One of the widespread issues in today‘s economic practice is the term of borrowing. Borrowing is present both in the lives of individuals and businesses and therefore in the life of the state. In this paper, we will focus on public debt as a product of the state efforts to cover the budget deficit. Our considerations will be focused on the Republic of Croatia. The problem well tackle in this research is the fact that Croatia has long been in a group of over debt countries where the amount of public debt significantly limits the management of appropriate tax, i.e. fiscal policies that would require a concrete economic situation. From this definition of such research problem comes the subject of research. In our paper we will investigate the causes of public debt in Croatia, its movement and its structure. Special attention will be paid to public debt management. With this research, we prove that reducing of the existing level of indebtedness can be achieved by conducting an appropriate and sustainable public finance policy, and that the existing adopted public debt management strategy successfully works to optimize the public debt structure by minimizing the costs and risks associated with the public borrowing. Consequently, we‘ve set the following research goals: to define the term and role of public debt; to consider the theoretical and empirical aspects of public debt activities on economic growth; to analyse the trends of public debt in EU countries and to analyse the public debt of the Republic of Croatia. In this research we will use standard methods such as analysis and synthesis, induction and deduction, historical method, descriptive method, and statistical method.