FACTBOX: Main issues in Croatia's parliamentary election

ZAGREB (Reuters) - Croatia holds a parliamentary election on Sunday, seen as a tight race between the ruling conservative HDZ and the Social Democrats (SDP).

Following is an overview of key issues facing the new government in the European Union candidate country of 4.4 million people.

EU/NATO MEMBERSHIP

Both main parties support joining the two blocs, but the SDP wants to hold a referendum before joining NATO, noting that only some 40 percent of Croats are in favor.

The HDZ wants to join the EU as quickly as possible, while the SDP plans to focus on quality of domestic reforms and ask Brussels for more time to implementing particularly complex parts of EU legislation. Both parties want EU membership during the next government's term in office.

The main issues remain the reform of the judiciary, seen as inefficient, prone to corruption and political manipulation, and of the oversized public administration. Both parties promise faster reforms and zero tolerance for corruption.

FISCAL DEFICIT/FOREIGN DEBT

Foreign debt stands at 85 percent of GDP and public spending accounts for almost half of GDP. Croatia also runs a huge trade deficit of some $10 billion a year, which is only partly offset by tourism revenues, accounting for some 20 percent of GDP.

The HDZ wants to continue fiscal tightening and reach a balanced budget by 2010, while the SDP wants to keep the deficit at below three percent of GDP for a few more years, and use it to boost production.