"The report is much better than last year and it is half the size than the one for 2005. Most definitely this is a good sign and indicator that Croatia has made progress in that area," Sanader told reporters after a government session.
The European Commission is expected to issue its report in Brussels on Wednesday.
Sanader said it was normal that the report also had some criticisms and outstanding issues because if it was not so, it would mean that "Croatia was already in the European Union and that there were no more challenges ahead".
"It is the criticism in the report that represents another challenge for our government and the entire state leadership. There are several outstanding issues left that need to be resolved," Sanader said.