Croatia's fiscal position is not sustainable. Although the Fiscal Responsibility Act set up stronger fiscal policy parameters, the last year's increase in the primary budget deficit was contrary to the fiscal adjustment trends observed in most European countries. Public debt has also reached a critical level. This is why the next Croatian government will have to introduce long-term savings measures, either with or without the IMF. Only this could remove the threat of a fiscal and financial crisis stemming from a new, and no longer unlikely, external shock. The possibility of crisis spreading to other European countries due to the slow response to the Greek crisis is no longer a distant threat. A possible new escalation of the crisis would find Croatia unprepared, which means that the external fiscal shock would probably spread to interest rates. Yields on government bonds would react and lending rates would follow suit, as Croatia currently has no protective mechanism against adverse international scenarios. Public debt and primary fiscal deficit need to be sharply reduced, which would boost the economy through lower prices of capital and increased resilience to external disturbances.