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Niue, a debt free paradise island in the heart of the South Pacific Ocean

The island nation of Niue has paid off all its national debt. With the promise of a more modest and happy lifestyle based on a community living within its means.

The island nation of Niue, perched on a coral atoll in the South Pacific Ocean and with a population of around 2,000, has paid off all its national debt, which amounted to 4 million dollars (2,000 per inhabitant). Premier Toke Talagi has declared that Niue will no longer be accepting loans but rather will focus on taking advantage of its own resources, such as banana and water exports, and tourism. Talagi also hopes this will encourage young Niueans to return to the island in an effort to counter the population exodus experienced over the last few decades.

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Niue is renowned for its limestone cliffs and coral-reef dive sites © Getty Images

Tackling population decrease

This way Niue joins a group of a select few debt free countries. By focusing on strengthening the local economy whilst posing more manageable development targets, Niue is beginning to tackle problems such as the afore-mentioned population decrease. Economic incentives such as payments for families with new-borns, a rise in salary for government employees (the single largest employer on the island) and the consolidation of a four-day working week have all contributed to expats returning to and young people remaining on Niue. Premier Talagi can already claim some success: “In the last few years we’ve seen a 10 per cent rise in our population, mainly through young people returning from New Zealand. A sort of reverse migration.”

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The Premier of Niue, Toke Talagi © Torsten Blackwood/AFP/Getty Images

A stronger voice against climate change

Niue relies on New Zealand for representation in international diplomacy as well as aid packages, which in 2015-16 amounted to 16.4 million dollars. However, Talagi has also declared his desire for Niue to obtain UN membership, so as to gain a stronger voice in global affairs and join the chorus of island states seeking representation on the world stage. This is particularly important due to island nations’ vulnerability to rising sea levels and extreme weather conditions, aggravated by the effects of climate change, which can threaten their very existence. In fact, in January 2004 Niue was hit by Cyclone Heta, which caused extensive damage to the island including the destruction of much of the capital Alofi.

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Niue’s capital Alofi devastated by a cyclone © Peter Bischoff/Getty Images

The susceptibility of island nations to extreme weather has made them some of the strongest advocates for climate change mitigation strategies. Niue’s new status as a debt free country seeking UN membership can provide a model of alternative development that moves away from accumulation of debt to sustain economic growth and towards a slower-paced growth based on a balanced use of available resources and means. For island nations as well as all developing countries, Niue is becoming an example of how things can be done differently.

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