New Zealand has thrown its support behind the Nauru government since it pledged to improve its international reputation on respecting separation of powers.
Earlier this year Nauru deported its resident magistrate and cancelled the visa of its chief justice, and accused them of cronyism.
The chief justice, Peter Eames QC, criticised the state of transparency and called it an abuse of power.
A media adviser to a former government was also deported, after the justice minister passed special legislation.
Since government officials met with the New Zealand foreign ministry in New Zealand, Mr McCully says he has confidence they will implement changes and says cutting New Zealand funding would be too harsh.
"The chief justice is entitled to her own views as a judicial officer, but I've got to take a somewhat wider political view. The justice sector support we've given Nauru is the only significant programme we have. Australia does pretty much everything else. It would be a big call for us to pull out completely."