The Croatian government on Friday banned Christmas presents and parties in state and public firms as a belt-tightening step in the wake of the global financial crisis.

`For that goal we forbid buying of Christmas and New Year`s gifts as well as organising of Christmas and New Year`s receptions,` Prime Minister Ivo Sanader said at a government meeting.

He also urged state-run companies to cut all expenses.

Earlier this week the government proposed that public sector salaries be frozen in 2009 to overcome the consequences of the global financial crisis.

`I believe that with the proposed measures ... we can avoid a deeper crisis within the next year,` Sanader said.

Croatia`s public services and state administration employ some 250,000 people whose average salary in September was 5,700 kunas (798 euros, 999 dollars), almost 15 percent more than the overall average in Croatia.