The purpose of this thesis is to explain the treatment of the transactions related to general government deficit and debt according to the ESA 1995 rules, to examine the content of EDP notification tables, the process of its compilation and the deadlines in which the EDP notification has to be submitted to Eurostat for its control and approval. The thesis explores the main methodological standards of Government Finance Statistics 2001, its comparability with the European System of National Accounts 1995, and reviews the current state of play of government finance statistics in Croatia. Research results show that the implementation of the key methodological adjustments has contributed for having a better insight and overview on government finances. Consequently, a significant improvement in the quality of statistical basis used for better decision-making on fiscal consolidation measures was achieved. The analysis of fiscal position of EU Member States was carried out, together with the comparative analysis on the levels of government deficit and debt before and after the adoption of excessive deficit procedure, the analysis of the causes for opening excessive deficit procedure and the estimation of the effects of the adopted policies from EDP on Member States’ government finances before and after the abrogation of EDP. The targets set by the European Commission regarding the levels of Croatian headline deficit and debt could be achieved only by strong fiscal consolidation measures, especially on the expenditure side of the national budget.