By Igor Ilic
ZAGREB (Reuters) - Croatian Deputy Prime Minister Tomislav Karamarko resigned on Wednesday and said his HDZ party, the biggest in the ruling center-right coalition, aimed to form a new government after a scheduled vote of no-confidence set for Thursday.
His resignation brings to a head a political crisis that has dogged the five-month-old administration of technocrat Prime Minister Tihomir Oreskovic and has hampered plans to improve Croatia's business climate and revive a moribund economy.
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Parliament is expected to back the motion of no-confidence filed by the conservative HDZ in Thursday's vote.
Earlier on Wednesday a state monitoring body accused Karamarko of a conflict of interest due to his wife's business ties with a consultant of Hungary's energy group MOL. Karamarko said his resignation had nothing to do with that ruling and that he would seek redress in court.
"Tomorrow we will hold a no-confidence vote against Prime Minister Oreskovic as this government is dysfunctional," Karamarko told reporters.
If Oreskovic loses the vote the government must resign.
"I hope Croatia will get a government aware of the (economic) difficulties Croatia is facing at the moment," Karamarko said.
Croatia has one of the weakest economies in the European Union, with high unemployment and public debt.
The Most ("Bridge") party, a junior coalition partner, has been pressing Karamarko to leave the government over the MOL affair.
MOL and Croatia jointly run the country's energy firm INA but are at odds over management rights and investment policy. They are involved in two separate international arbitrations. Karamarko has previously said he fears Croatia could suffer financially if it loses the arbitration cases.
"By expressing his personal views and suggestions on Croatia's withdrawal from arbitration with MOL, we found that Karamarko was in a conflict of interest," said Dalija Oreskovic who heads the state commission that handles such cases.
The HDZ has voiced confidence it can build a new parliamentary majority, but analysts believe this will be difficult to achieve without Most. The HDZ wants to nominate Finance Minister Zdravko Maric as prime minister-designate.
The main opposition party, the Social Democrats, have said they will support Thursday's no-confidence motion as they want a snap election as soon as possible.
If the government is voted out and no one can secure the support of a majority of deputies for the formation of a new cabinet within 30 days, President Kolinda Grabar Kitarovic must call a snap election.
(Reporting by Igor Ilic; Editing by Gareth Jones)