The public debt has grown from 29.3% of GDP in 2008 to 52.9% this year, which is why the amount paid for interest goes up, to HRK 9.4 billion in 2013 and HRK 10 billion in 2014, said Linic.
Prime Minister Zoran Milanovic said Croatia could not indefinitely endure the more expensive borrowing resulting from public debt growth.
Interest accounts for the whole deficit cannot be an excuse for the government, it must know how to deal with it, he added.
Milanovic said the government did not opt for privatisation out of desperation but to rehabilitate state finances and this money will go to pay debts. He said the goal was not to sell state-owned companies but find good partners that would inject fresh capital in them and enable them to be more successful.
He recalled last week's acquittal of Croatian generals at the Hague war crimes tribunal, saying a line had been drawn under a period of history and that "now we can deal with what makes the difference between success and failure."
The draft 2013 budget is "the end of the beginning of our job. The beginning was to send out the message in 2012 that we are in control of finances and act sensibly, but in 2013 we have to show citizens and investors that this is a serious state with a serious approach to work," said the PM.
He said that in 2013, the government would have to explain to public sector unions what was possible and what was not. He said the government was ready for dialogue, even protests. "I'm willing to take on the burden and explain what is in Croatia's interest."
Regional Development and European Union Funds Minister Branko Grcic said the 2013 draft budget would lead to fiscal consolidation and primary surplus, namely to spending what was earned, without interest costs. This means that cutting budgetary costs will be increasingly difficult and that economic recovery is the only way to maintain a stable budget, he said.
Grcic announced that a new public investment plan would be presented in about 10 days, saying those investments would be higher than this year, as well as a reform plan. He said much more attention would be paid to private investments and investment through EU funds, notably in the rail sector, water supply, and big regional landfills.
Foreign Minister Vesna Pusic recalled that upon joining the EU next year, Croatia would be able to draw HRK 4.8 billion kuna.
(EUR 1 = HRK 7.53)