB. The outlook remains negative. It said in a statement that "further fiscal consolidation measures and structural reforms will be required to boost economic growth and stabilise the public finances." Croatia's current credit rating is at the bottom investment status level.