Standard & Poor's Ratings Services on Friday revised its outlook on Croatia from stable to negative, but at the same time affirmed its BB+ long- and short-term foreign and local currency sovereign credit ratings.

"The outlook revision reflects the agencies estimate that there is a more than one-in-three chance that prolonged weak economic performance, coupled with limited reform impetus, will lead to fiscal or external outcomes worse than we currently project," the agency said.

"This evaluation provided by S&P is a message to the government to accelerate reforms, strengthen restructuring processes in public companies and turn them to investments. On the other hand, we must reduce our high debts. The government is seriously thinking about it, the only question is how much support we will get from the Croatian public. It seems that the public is not aware how high Croatia's debts are and what are its economic potentials," Linic told Hina in a telephone interview.

According to S&P, Croatia entered its fifth consecutive year of recession and the agency projects a further contraction of 1%.

Linic said that the latest revision was the result of the real situation in the Croatian economy and finances.

According to Linic, the revised outlook is also the result of a crisis in the shipbuilding and petrochemical industries. He underlined that despite restructuring of public companies no significant progress was recorded in the investment cycle.

The agency expects that when Eurostat publishes data related to the EU's fiscal notification in October, Croatia will face the activation of an excessive debt procedure (EDP).

"Croatia will most definitely face that because our deficit is above 3% of GDP, it amounts to 3.4% of GDP," Linic said.

Speaking about public finances, Linic said it was evident that reform processes had increased the public debts, as did privatisation of the shipbuilding industry, restructuring of the Croatian Railways company, Croatia Airlines, the health sector...

Linic also said that Croatia today, as an EU member state, had additional expenses.