Tag: H. Calero

Has the Puerto Rico economy recovered from its protracted economic recession? This is a hot-button issue and the answer is: Not yet. So far, Fiscal 2014 has been another tough year. General Obligation bonds were downgraded to below investment grade. Many Puerto Ricans have experienced a significant loss of wealth since 2005. Unemployment and fiscal revenues have been disappointing. Hence, we conclude the PR Planning Board’s mild recovery of real economic growth in FY 2012 and 2013 is simply a mirage. No good news is coming from the mainland. Oil prices remain stuck at high levels and an endless political infighting has taken the PR economy as hostage. Without external windfalls and short-term relief, such as ARRA funds in 2009-12, Puerto Rico will have to go through a necessary economic adjustment. The proposed balanced budget of the government is needed but the budget scissors will also cut investment needed for growth. This issue analyzes some ideas to start a long awaited take off.

For too long, PR has ignored the limitless possibilities that can come from the Information Communication Technology (ICT). This has resulted in lackluster growth and productivity when compared to the leaders of the industry. It is time to take matters into our own hands and learn from our competitors while using our own distinct advantages to become competitive and attractive for foreign investment. PR has a relatively untapped broadband market that can lead to massive amounts of growth in GDP and jobs. Educational institutions in the island need to adopt this technological platform if they are to provide the world with some of the most capable engineers, doctors, and other professionals for a fraction of the cost incurred in the US. By improving the information infrastructure; creating competition; and harnessing our workforce with Computer Science, and fostering an entrepreneurial spirit, PR can also experience the same kind of growth that leaders in ICT in other countries are experiencing.

On February 28, 2014, the PR Senate approved a bill enabling the island to issue $3.5 billion in General Obligation bonds of the Commonwealth of PR and on March 3, 2014, the House of Representatives finally stamped its approval to this bill, which Governor Alejandro García Padilla has already signed into law 34-2014. Rating agencies gave it a preliminary below investment grade. The proceeds of this new bond issue will be used to pay and/or refinance Commonwealth debt in the estimated amount of $2.9 billion. Meanwhile, the island economy continues mired in deep recession. How did PR get to this point? This issue of Pulse highlights how the $71 billion public debt affair of Puerto Rico evolved; why were bonds downgraded to below investment grade; what does this mean for the island; how will this impact PR bonds; is it likely that PR could default on its debt; will the Federal Government assist; how does PR regain investment grade rating and how soon? We will look at some of these questions.

Food drives the world and access to adequate food is the primary concern for most people on earth. This makes agriculture one of the most significant industries in the world. Agricultural productivity is important, not only for a country’s balance of trade, but for the security and health of its population, as well. Over the past seven fiscal years, the once growing PR economy has been immersed in deep recession. Now, we need to focus more on economic growth than on the “fiscal cliff” the island has been facing. Puerto Rico’s insular status makes the island especially vulnerable to external shocks in food and oil prices. This issue analyzes the importance of agriculture for Puerto Rico’s efforts at restarting its economy out of the current recession; how this sector has evolved or declined since Operation Bootstrap in the late 1960s; what lessons can we learn from other countries that excel in agriculture; and what the government, in alliance with the private sector, needs to make agriculture once again a strategic, export-oriented sector.

Will Obamacare increase or decrease the average cost of an insurance policy on the individual market? Ending discrimination against sick people raises premiums for the healthy but lowers them for the sick. Reducing discrimination against old people raises premiums for the young but reduces them for the old. Regulating insurance products raises prices at the low-end of the insurance market but cuts costs for people who actually get sick and need insurance that actually covers illnesses. Unlike the US, Puerto Rico does not have a trillion dollars in subsidies to cut costs for the poor. Unlike the US, Puerto Rico does not have an Exchange to encourage competition between insurers and hence, reduce costs. Unlike the US, Puerto Rico does not have either an individual mandate nor an employer mandate to help reduce average premiums by bringing younger, healthier applicants into the market yet PR’s Insurance Code mandates essential benefits in health care plans. Find out some of the sobering implications of the Affordable Care Act of 2010 for MiSalud, Medicare Advantage, individuals, and employers in Puerto Rico.