The newly re-installed Government in Nauru is cutting scholarships for elite students to study in Australia.
President Ludwig Scotty has been unanimously re-elected following Saturday's snap general election.
His reformist government has already passed the Budget which aims to cut Government spending.
Finance Minister David Adeang says it will cut public sector wages and re-assess wages policy to fit the government's ability to pay.
He says there will also be increases in import duties and more user pays of government services, including an end to funding of a Nauruan elite to attend leading private colleges in Australia.
Mr Adeang says the scholarship spending means some Naurauns miss out on basic education.
"most of the resources for education were directed towards scholarship students being schooled in Australia, whilst everybody here, we couldn't buy them pens, books, teachers were not being paid,. while a handful of elite students were being schooled in Australia at costs that were simply too onerous for Treasury to bear."