Presenting the report, Defence Minister Berislav Roncevic said the probability of the state territory being threatened by a conventional conflict was small, but that there existed possible new threats, such as terrorism.
The Armed Forces are doing their best to keep their combat readiness at the required level, Roncevic said, adding that all important tasks were being performed well and within set deadlines.
He warned that the military equipment and infrastructure were obsolete, announcing that the number of military facilities would be reduced to cut costs, that obsolete weaponry would be written off and that all segments of the Armed Forces would be modernised.
The Opposition criticised the report, saying that the government lacked vision regarding the development of the army and did not know how to respond to new threats, such as terrorism.
Zeljka Antunovic of the Social Democratic Party (SDP) said the government did not recognise the importance of regional military cooperation, adding that "the cooperation of former enemies reduced the possibility of relations being disrupted again and armed conflicts being renewed".
She warned about lack of criteria in the selection of Defence Ministry staff, about decreasing research and development, and cuts in budgetary allocations for the army.
Pero Kovacevic of the HSP said his party would not support the report because the government lacked a national defence plan.
The debate on the government report will continue on Thursday.
Earlier in the day, the Sabor wrapped up a two-day debate on amendments to the Law on the Election of Local Self-Government Representative Bodies.