By finance reporter Elysse Morgan and staff
Updated 26 Sep 2014, 10:28pm
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.
