Country Background Capital city:  Alofi Population:  1,492 (note: based on data for 2000 and 2001, which indicate a declining population trend that is assumed to continue (July 2007 est.)   Geography:  With a total area of 260 square km, Niue is one of the world’s largest coral islands with the terrain comprised mostly of steep limestone cliffs. There has been increasing attention to conservationist practices to counter loss of soil fertility from traditional slash and burn agriculture. Economy:  The economy suffers from the typical Pacific island problems of geographic isolation, few resources, and a small population. Government expenditures regularly exceed revenues, and the shortfall is made up by critically needed grants from New Zealand that are used to pay wages to public employees. Niue has cut government expenditures by reducing the public service by almost half. The agricultural sector consists mainly of subsistence gardening, although some cash crops are grown for export. Industry consists primarily of small factories to process passion fruit, lime oil, honey, and coconut cream. The sale of postage stamps to foreign collectors is an important source of revenue. The island in recent years has suffered a serious loss of population because of migration of Niueans to New Zealand. Efforts to increase GDP include the promotion of tourism and a financial services industry, although Premier LAKATANI announced in February 2002 that Niue would shut down the offshore banking industry. Economic aid from New Zealand in 2002 will be about $2.6 million. Our Work in Niue Environment and Energy Democratic Governance Poverty Reduction Crisis Prevention and Recovery Source: The World Factbook 2008 about Niue