The grey economy in Croatia, according to some estimates, accounts for 20-30 per cent of the Gross Domestic Product, Economy Minister Djuro Popijac said at a government meeting in Zagreb on Thursday.

Popijac said that the grey economy was one of the main ailments of the national economy and that it posed a serious threat to the legal economy.

Popijac was presenting a bill for the prohibition and prevention of unregistered business activities, which was sent to Parliament.

The bill was proposed on the initiative of the Croatian Chamber of Trades and Crafts, because small businesses are most affected by unregistered activities. It provides for fines of up to 50,000 kuna for offenders.

Also at today's meeting, the government decided to donate 3.5 million kuna in financial aid to Japan to help alleviate the consequences of a devastating earthquake and tsunami that hit that country last week.

The aid would go through the activities of the Red Cross. The government also offered accommodation in holiday resorts in Croatia for Japanese mothers with children, and medical treatment at the Rebro hospital in Zagreb.

The government set up the Croatian Committee for Investment, an advisory body that would recommend measures to improve the investment climate and remove barriers to investment.