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Nauru government runs out of money, may shut services
Topic Started: 28 Sep 2014, 06:53 AM (729 Views)
peter fraser
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Nauru government runs out of money, may shut services
By finance reporter Elysse Morgan and staff
Updated Fri at 10:33pmFri 26 Sep 2014, 10:33pm
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Nauru's finance minister says the country is out of money and services will soon start shutting down, including those for refugees.

Two years ago a court ruled that Nauru owed $16 million to a US-based fund manager, Firebird.

It refused to pay and that debt has grown to $30 million.

The government's bank accounts with Westpac have now been frozen, leaving it with only the cash it had on the island.

Nauru is seeking to overturn the decision and urgently free up the funds.

Nauru's government says it has had to fly its employees offshore with cash to pay overseas suppliers.

In an affidavit, the country's finance minister David Adeang told the NSW Supreme Court that the island would shortly run out of cash, after making its latest round of government salary payments this week.

The minister says Nauru will not be able to make any further salary payments, which will affect almost half of Nauru's population who are employed by the government, and have a large flow on impact to the island's tiny economy.

Nauru would also have no money to buy fuel for generators, affecting the hospital and desalination plant.

The minister says planes would be grounded, meaning Nauru will not be able to transport health, legal and other contractors to the detention centre, which he says will have a severe impact on the physical and mental health of the approximately 1,200 refugees living there, plus 200 more living in the community.

However, a Nauru government spokesperson says no services have yet been affected.

The court case starts on Monday.
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Lef-tee
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One of the perils of adopting a foreign currency - I believe they use the $AUSD - as your national currency. Mind you, I'm not sure why enough people would want enough Nauru dollars to make them worth anything much in foreign exchange and they are so physically tiny that they lack much in the way of real resources that I often wonder if there is a cut-off point where a first-world existence becomes un-viable.
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peter fraser
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Lef-tee
28 Sep 2014, 07:07 AM
One of the perils of adopting a foreign currency - I believe they use the $AUSD - as your national currency. Mind you, I'm not sure why enough people would want enough Nauru dollars to make them worth anything much in foreign exchange and they are so physically tiny that they lack much in the way of real resources that I often wonder if there is a cut-off point where a first-world existence becomes un-viable.
They were once a wealthy nation but then the phosphate ran out.

If they had just discovered real estate as an export commodity they would have been saved.

Seriously we will probably have to bail them out or take them in as a protectorate, otherwise we will get all those refuges back.
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Lef-tee
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Well then it looks like maybe they do have something after all - a powerful political bargaining chip :)
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DragonGM
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Australia will support Nauru until all the refugees are in Cambodia and then the island will be left to sink it's own debt.
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Lef-tee
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DragonGM
28 Sep 2014, 08:18 AM
Australia will support Nauru until all the refugees are in Cambodia and then the island will be left to sink it's own debt.
Very possibly.
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peter fraser
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DragonGM
28 Sep 2014, 08:18 AM
Australia will support Nauru until all the refugees are in Cambodia and then the island will be left to sink it's own debt.
Nauru apparently doesn't have a titles system for real estate - it's mostly word of mouth with houses and huts passed on from generation to generation, so property ownership is very hazy.

Foreigners won't invest in hotels, industry etc unless they can buy an asset that is clearly established as their own property. Until Nauru gets its act together it will remain a basket case.
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Foxy
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Zero is coming...

Nauru was once a country with the highest net worth per capita.

Peter
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