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M. Continuo

Croatia's kingmaker party wants PM-designate by Tuesday


    ZAGREB (Reuters) - A Croatian party left holding the balance of power after close elections told other movements to reach a deal on forming a new government by Tuesday or face a new vote.

    "We will know the prime minister-designate on Tuesday or there will be a new election. There will be no procrastination any more," said Bozo Petrov, leader of the "Most" party, whose name in Croatian means "bridge".

    Croatia is the newest of the European Union's 28 members, and its economy is among the weakest. It is under pressure from the European Commission to pursue swift reforms to encourage investment, reduce unemployment and restrain public debt, which is running close to 90 percent of gross domestic product.

    Delay in forming a government, or failure to enact reforms, could lead to further downgrades in Croatia's credit rating and make it harder and more expensive for it to borrow on international markets in coming years.

    The Nov. 8 election gave the opposition conservative HDZ party 59 seats in the 151-seat parliament, three more than the incumbent SDP-led, centre-left coalition. Most, without which a new government cannot be formed, won 19 seats, but this was later reduced to 15 due to internal squabbles.

    Most said it favoured a reformist government comprising all three sides and a technocrat prime minister, but was ready to side with one of the major parties if the other rejected its conditions. First the conservatives and then the Social Democrats agreed to discuss these terms, and talks are scheduled to start on Friday.

    President Kolinda Grabar-Kitarovic will nominate as prime minister-designate a person who can command the support of at least 76 parliamentary deputies. If no one can do that, she must call a new election, but there is no legal time limit for her to take such a decision.

    She will hold a fourth round of talks with all the parliamentary parties on Tuesday.

    Most, founded three years ago and made up of municipal politicians and independents, says its aim is to overhaul the public sector and judiciary, reduce tax pressure on businesses and tame the country's rising public debt.

    Croatia is rated BB by Fitch and Standard & Poor's and Ba1 by Moody's, with a negative outlook.

    (Reporting by Igor Ilic; Editing by Mark Trevelyan)