Puerto Rico Economic Pulse ©

February 2009: Is There a Rescue Plan at the Helm?

Policy Options and Economic Growth

The Puerto Rico economy, once again, finds itself at a crossroad. This time, however, the decisions adopted could have deep and lasting consequences and will depend on four issues.  First, how much of Puerto Rico’s appropriated funds under the $787 billion federal economic stimulus package, an estimated $5.0 billion, can be spent under local discretion. Secondly, the government’s fiscal accounts continue to be in an extremely delicate situation.  The cash-flow deficit in fiscal 2009 is staggering. The third issue is the government’s willingness, and political clout, to significantly cut fiscal spending, particularly to reduce the government payroll. Finally, no long-term economic development initiative has yet been put forward. Find out how these policy questions will determine output growth in Puerto Rico in the short and medium term.