The Government of Niue has confirmed that the country will be bankrupt in seven months unless it can cut costs by 20 percent.
Earlier this week the Government revealed that it had deferred the Budget, which was due to be tabled this week, and asked Heads of Departments to look again at how they could make savings.
A key cause of the problem is that Q-Tel, the company which is leasing Niue's surplus phone lines, has not paid bills of nearly three quarters of a million US dollars. .
Opposition MP Terry Coe says much of the blame must be directed at the Lakatani Government's handouts, pension increase and ten percent across the board cost of living adjustment.
Mr Coe says a 20 percent salary cut would work because the wage bill is nearly five million US dollars.
"And we are talking about everyone having a cut, or going to some other extreme like putting a lot of people off. I think people, if they knew the reasons, would probably - they wouldn't take it lightly - but would have to accept the cuts"