She was speaking at the 18th conference of the Croatian Economists Society in the northern Adriatic resort of Opatija.

The European Commission's latest progress report on Croatia shows that we have made headway in all areas of life and that we worked a lot over the past year, said Kosor.

I agree with those who claim that we do not need to call the IMF. We can solve our own problems because we have the strength, the know-how and the intelligence, she added.

Kosor voiced confidence that the government will make it through the adoption of the 2011 budget, as it did through the recent attempt to give it a vote of no-confidence, calling on everyone on the political scene to join the government, after the adoption of the budget, in efforts to overcome the crisis.

There will be no expenditure increase in the 2011 budget, although expenses will have to include money for parliamentary elections, a referendum on Croatia's accession to the European Union, more than HRK 1 billion for interest, and the increased amount for pensions, said Kosor.

Speaking of problems in the government's work, she mentioned shipbuilding, for which decisions had to be made based on many, often opposite, expert opinions on how to solve this issue. Despite that, a step forward has been made, she said.

Kosor said the absurdities which the government was facing were also reflected in arguments over inexistent Labour Act amendments.

She advocated respecting all institutions of the state, saying that not every decision of the government, parliament or the judiciary could be "revoked on the street," which she said undermined the system.

Kosor anticipated that Croatia would wrap up the EU entry talks and sign the accession treaty next year.

She went on to say that it was not true that the Economic Recovery Programme was not being implemented, as claimed by some, and that the government would do its utmost so that all the measures from the programme were unconditionally implemented by the end of this year.

Kosor said the government was working towards reinforcing the tax discipline, augmenting the liquidity of public companies, and reducing political influence in their supervisory boards, adding that by fighting corruption it directly supported the strengthening of the economy.

Economic growth should be based on private initiatives and investments, because the time of state investments is behind us, Kosor said, adding the government encouraged investment, as evidenced by the recent investment project programme and the action plan to eliminate obstacles to investments.

Kosor went on to say that there were plans to downsize public administration in order to have a relatively small, agile, trained and well-paid administration.

She said a functional decentralisation and downsizing of local self-government units could not be effected at once, as nobody would support cancelling parts of counties, cities or municipalities, adding that all the criteria had been defined, but that implementation called for time and political consensus.

Kosor also said the pension system must be changed, as it was not viable in the long term.

Presenting economic figures, she said production had gone up 3.1 per cent and exports 13.5 per cent, and that this tourist season had seen the highest number of arrivals and nights to date.

Kosor said the predicted 1.5% GDP growth for 2011 could be higher provided that some of the major investment projects were carried out.