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Nov 26, 2007 16:08 EEST
(updates results, adds market reaction, S&P statement)</p>ZAGREB
November 26 (SeeNews) - Croatia's ruling conservative HDZ party has a lead of around two percentage points ahead of main opposition Social Democrats after Sunday's parliamentary elections, partial results indicated on Monday afternoon.
"HDZ gets 34.78% while the [Social Democratic Party] SDP has 32.46% under partial preliminary results announced by the state electoral commission," state-run radio broadcaster HR Prvi Program reported. The preliminary results were based on 96% of the ballots counted.
Whichever of the two main contenders wins, it will need to seek to enter a coalition with smaller parties to form a cabinet.
Several other political formations had passed the five-percent threshold to enter parliament: liberal Croatian People's Party (HNS); a coalition of the Croatian Social-Liberal Party, the Croatian Peasant Party (HSS) and thier partners regional parties PGS and ZDS; pensioners’ party HSU; euroskeptic Croatian Party of Rights (HSP); regional parties Istrian Democratic Assembly (IDS) and HDSSD. Ethnic minorities vote for eight of the 150 to 160 seats in the unicameral parliament.
Global rating agency Standard & Poor's said earlier on Monday that the results of the post-election talks that will determine who forms the next Croatian government will not have a direct impact on the sovereign credit ratings on the Adriatic country. Croatia has a foreign currency BBB/A-3 and local currency BBB+/A-2 ratings, both with stable outlook.
Prime Minister Sanader announced election victory for HDZ on Sunday night, while the head of the SDP, Zoran Milanovic, said his party was preparing to form a government.
"I’ll give a mandate to those who can confirm the support of 77 members of Parliament," HR quoted President Stjepan Mesic as saying.
"HDZ is the relative winner but who will get mandate is another story. Tonight we failed to understand who will lead Croatia in the next four years," the radio reported.
The Croatian bourse’s share index Crobex was lifted on Monday by the news of HDZ's lead, because HDZ is opposed to the introduction of a capital gains tax, traders said.
Analysts have agreed that risks for the country's economic stability from a change in government after the elections are low, as the main challenges ahead of the new cabinet - fight against corruption, restructuring of the economy, reforms of the judiciary and the public administration - are all determined by Croatia's EU accession process.
Croatia started EU accession talks in October 2005 and hopes to join the bloc by the end of the decade. The country expects to receive an invitation for NATO membership next year. Both SDP and HDZ support Croatia’s membership of the EU and NATO but SDP says a referendum should be held to decide whether the country should join the military alliance.
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