The article discusses how fiscal policies in European development countries before the financial crisis led to economic imbalances and vulnerabilities. The countries experienced high economic growth followed by significant declines, causing macroeconomic instability. Poor budget management, twin deficits, and reliance on foreign capital inflows worsened the situation. The study highlights the negative impact of pro-cyclical fiscal policies and lack of economic buffers on the countries' economies, leading to unsustainable current account deficits and financial instability.