Niue's 20 MPs have passed the island's first balanced budget in many years mainly by cutting the salary allowances for departments by ten percent.
Premier Young Vivian says they have been able to make the cuts without any job losses or reduction in wages.
"The tendency of departments is to over budget those items and money was saved from those particular items, and it normally comes back to Cabinet to be utilised in other ways."
The government had been offered an incentive from its main aid donor, New Zealand, if it could balance the books.
Mr Vivian says this additional three percent of aid money will be used to give workers a wage increase.