Croatia is embarking on a programme of political and economic reform which should see the Balkan state become a full member of the European Union by 2007, Mr Goranko Fizulic, the Minister for Economy of Croatia, told potential Irish investors yesterday.

Speaking at a New Investment Opportunities roadshow which was held in Dublin Mr Fizulic, said Croatia would begin free trade talks with the European Council of Ministers on June 13th.

"I am optimistic that the trade agreements will be implemented by summer 2001 and this is the first step towards joining the EU by 2007," he said.

Mr Fizulic said the new government in Croatia, which has been in power for some 100 days, was following a policy of promoting privatisation, attracting greenfield investment and creating a fully open economy.

He said the government was introducing a number of incentives to attract inward investment including reduced tax rates and streamlined legal provisions for foreign investors.

Mr Fizulic said the government was committed to privatisation and had set target dates for initial public offerings for several large state owned enterprises. These include Croatia Telecom, Croatian Insurance, the oil and gas company, INA and HEP, the domestic electricity company.

He said the biggest problem facing Croatia was an unemployment rate of some 22 per cent. However, inflation remained stable at around 4 per cent and gross domestic product would rise by 2.5 per cent this year and 5 per cent in subsequent years, he added. On his visit to the Republic, Mr Fizulic, met the Minister for Foreign Affairs, Mr Cowen, Minister for Finance, Mr McCreevy and the Tanaiste, Ms Harney, to discuss EU membership, trade and investment opportunities.