"The trends are bad, but they have been detected, which is important. I expect much of the ongoing campaign aimed at the only possible exit: job creation and investments," Josipovic said in his interview with the national radio on Monday when he warned that in the event of its failure, the cabinet of Prime Minister Zoran Milanovic would be judged by voters.

As for Finance Minister Slavko Linic's plan to reduce the public sector wages by three per cent, Josipovic told the HR radio that equity required more contribution from those who had more funds at their disposal.

"Estimates should be made on participation (in bearing the burden of crisis) in proportion to income," the head of state said.

Asked whether Croatia should opt for a more restrictive policy towards the banking system, Josipovic said that a trend of protecting consumers was evolving in Europe.

"One should see what is applicable to the very sensitive banking system, as the money in the banks is our money: the money of private citizens, institutions, the state, entrepreneurs and companies, and there must be rules on how to operate with that money," he said.

As for the forthcoming local elections and Croatia's first election for its representatives to the European Parliament, the president said that enough time should be allocated for a clear and smooth campaign for the election for MEPs.

"I would like to see this campaign interfere as little as possible with other campaigns, such as for the local elections," he added.

He said he believed that the next monitoring report on Croatia, also the last one from the European Commission, would be positive.

I expect some objections but not on the most important things, he said, adding that the report would pave the way for the ratification of the Croatia-EU accession treaty in those EU members that have not yet ratified the document.

Asked to comment on the European Commission's recently proposed directive on concessions, including on water sources, Josipovic said Croatia would act as other countries.

We will decide on the models, abiding by the obligations we have. I find concessions acceptable, provided that there are strict controls for the use of natural resources and safeguards against anything state-owned being taken from us, the president said.