The Niue government is being praised by its main aid provider for taking action early to try and overcome a budget blowout.
Niue faces a deficit of around a million US dollars and is planning to cut some services and put workers on reduced hours.
The plans have met with opposition, with some saying the government should first end costly overseas travel for ministers and other perks for members of parliament.
But the head of the New Zealand Ministry of Foreign Affairs' Special Relationship Unit, David Patton, who is on the island this week for talks, says, while it is a serious situation, the Niue government is acting responsibly by trying to deal with the problem before the financial year ends on June 30.
"Together with New Zealand it has been looking at how it might do this. But the government of Niue is the one that has come forward and said this is what needs to be looked at, and it's the one that is putting forward a range of proposals for its assessment."