In the Federated States of Micronesia, workers in Chuuk State's public service could be laid off work as a cost cutting measure.
The Finance Minister, John Ehsa, says a 25 million US dollar debt incurred by the Chuuk administration could mean across the board redundancies for public workers.
This comes as the FSM government stepped in to help Chuuk out of its financial difficulties.
The Chuuk administration, which is the largest state government in FSM, admitted overspending on infrastructure development and over estimating the amount of revenues it will receive this fiscal year.
Mr Ehsa says the Chuuk administration cannot afford to pay public workers their full salary and reduced working hours will implemented.
He says if those cost cutting measures fail then redundancies are likely.
"There is the likelihood of redundancy and also overstaffing ...there is a certain number of contract employees working there for some time.......The nation has completed a public sector reform however you know some of the reform targets in terms of personnel and personnel costs for the state of Chuuk - they have increased."
FSM's Finance Minister, John Ehsa