He was responding to questions from members of the press who asked if, in order for Croatia to retain its credit rating, it would be necessary to change the Labour Act provisions on the extended application of legal regulations in collective agreements.

"The law will be amended in that direction, but the changes are no social drama and won't affect entitlements. The economic situation must be acknowledged and collective agreements must see to that," said Cacic.

"You can't explain that either to the IMF, Fitch or anyone, but I think there is a consensus on that with trade unions. We all realise that this simply can't go on and this country, if it wants to look in the mirror and say what needs to be done, must do this."

Cacic did not mention deadlines but said the Labour Act should be amended as soon as possible.

He also commented on the Fitch Ratings agency's statement yesterday that the proposed reduction of budgetary expenditures was encouraging although the cuts were smaller than initially announced, and that it would assess Croatia's credit rating at the end of the first quarter.

Cacic said the agency for the first time explicitly said that the government's direction was good and that the economising measures were a good indicator.

"When I say that's good, you can doubt it. When (Finance) Minister Linic or the prime minister say that, you can doubt it and you should, but Fitch, believe me, isn't under our influence," Cacic said.