Prime Minister Tihomir Oreskovic described Friday's meeting with union federation leaders as excellent, saying it was agreed to activate the Economic and Social Council and create a platform for dialogue.

"We discussed the state of the Croatian economy, with Finance Minister Zdravko Maric presenting the indicators, and we had an open discussion. I took the opportunity to present our programmes and the way we will reduce the debt, but the focus was on how to raise the living standards of all citizens," Oreskovic told reporters.

He said the European Commission had released a new economic forecast and that he thought the direction was positive. "It's necessary to increase GDP and reduce the debt and the deficit," he said, adding that it was necessary to see how to increase investments and stimulate small and medium enterprises.

Oreskovic said he would have an open dialogue with the unions. "They are our partners and that was the main topic, that we will deal with issues together and move forward."

Asked about a 6% base salary increase for public-sector employees, he said this was on the table and would be discussed but that it was very important for everyone to have a clear picture of the situation and that it was necessary to deal with the challenges.

Asked about a new war veterans' minister, Oreskovic said the position would be filled "in the shortest time possible", possibly next week.

Asked about the pledge made by the Croatian Democratic Union (HDZ) during the parliamentary election campaign that 1,000 euros would be given for every newborn, Oreskovic said the 2016 budget would be known by the end of March. "We need to see how to rationalise the budget. We'll increase it in some places and reduce it in others. The budget will be crucial for implementing reforms," he said.

As for downsizing the number of counties, he said it was necessary to make public administration more efficient. "All options are on the table," he said.

Asked if he would replace Security and Intelligence Agency (SOA) chief Dragan Lozancic, Oreskovic said he would decide about the right time for that together with the president. In the meantime, President Kolinda Grabar-Kitarovic's office said that she had signed a decision to relieve Lozancic of his duties because he had breached the law on the security and intelligence system.

Later in the day, the government told Hina that Oreskovic would decide on the president's initiative to replace Lozancic next week.

Under the law, a decision to replace the SOA chief is co-signed by the prime minister and the president. The president signed a decision to replace Lozancic this afternoon and forwarded it to the government. The government confirmed receipt and said the prime minister would decide on it next week.

Related stories

PM says every option possible to cut budget deficit

Deputy PM sees no reason for SOA head's dismissal

President: SOA chief has lost my trust

Intelligence chief Lozancic resigns

PM says will focus on intelligence agency chief next week

Latest news

Syrian opposition rules out future role for President al-Assad

The Syrian opposition said Friday it would not accept any role for President Bashar al-Assad in the future of the war-torn country, reacting to a recent US shift saying that removing al-Assad is no longer a priority for Washington.

Russian Army integrates breakaway forces of Georgian province

Parts of the small fighting forces of the Georgian breakaway province of South Ossetia have been placed under Russian military control, Russian Defence Minister Sergei Shoigu said on Friday.

Czech Republic's Pilsner Urquell beer is now Japanese

Japanese brewing company Asahi completed its takeover of the Czech brewery Pilsner Urquell on Friday, Asahi said in a statement.

Judge approves 25-million-dollar settlement of Trump University case

A US district judge on Friday approved a 25-million-dollar settlement of lawsuits and state fraud allegations against Trump University, the US president's now-defunct business venture.

Former Thai premier Thaksin to junta on reconciliation: 'Cut me out'

Former Thai prime minister Thaksin Shinawatra on Friday announced that he is not interested in the junta-led reconciliation process, three days after the junta handed him a half-a-billion-dollar tax bill for his past business deal.

Dalic: We welcome possible deal between Agrokor and banks

The government welcomes the possibility of an agreement being concluded between the Agrokor food company and creditor banks, and the bill on vitally important companies is not a fallback plan but the result of the government's care for the overall economic and financial stability of Croatia, Deputy Prime Minister and Minister of Economy Martina Dalic told a press conference in Zagreb on Friday.

Croatia, China sign action plan for cooperation in agriculture

The Croatian and Chinese ministries of agriculture on Friday signed an action plan for cooperation in the field of agriculture for the period 2017-2018, the Croatian ministry said in a statement.

ZSE indices up, Agrokor shares in focus of investor interest

The Zagreb Stock Exchange (ZSE) indices on Friday rose by more than 1.8%, with stocks of the Agrokor food and retail concern being in the focus of investor interest again.

Berlin police defend handling of Berlin market attacker

Berlin police defended themselves on Friday against accusations that they stopped surveillance on Berlin Christmas market attacker despite knowing in June 2016 he was dangerous.

Croatia, creditors tailor emergency measures to save tottering giant

Croatia's tottering retail and food giant Agrokor reached an agreement with its creditors, putting its debts standby and allowing it to continue working during emergency restructuring, the Croatian branch of Austria's Erste Bank said Friday.

Agrokor's creditors say standstill agreement to go into force today

A standstill agreement regarding the Agrokor concern's existing financial obligations to banks will take effect on Friday, additional capital will be injected into the concern in the coming days and the concern will be actively restructured, which includes a change of its management, it was said on Friday after a meeting between Agrokor's suppliers and creditor banks.

Palestinians, UN slam Israel's new settlement plan

Palestinians, Israeli activists and the UN lambasted the government of Israeli Prime Minister Benjamin Netanyahu on Friday, a day after it gave the go-ahead for the first new West Bank settlement in a quarter of a century.

South Sudan rebels release three abducted foreign oil workers

South Sudanese rebels have released three foreign engineers they abducted in early March in the oil-rich Upper Nile region, Foreign Affairs Ministry official Mawein Makol Arik said on Friday.

Turkish opposition: Imprisoned party chief has gone on hunger strike

The head of Turkey's pro-Kurdish opposition party has launched a hunger strike from prison.

European leagues threaten Champions League schedule clashes

The European Professional Football Leagues (EPFL) on Friday threatened schedule clashes on Champions League matchdays in an ongoing dispute with the governing body UEFA.

Danish court revokes citizenship of IS volunteer

A Danish appellate court on Friday stripped a man of his Danish citizenship for volunteering to fight for the extremist Islamic State in Syria.

Banks and Agrokor agree on key elements of standstill agreement

Member banks of the coordinating committee of financial creditors and representatives of the Agrokor food company have in principle agreed on key elements of a standstill agreement, which is expected to be signed later today, announcing changes in the company's management team, Erste Bank said in a statement on Friday afternoon.

Syrian man on trial in Sweden; mosque attack labelled terrorism

A Syrian man went on trial Friday in the southern Swedish city of Malmo, charged with terrorism and arson after an attack last year on a building used as an assembly hall by Shiite Muslims.