Reuters International

Croatia's Prime Minister-designate Tihomir Oreskovic, new First Deputy Prime Minister Tomislav Karamarko and new Deputy Prime Minister Bozo Petrov (R-L) seek approval for the new government in the parliament in Zagreb, Croatia, January 22, 2016. REUTERS/Antonio Bronic

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By Igor Ilic

ZAGREB (Reuters) - Croatian Prime Minister Tihomir Oreskovic urged his two deputies on Friday to resign over a political dispute in which they are both embroiled so that the government can press ahead with crucial economic reforms.

An alleged conflict of interest involving Tomislav Karamarko, head of the biggest party in the ruling coalition, the conservative HDZ, has brought the four-month-old government close to collapse..

Bozo Petrov, head of 'Most' (Bridge), a small reformist party in the coalition, has been pressing Karamarko to quit.

"Relations between Karamarko and Petrov became too big a burden for the government. That's why I call upon them to withdraw so that the government can continue working on reforms as we are already seeing results," Oreskovic, a technocrat prime minister, told reporters.

Croatia this week put on hold an international bond worth one billion euros (770.85 million pound) due to the political crisis.

"I decided to stop the sale as I did not want us to pay an additional premium for this political risk. I believe that maybe already next month we could achieve better terms. At the moment it is clear that this political situation has started to threaten key national interests," Oreskovic said.

He added he did not plan to resign as some local media have recently speculated.

The Croatian parliament is due to hold a no-confidence vote over Karamarko by June 18.

The government has vowed to pursue reforms in order to spur growth and cut high public debt. It includes better investment climate, cutting red tape and tangible fiscal consolidation.

(Reporting by Igor Ilic; Editing by Gareth Jones)

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