Prime Minister Andrej Plenković delivers his annual report (Patrik Macek/PIXSELL) Prime Minister Andrej Plenković delivers his annual report (Patrik Macek/PIXSELL)

The Prime Minister said his government was trying to generate economic growth through a three-pronged approach – structural reforms, investments, and responsible fiscal policy.

“Another words, we have to work harder, invest more, and manage our budget more wisely. We are rapidly reducing our public debt, which should fall to 75.4% of our GDP by the end of the year. We plan to reduce it further to 65% by 2021. In 2017 we had a budget surplus of 2.75 billion kuna. In the first six months of 2018, we generated a surplus of 1.6 billion kuna. We promised a pension hike of 5%, and we've already raised pensions by 6.3% during our first two years in office. We will continue to work on making a fairer and sustainable pension system, while continuing to raise pensions at the same time,” Plenković said, touting some of the government’s key achievements.

In addition to the budget surplus, the Prime Minister said Croatia had achieved another record-breaking year in the tourism industry. He said the next round of tax reform would give taxpayers and businesses a 2.7B kuna tax break.

He also underscored that key reforms were still to come in the pension system, health care, and education. The LNG terminal on the island of Krk, the Pelješac Bridge, and the modernization of Croatian Railways, were the government's key infrastructure projects, he said. Addressing recent concerns about information leaks from the police and intelligence services in the wake of several related scandals in which members of his party have been implicated, he vowed that no one was above the lay.

Finally, Plenković addressed the elections in Bosnia and Herzegovina, saying the will of the Croatian people had been deceived with the election of Željko Komšić to the country's tripartite Presidency because Komšić had won by a majority of votes cast by Bosniacs, who far outnumber Croats.

The opposition did not respond positively to the report. Some MPs said the PM's assessment was a fairy tale, others called for snap elections.

"After the PM's speech one would think we are living like Alice in Wonderland, but we are at the bottom of the EU," said Most MP Miro Bulj. His Most colleague, Božo Petrov, said the economic growth generated last year wasn't even enough to cover the interest on the loans the government borrowed last year.

"This report is nothing but deceit and lies, a farce. It deserves nothing short of snap elections right now," said Social Democrat Davor Bernardić.

"Since independence, no government has shown a greater capacity for reform than this one," said HDZ MP Branko Bačić, defending the government.

Istrian Democratic Assembly MP Boris Miletić criticized the government for trying to save Agrokor but neglecting the shipbuilding industry.

"If you push Uljanik into banruptcy by doing nothing, you can forget about rezoning the docks!" Miletić threatened.

Miletić was referring to the troubled Pula shipyard which occupies a prime strip of real estate on the city's waterfront. Opposition lawmakers also criticized the government's education reform program, saying it did not reflect the needs of the labor market. They also said the judiciary was weak, corrupt and shielded powerful politicians.

The government's coalition partners, minority MPs, expressed concern that the country was veering to the far right and that relations with Croatia's neighbors were souring. However, they said they still supported the government.