Due to join the European Union on July 1, 2013, Croatia relies heavily on its Adriatic-based tourist industry, which accounts for almost 20 percent of its gross domestic product.

The Balkan country has strongly invested in developing its highway network in the last 10 years, with most of it financed via long-term loans.

However, state-owned road management and construction firms have considerably contributed to the rising general budget gap in recent years and have been the target of several corruption investigations.

"This is a step towards stabilising their business. But those companies will have to start acting like profit-driven firms," Transport Minister Sinisa Hajdas Doncic told T-portal website before the decision was publicly announced.

The one-way toll for a 380-kilometer stretch from the capital Zagreb to the southern Adriatic city of Split will from June 1 cost 180 kuna, up from 157 kuna.

The road companies need to secure funds for repaying debts in the coming years. Their income depends mostly on the heavy traffic in the summer months, which dwindles from October to April.

Croatia is struggling to recover after three years of recession but the government also wants to reduce the general budget gap to around three percent of GDP from more than five percent in 2011.

(Reporting by Igor Ilic; Editing by Zoran Radosavljevic and Toby Chopra)

• A Permanent Economic Emergency