Croatia's government, private sector and unions have agreed on most of the terms of a "New Deal" for the country's economy embracing a range of tough measures to keep money in the country and ride out the global financial crisis, while prime minister Ivo Sanader has said that needs no assistance from the International Monetary Fund.

Croatian and international news agencies reported that president Stjepan Mesic, addressing a gathering of economists in Opatija, credited Croatia's central bank for ensuring the stability of the country's financial system for several years.

However, he warned that a withdrawal of foreign banks could mean that the country would have difficulty servicing old loans. Croatia has enormous foreign debt, estimated at 90 per cent of gross domestic product.

Money earned in Croatia should stay in the country be reinvested to preserve and create jobs, as well as to promote exports, Mesic said.

The "New Deal", on which Sanader called for a national consensus, envisages a freeze on salary increases, no festive season bonuses, a zero per cent national budget deficit, and an effective freeze or reduction in all budget-funded spending except pensions, health care and social contributions.

At the November 11 2008 meeting, private sector employers agreed that private companies will not give managers benefits and would cut spending on business trips and other items such as business lunches.

Unions are discontented at the prospect of a freeze on salary increase. Union federation leader  Kresimir Sever said that it is always those who have the least, meaning workers, who are most affected, Croatian news agencies reported. A working group including representatives of unions, employers and government ministries was set up to address the issue.

Sanader said that while economic growth would slow, to an officially revised forecast of between two and three per cent, no help would be needed from the IMF.

He said that the national budget would be more restrictive in the light of the global economic crisis.