Q4 2013: Time to Get Creative
Puerto Rico’s economy continues immersed in a recession that began in 2006 and continues today with high unemployment, low workforce participation, a declining population, and challenges facing its key pharmaceutical sector. At the start of 2013, Puerto Rico had a new Governor with hopes of a long-awaited change in all branches of the PR Government and the Island economy. As of 4Q 2013 and despite great efforts to spur the economy and reduce the central government’s fiscal deficit, the situation remains challenging and requires a commitment to action both from the public as well as the private sector. As the year ended, Moody’s announced it had a negative outlook on PR’s GO bonds and its decision to downgrade to speculative (junk) status would be revisited within 90 days. As of February 2014, all three rating agencies had downgraded PR”s GOs. An analysis of 4Q 2013 quarterly indices signals it is time to be creative regarding solutions to the economic and fiscal crisis.