The start of fiscal consolidation and announced reduction in the budget deficit has enabled Croatia to retain macro-economic stability, however, consolidation has mostly occurred in revenues rather than expenditure. A growing fall in foreign demand and investment under-performance have resulted in the greater fall of the GDP and so reducing the budget deficit is questionable, he said. The government should be looking to reducing public spending which is less detrimental than increasing tax burdens, Vujcic pointed out.

Macro-economic stability has made it possible for Croatia to retain its credit rating this year, however, it seems nothing has been done to find a new model to stimulate growth, which we also saw in the latest "Doing Business" report by the World Bank, Mr. Vujcic added.

Vujcic believes that the only thing that can stimulate growth would be a favourable investment and business climate to attract private capital and in particular in the import/export sector. Too much emphasis has been placed on government investment projects if we consider the limited government loan capacities although investments into domestic primary energy sources could have an impact on greater exports.

The experience of small open countries show that foreign investments have been the key to successfully develop their export industries.

Vujcic reiterated that the crisis cannot be resolved through "populist" measures and devaluating the domestic currency or fiscal expansion as this was tried time and time again and failed each time. If we observe successful countries in the European Union they retained firm currencies, low deficits etc, he added.

Croatia's public debt has increased 29.3 percent of the GDP since 2008 to around 53 percent, which is obviously unsustainable and which is what rating agencies, the IMF and investors have been telling us. It is a dangerous illusion to believe that we continue to live as we have done until now, Vujcic said.