"It's not about money, it's about principles," he said regarding the negotiations on the EU budget for the 2014-20 period which he was attending in Brussels.
British PM David Cameron and German Chancellor Angela Merkel hope for deeper overall spending cuts, while France and Poland seek smaller cuts than planned in farm subsidies and regional development funds, CNBC reported.
"Given the amount of tension among the EU members and the opposing positions on the philosophy of spending, I'm not very optimistic," Milanovic told CNBC. "It's not about money, it's about principles, it's about elections, it's about conveying a message to the electorate."
Milanovic said that informally he was in the same camp as France and Poland and that any extra money for the EU budget was crucial for cohesion funds, regional funds and real-life programs for countries like Croatia.
On July 1, 2013, Croatia will become the 28th member of the EU at a time when others are stumbling over whether they want to remain in the euro bloc, but Milanovic said Croatia had been waiting 20 years to join, reported CNBC.
"We have to put our public finances in order, we have to reduce public spending altogether. We are business friendly and my goal is to consolidate the country fiscally."
Milanovic underlined that both Moody's and Fitch rating agencies had given Croatia an investment grade rating but stressed he was still pushing to be in the top tier of European countries.
CNBC recalled that three days ago former Croatian PM Ivo Sanader was jailed for ten years for taking bribes, saying the case has been closely watched by the EU in order to make sure the country deals with corruption.
"There was a long history of corruption, we are erasing that, we are changing the game altogether," Milanovic said.
Speaking of the money Croatia is expected to receive in grants from the EU in the next eight years, he said, "There are two pillars... European cohesion funds because its 'quid pro quo' - it matters, we need to get something in return because we are opening ourselves altogether. And private investments, because the state investments, public sector investments, will not make a fundamental difference. I'm a social democrat but I know the rules of the game."
Milanovic would not say if Croatia would join the euro zone after joining the EU. "I don’t know. It's in the schedule, it's on the timetable but let's see what happens and how the story unfolds. In the meantime we have to clear the house."