By Igor Ilic
ZAGREB (Reuters) - Croats choose a government for the second time in less than a year on Sunday, and polls predict a close outcome and another coalition that lacks a clear mandate to push through painful cuts and restructuring being urged by European authorities.
A Social Democrat-led four-party alliance stands to win about 60 of 151 seats in a fragmented parliament, while its conservative rival, the Croatian Democratic Union (HDZ), should be a few seats behind, polls say.
That would leave them seeking support from the centre-right Most (Bridge) party, also the kingmaker after last November's elections, which wants to end the 20-year dominance of the big parties, which it accuses of clientelism and corruption.
The previous HDZ/Most coalition collapsed after just five months amid rows over political appointments, public administration reforms and a conflict of interest case.
Under former Prime Minister Zoran Milanovic, the SDP hopes to wrest control from the short-lived technocratic government, but the HDZ hopes a new leader, European Parliamentarian Andrej Plenkovic, can make up lost ground and renew the coalition.
Any government will face an enormous task in revitalising one of the European Union's weakest economies, where state enterprises still dominate and red tape discourages private investment.
Three years after joining, the country's record on drawing down European funds is poor, a waste of free money that points to glaring public administration shortcomings, contributing to macroeconomic imbalances seen as excessive by the European Commission.
Yet a government that may need the help of even smaller, populist parties to govern may have every incentive to shy away from pushing through reform measures.
"Most of our politicians are not really interested in the economy," said one economic official. "Now we have some growth and a lower budget deficit, there is a risk that reforms will remain tepid."
Parties offer few details on how to deliver promised higher standards of living for Croatia's 4.3 million people, where unemployment runs at 13 percent. All promise lower taxes to be financed by expected higher growth.
With public debt at 85 percent of gross domestic product, Croatia is spending about 3.5 percent of GDP on interest payments alone. Growth is finally accelerating after six years of recession ended in 2014, but the 2.5 percent expected this year is not enough to raise living standards, analysts say.
"Our current growth potential is 1.5-2.5 percent, but we need at least 3.5-4.0 percent for new jobs and better living standards," said Raiffeisen analyst Zrinka Zivkovic Matijevic.