Puerto Rico Economic Pulse ©

Jul 2017: They Still Don’t Get It

An Analysis of PR’s Fiscal Plan & Budget
On June 30, 2016, President Obama signed into law the federal Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). Section 1010 of PROMESA created the Financial Oversight and Management Board (FOMB) for Puerto Rico, a seven-member board appointed by the US President for terms of 3 years. The Board has omnipotent powers and neither the Governor nor the Legislature in PR may control the Board. Their charter is to enact fiscal plans and budgets so the Island can return to the financial markets. The question is how will this be achieved. A balanced fiscal budget alone will not rescue the PR economy from its long-term economic recession nor will it stop the outward migration of its residents. Bondholders of PR’s public debt want to be paid but without a growing and vibrant economy, there will not be enough revenues to service this debt and continue providing “essential” government services. This issue addresses the key question of economic policy to restore growth, something which appears “Many, Still Don’t Get It!”