A continuous process is under way to fully transform public finance management into an efficient and transparent system. This is also confirmed by the provisional closing of the policy chapter No. 32 on Financial Control during Croatia's European Union accession negotiations, the Union's diplomat said.

Challenges Croatia is faced with on this path are a permanent political support and commitment to reforms, the need for long-term budget planning and enhancement of fiscal responsibility, efficiency and transparency, Vandoren said.

Croatian Deputy Prime Minister and Finance Minister Ivan Suker said that Croatia had highly transparent and efficient public finances.

He spoke about the centralisation of the budget system and the establishment of the state treasury as steps leading to the rationalisation in public finance management.

Fiscal consolidation measures reduced a share of the budget deficit in Gross Domestic Product from 5 percent in 2003 to 1.5 percent in 2008.

Had there been no crisis, we would have a balanced budget, and a draft budget for 2009, which the finance ministry proposed in November 2008 and which unfortunately had not been adopted, headed towards that aim, Suker said.

The finance ministry has adopted good practices for managing the EU funds, which along with an increase in private investments, should improve the budget revenues.

Private investments are necessary to improve the revenues side of the budget, and a framework for encouraging private investments must be created, As a result, the economic growth can go higher than 1.5 or 1.6 percent, as forecasted in conservative projections for 2011, Suker said.