The state budget deficit amounted to 14 billion kuna last year, and the new government has found an additional 2.2 billion kuna of unpaid bills, Linic said at a government meeting on Thursday while speaking about the execution of the 2011 budget.

Last year budget revenues reached HRK 107.4 billion and expenditures HRK 121.4 billion, and the deficit was officially HRK 14 billion. However, we have found an additional 2.2 billion kuna of unpaid bills -- nearly HRK 950 million for agriculture, HRK 480 million for shipbuilding, HRK 339 million for the Financial Agency, HRK 170 million for shipping companies that had commissioned ships from domestic shipyards, and not all liabilities towards the Catholic Church were paid either, Linic said.

The total deficit therefore was HRK 16.2 billion, which was 4.7% of GDP and not 4.1% as was presented. If we add to it money for state funds and local government units, the deficit increases to 5% of GDP, Linic said.

Asked to comment on Linic's statement, Dalic told reporters in Parliament that it was unreliable, as evidenced by the fact that the deficit also included liabilities towards the Catholic Church dating back to 2003, when a coalition government led by the Social Democratic Party was in power.

She added that upon coming to power in late 2003, a government led by the HDZ recognised the debt and reached agreement with the Bishops' Conference, signing with the Church agreements whereby the Church renounced a part of its claims, including 45 million kuna in 2011.

"As regards the term of the previous government, there are no debts either to the Catholic Church or to any other religious community," she said.

Asked if she remembered the amount of the debt to the Church, she said that it amounted to some HRK 250 million in 2004.

"In 2004 we found a situation in which it was claimed that there were no liabilities, but there were liabilities, arising from the agreement with the Holy See."

Dalic said that in the previous two terms, the HDZ-led government did not have money to meet its obligations to the Church and that the Church did not insist on it but gave up on parts of its claims.

Asked why the debt had not been paid over the last eight years, she said that the government had made such an agreement with the Church.

She said that data on the Finance Ministry web site clearly showed that the budget deficit in 2011 was 800 million kuna less than planned and that with local self-government units included, it was 2.2 billion kuna less than planned and around the level of 2010.

Asked about other debts mentioned by Linic, she said that shipbuilding grants were abolished in 2010 and that therefore they could not have resulted in new debts.

As for allegations about a debt of 950 million kuna in agriculture, she called for publishing the structure of the debt to see when individual grants were paid.

She said that all farm grants in 2011 were paid in line with relevant laws and regulations and EU regulations, as a result of which they were paid only once a year.