It is up to us to quickly solve problems that nobody has wanted to seriously deal with for the past 20 years out of political fear that they would displease somebody, he said, adding that at this stage, the government would probably manage to rescue the shipbuilding industry.
Milanovic said Croatia could have been around the zero mark or post a primary surplus if it were not for the interest to be paid on debts.
He said Croatia's problem was that it spent more than it earned and that it was time to stop taking things for granted so that "we can have more than we have now" in the near future.
We have an emergency situation, not one of panic or unrest, but we have to realise that we have to make changes, he said.
Milanovic said his government had wanted to change the excessive salary mass in this year's budget but was not particularly successful. The reason for that is that Croatia is a law-based state, contractual obligations with unions exist and these have to be honoured until legislative conditions for a different situation are emplaced, he added.
Milanovic said this year's budget expenditures were exceeded but revenues were underestimated, as HRK 1.5 billion more than planned was collected, adding that the government tried to facilitate the situation in the economy with a series of measures, yet managed to collect more from contributions than in 2011 "through constructive pressure."
The PM said the government predicted a 1.8 per cent growth for 2013, although it failed in its prediction of a 0.8 per cent growth for this year.
Next year will be difficult in Europe, growth rates in all of southern Europe will decline, yet foreign analysts predict a growth in Croatia, although lower by the month. We are around zero whereas others, on whom Croatia depends for exports, tourism and most of its activities, are below zero, said Milanovic.
He said the European Union's decision yesterday to write off part of the Greek debt was a big turnaround which would impact Croatia as well, but stressed that it was primarily up to Croatia to ensure growth.
Tourism saves our balance of payments and next year we plan up to HRK 4 billion in investments in the public sector but without the private sector's initiative, this won't be enough to achieve growth, said Milanovic.
Former PM Jadranka Kosor from the opposition HDZ party criticised him for talking about difficulties in reducing the salary mass although when he was in the opposition he signed a petition against amendments to the Labour Act.
Milanovic said Croatia's Labour Act was not more rigorous than in other states and that the problem was that the previous government "didn't carry out even one reform."
Djuro Popijac of the HDZ asked what exactly the HRK 900 million envisaged for restructuring the shipyards would be spent on.
Milanovic said the HDZ-led government did nothing to restructure the shipyards, failing to initial even one privatisation agreement. He said that in democracies it was impossible to make anyone buy something without offering something in return, which his government was working on.
(EUR 1 = HRK 7.5)