The fiscal deficit, and especially public debt, is an issue that has burdened all developed economies over the last decade. With the rapid globalisation, as well as the opening of the global financial market, borrowing to cover annual budget deficits has become a standard fiscal practice. Republic of Croatia is not an exception to this practice, and its national economy has been burdened by a public debt which exploded with the global financial crisis of 2008. A similar situation took place all across the European Union where national governments reached out for debt mesaures to save the shaky financial sectors. Some countries are, as a result of excessive and uncontrolled borrowing, faced with so called debt crisis that disrupts macroeconomic balance and leaves serious consequences on the entire economy. Although macroeconomic tendencies have recently promised recovery and balancing of the fiscal policy, public debt is still a giant burden that holds the Croatian economy at the very bottom of the European Union. Its reduction requires a strict budget regime, and often a fiscal burden that negatively affects personal and business consumption in the economy, adversely affecting the aggregate cycle in the economy. In recent months, the current debate on the introduction of the euro as an official currency has been ongoing, but in order to achieve this, Croatia has to fulfill the Maastricht criteria, two of which are directly concerned with fiscal consolidation and the balancing of public finances. The aim of this paper is to analyze the budget deficit and growth of public debt in the Republic of Croatia, explaining its impact on macroeconomic trends, and to compare the fiscal imbalance in the Republic of Croatia with the selected EU members.