Vettel's contract with Aston Martin ends this year and, when asked about his future in Imola, the former world champion said he had not yet made a decision, while acknowledging that he can't wait too long before telling the team of his intentions.
He also made it clear that his decision will be influenced by the progress that the troubled team makes in 2022, noting "it will depend on obviously how this year goes, and then take it from there".
Krack stressed he understands that Vettel wants to see the team move up the grid before making a longer-term commitment.
"I'm not going to speak about contracts here but obviously if you have a driver like Sebastian Vettel, that you can keep motivated by giving him the car that deserves the quality of his driving, I think you would be foolish not to try to retain him," he said.
"But I 100% understand his comments. He wants to see progress, he wants to see the car moving forward, because he's not a driver that wants to fight for P18 or P16 or whatever, so I fully understand his comments and it's up to us to deliver the tool that is needed for him to perform."
Krack, who worked with Vettel in his early days in Formula 1 with BMW Sauber, said that he's been impressed with the German's commitment.
"He has a very, very competitive approach, despite the big success that he was always already having. He has a very high work ethic that I really share and that I really appreciate.
"There is no time of the day where it's too late to work or to have some input so from that point of view, it's a pleasure to work with him, because, first of all, he's what I described already.
"But then also he's a nice guy, he's a nice fellow and he understands where our limitations are at the moment, but he doesn't stop pushing, and he is realistic about what we do.
"So it's a matter of trying to merge what we think we have to do, what he thinks we have to do and be open, transparent, have good conversations and move on."
After dropping from ninth on the grid to 13th at the flag on Saturday's Imola sprint event, Vettel admitted that it was impossible to keep quicker cars behind with the car he now has.
"It was a shame that there was a whole train behind me!," he said when asked about his race by Motorsport.com. "So it was one after the other in the end, and I struggled with the tyre. So we got eaten up.
"There are obviously our limitations that we know. And we understand fairly well by now. But yes, still, every lap helps. So we see what we can do tomorrow. We're not far from the points. Who knows what the weather brings? So we need to be sharp."
Regarding the team's current form, he added: "It's been a tough time. I think understanding where we are, having the limitations, being so far away from where we should be with the car, not being able to run it where we want to, we're not the only ones.
"As I said I think we understand now, and we have a direction, but it takes time obviously to put it on the car."
