The Niue Treasury has written to the premier Young Vivian advising him of a critical financial situation and urged ministers to implement more stringent controls.
The report on the first seven months of the financial year notes that almost every cabinet account has been overspent.
The account statements show that cabinet salaries were overspent by 23,000 US dollars and hospitality costs by nearly 5,000 dollars.
The cabinet has already overspent its travel budget for the entire year in seven months by 37,000 dollars.
And treasury has also pointed out that donor accounts have been overdrawn by more than 100,000 US dollars mainly related to travel money that had not been reimbursed.
The report urgently requests that necessary steps be taken to remedy the problem.
It says there is a recurrent deficit of 170,000 US dollars when the financial position was expected to be more than 185,000 dollars better than budget.
The projected deficit is now expected to be nearly 350,000 US dollars at the end of the year.
The reports cites overexpenditure to be at around 526,000 dollars.
The major contributors to this are increased fuel prices, health costs, benefit payments cabinet expenses including overseas travel and power and Telcom Intelsat costs
The treasury report also shows that the Niue High Commission in New Zealand accounts are more than 12,000 dollars in the red.
On a positive note the Bond Store has brought in over 33,000 dollars more revenue than expected thanks to alcohol sales.
