By Igor Ilic
ZAGREB (Reuters) - Croatia's president said on Tuesday she would nominate a prime minister-designate on Wednesday or call new elections, paving the way for the main opposition conservatives to form a cabinet together with a small reformist party.
She acted after the reformist Most (Croatian for "bridge") party renounced coalition talks with the outgoing Social Democrats (SDP), accusing them of trying to poach some of its members following the inconclusive election held on Nov. 8.
Croatia, the newest of the European Union's 28 members, is under EU pressure to enact economic reforms to spur investment and any delays caused by political deadlock would risk further crippling downgrades in its credit rating.
President Kolinda Grabar-Kitarovic said the conservative HDZ party and Most had now shown they had support of 78 deputies in the 151-seat parliament, just over the minimum required for a governing majority.
"Tomorrow I will hold the last round of consultations and we will have the prime minister-designate, or I will call a new election," Grabar-Kitarovic said at the end of a fourth round of talks with parliamentary parties.
Most has become the former Yugoslav republic's coalition kingmaker with 15 seats, enough so that no party can form a cabinet without its support. Since the election, Most has held talks with both the SDP and HDZ.
"We will make an effort to agree on a non-party technocrat prime minister which will reflect a composition of the whole government. It should be an expert and reformist government," HDZ leader Tomislav Karamarko told reporters.
The November vote gave the HDZ 59 seats, three more than Milanovic's centre-left bloc.
Most leader Bozo Petrov said the SDP had tried to convince some Most deputies to join them in the event that talks on a coalition government failed. "We cannot have confidence in such a partner," Petrov told reporters.
Prime Minister Zoran Milanovic, the SDP leader, denied the accusation and said his party had accepted almost all of Most's conditions for a future cabinet during several rounds of talks.
"The claims about poaching don't sound very convincing as no proof has been offered. I think Most did not want a coalition with the SDP and fears a new election. The coalition with the HDZ may be stable but its reformist potential has yet to be seen," said political analyst Berto Salaj.
He said neither HDZ nor Most had so far offered anything more than vague readiness for pursuing reforms needed to revive one of the weakest EU economies.
EU officials say Croatia must liberalise its economy to encourage investment and restrain public debt, which is running close to 90 percent of gross domestic product.
The economy is set to grow about 1.5 percent this year after losing 13.1 percent of its overall output from 2009 to 2014.
(Editing by Mark Heinrich)
